Archive for October, 2010


Cash for Gold

October 17, 2010

Regarding selling gold for money, I have a rather neutral opinion on it.  From an advisory standpoint I would make people aware that they will receive slightly more for their gold if they sell it themselves. Also, I would make them aware that these companies are using economies of scale to receive a large spread above what they are paying you for your “useless” jewelry.  In a recessionary market people often panic with their money and buy precious metals since, it is presumed, they are the ultimate in safe investment. With billions of dollars flowing into the precious metals market, the price skyrockets. Companies such as these wish to collect large quantities of these metals and either sell it on the spot market or sell contracts on speculations of its value increase (or decrease). All of this is done with the result of huge profit for the companies and probably a net loss for you (unless you received your jewelry for free in the first place; see my experiment below). Having said that, however, I do not necessarily agree that people should ignore the opportunity.
As an experiment, my wife and I tested one of these companies with a gold ring that was given to us. This ring had no sentimental value so we decided that we would have it appraised locally and then send it in to one of these companies (to remain unamed) to test its claims to both speed and amount of return. What turned out was not as bad as I first assumed. First, the company sent a kit with which to send them the ring so shipping was minimal. Secondly, the speed with which they appraised the property and sent us the money (to Paypal) was less than a week. Now we didn’t use the company that guarantees 1-2 business days, but nonetheless I was impressed that the company lived up to its expectations.
I will say, however, that the money we received was less than what was appraised locally. It was not enough different, however, to concern me. I knew that selling it locally was a great deal more difficult and time-consuming than this process.
In the end, I was satisfied. Would I advise my clients to use the service if they needed some extra cash in a hurry? I would, but I would advise that they would likely net a loss on their investment. It is difficult to earn a return on hard gold greater than the cost of buying it in the first place since the original seller would have factored in both a manufacturing cost and a mark-up in the original sale. However, in my opinion not enough households have enough cash flow to debt. If increasing cash flow and the accumulation of an emergency fund is part of your financial plan (which it should be) than the removal of some old jewelry through one of these companies is an efficient strategy. I would however, not rely on this philosophy forever. As the price of gold continues to break records, one should eventually expect the bubble to burst.


Busy-ness redefined…

October 12, 2010

You know, I read this article lately called “The End of Busy” ( There has been a large movement against the bravado of the all-to-familiar response to the question: “how are you?”  The answer, unfortunately, lies in the quip:  “I’m great, really busy.”  Busy-ness as an ideal state of productivity is actually counter productive. The article calls it “a fool’s game.” Instead, it says that “busy is simply noise, action without meaning, lots of little unimportant things rather than a few important ones.” Can we not transfer this to the theory of investing for the future? I refer you again to my often quoted statistic that shows that: “from 1984 through 2000 the stock market surged by 16% a year. In the same time, however, the average investor in a stock fund earned only about 5%. By pursuing the crowd, investors lost two-thirds of the profits they could have.” Just as in life, this ‘busy-ness” (which if you look at it spelled “business” you will extrapolate a sort of irony), actually erodes two-thirds (in the analogy) of your life through ineffectual, half-finished, and emotional fickleness. It is illogical to believe that you’ve finished what you’ve started if you’ve continued to deviate at points in the interim. Establish the foundation of protection, and grow with the trend that has existed in perpetuity. Through a holding of that space, you will actually earn more.


Emotional Wellbeing and Your Financial Plan

October 12, 2010

A new study reveals the benefits of financial planning for families:

“While the study clearly establishes the benefits of planning, what may be surprising is just how profound these results are and the relationship between financial planning and emotional well-being of Canadians, regardless of their age or net worth.”