[Jewelry making - Article 01054] - Re: [Orchid] Jewelry in the 80s

[Richard W. Wise]

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Susanna,

    My first day in business was the day of the blizzard of 1978 which
    dumped 4 feet of snow on the Northeast and actually shut down I-95
    for over a week. After that things really got interesting. 

    Just after that Nixon decided to "float the dollar" and it promptly
    sank out of site. Gold went to $100.00 per ounce and didn't quit till
    it hit $850.00. 

    What do you do in a hyper-inflationary economy? Constantly monitor
    your prices. Your prices must keep up with the cost of materials. A
    few foolhardy jewelers held the price line and sold based on their
    old cost. They found that replacement costs shrunk their buying power
    and therefore their inventory out of existence and one of the laws of
    retail: Ya cant sell it if ya don't have it. 

    If you are trying to build capital, you can always buy gold. I did,
    though I was so poor, I usually had to turn it over within a couple
    of weeks. Big manufacturers hedge the market, they buy a kilo and
    sell a kilo all on the futures market, one way to guarantee stability
    in your costs. One of the most interesting phenomena of that period
    was the rise of the scrapper. These guys knew nothing about gold or
    gems. They would pay about 50% of market for anything gold by weight
    and $250.00 per carat for anything they couldn't scratch with a
    diamond test point. People lined up to sell. I occasionally bought
    diamonds from one of these guys paying about half of wholesale. 

    When gold hit $525.00 I took my Xmas profits and bought a kilo (1000
    ounces) on margin. You could do that for 25% down in those days. The
    next week I sold it for $650.00 per ounce, bought a ticket, closed
    the shop and spent the winter in the Carribean. I was in the airport
    in the British Virgin Islands when gold hit $850.00 

    The moral of the story: As Rhett Butler pointed out: there is often
    more money to made in the wrecking of a civilization than in the
    building of one. A major runup of gold is unlikely at this time.
    Should it happen it will bring with it great tragedy and great
    opportunity for those who are alert. 

    As Richard Nixon once said: "The American dream does not come to
    those who fall asleep."

www.rwwise.com

For Information and sample chapters from my new book:
www.secretsofthegemtrade.com

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