In the Loupe
In the Loupe
Why Is the Price of Gold so Darn High?? ft. David Siminski
David Siminski, a refiner with 32 years of experience at United Precious Metals in Buffalo, shares his expertise on gold's dramatic price surge, how it might impact custom jewelry projects, and speculates on if the price will continue to climb.
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Welcome to In the Loop. What is up everybody? My name is Michael Burpo. Thanks again for listening to In the Loop. This week I'm interviewing David Siminsky and he's a refiner with over 32 years in the industry and he's sharing his knowledge all about gold and, more specifically, why is it so expensive right now? And the price of gold has gone up nearly 32% as of today in the past one year and it seems like every year there's a new record setting high. That is making news, at least for me, and I'm talking to him about what outside factors are impacting the price of gold, what this means for custom jewelers and different retailers around the nation, and also how you can insulate and look to past events, such as the market crash of 2008 and 2009, for what might be happening to price of gold in the future. It's one of the best conversations I've had on In the Loop. David is great on the mic and I really hope you enjoy and share this with your jeweler friends. Cheers and enjoy.
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Speaker 1:Welcome back everybody. I'm joined by David Siminsky, a refiner. David, how are you doing today? I'm doing well. So we're here to talk all about the price of gold. It's a very, very, very topical topic and I have it up right now. I decided I was going to look through the episode. Price of gold is at $3,068.20 as of this exact recording, but this episode is going to air in about four days and who knows where it's going to be from there, because we've been seeing it literally go up and to the right for the past while. So I wanted to have you on to talk about, talk through the outside forces that are impacting the price of gold, where we think it's going to go, how it's going to affect retailers and vendors and just everybody as a part of the jewelry industry and vendors and just everybody as a part of the jewelry industry. But I think let's start with you so that we kind of establish the authority in the room, because I don't know anything about this. David, can you explain your background in the jewelry industry?
Speaker 3:Yeah, so my name is David Szymanski. I work for a company in Buffalo, new York. The company's name is United Precious Metals. We do three facets of the jewelry business. I've worked at United for I'm going on my 32nd year, so I'm considered at this point which can always change the vice president of sales. We do three facets of the jewelry business. We are a precious metal supplier Okay, so basically for alloys, castigranes, solder, wire and sheet those products for the bench jeweler and the manufacturers to create jewelry.
Speaker 3:We also are the largest US owned primary refinery. So a primary refinery basically means we are the end guy in the food chain so we can actually take that material, your sweeps, your gold scrap, your bench sweeps, your scrap wood zones and we actually will take it back down to bullion form. So we're not middlemanning anything out, so we actually do it right in Buffalo. And then we do a little part of our business also analytical, so we'll do a lot of testing and color matches for people in the industry. Everything. We're about the size of a small Home Depot. Everything is done in Buffalo, new York, and we have approximately 106 employees at this point.
Speaker 3:I've been with United 32 years. I started basically on refining trips which basically United still does to this day where at the end of the day, we will drive using company vans or rented trucks to your location, actually pick up your material and actually bring it back. We're old school, as in the point of we're very relationship based, so that us being relationship based, me being on the road 210 days a year, and then what happens is is being on both ends of the gold market, from the refining end, where people are cashing it, cashing it out, to when they're purchasing. I think it gives us a really good look at what things and how things have changed and evolved in the years and United's been around since 1988, and I've been there since 94. What's changed and how it's changed from your manufacturing here domestically, to now it's globally. How we had to chase it, what's going on with this situation, everything that's affecting the jewelry industry, especially from the retailer standpoint.
Speaker 1:Man. So you've been in the industry for life at this point and I guess gold has been running economies for hundreds and hundreds of years and even thousands of years, but in the last year I'm just looking at it again right now the price of gold is up 32% in the last year. Have you ever seen a run-up like this in your experience in the industry?
Speaker 3:In 2008, 2009, and 2010,. Actually, after the financial crisis first hurt, gold ran to like $1,900, $2,000. It went from like $1,000, like $1,900, let's say it almost doubled. Let's just say that. And that's when, back in 2009 and 10, the first we Buy Golds campaign was really out there, where everyone from supermarkets to gas stations to home parties that really came into vogue. So then what happens is, when gold was high like that, the gold was like pouring in the gold scrap was like pouring in back. Then. Now what's happening? And then after like 2012, 11, the gold was like pouring in. The gold scrap was like pouring in back. Then Now what's happening? And then after like 2012, 11, the gold price went backwards. It went back down to like $1,200 and all that type of stuff. So now it's slowly gained momentum, blew through two, blew through 2,500, now at 3,000 and up to almost touched 3,200 a couple of days before we've actually had this interview, so it has happened. Actually had this interview, so it has happened before. On this increase, this one seems a little more sustainable because it really blew through 2,000 and went right to 3,000.
Speaker 3:The issue really, what happens when it comes to the gold price is how it affects everything else. And, to be honest with you, the, the jewelry industry, is just a small portion of the, of how the bullion price, how interesting. It's not a large portion, it's a small portion of it. So, but we're all affected by it. Yeah, but there's some.
Speaker 3:But I've seen some trends just lately this year of from basically when I say, well, I'm out, 210 a year, michael, the issue what happens is it's when I'm out, it's not just knocking on doors, but it's going to all these, all the trade shows. United does all the trade shows, state events, association events, conversations, lectures, you know, listening to people's podcasts, listening to their webinars and all that stuff. So we kind of get out there and get around. When it comes to really getting the, let's say, the story and the scoop of really what's actually happening, you know, and how it affects not just a retailer, how it affects a wholesaler, how it affects a manufacturer, how it affects, let's say, a hobbyist or a bench jeweler that's working in his basement, that has a bench, how everything comes into play when it comes to gold price. But to go back to your original point, yes, we've actually have seen it before, but it's almost like I'm steroids right now of what's happening.
Speaker 1:So you're saying you know, you think it's a little bit more sustainable. So that's an interesting kind of term, because I wasn't buying or paying attention to the price of gold back then. This feels like this boom that I haven't seen for something that has a tangible aspect to it, Because I find gold to be fascinating, because there is this physical aspect where the amount of gold that you have is the amount that's in your hand. It's not, for example, like we've seen with Bitcoin going past $100,000 and then people were saying it's going to keep on going. The fact that it can go up and down but the gold is going to remain is fascinating. What do you kind of point to as the main reasons for this most recent surge when it comes to the price of gold?
Speaker 3:most recent surge when it comes to the price of gold. Well, at first I want to find those people, just like you said about the bitcoin thing at a hundred thousand, because I might have bought. I'm not going to say true or lies, but I might have bought one at over a hundred thousand. It's gone the other way.
Speaker 1:Let's stop let's just we'll have that stick to gold stick to gold, but on the gold price, and why?
Speaker 3:why? Basically he's asking is why the price increase and why? Okay, so what happens? I'll go this way first. Okay, I put on a lot of presentations and what happens? One of the people asks I always put up a slide that says factors affecting the price of gold and silver. I've run this same PowerPoint slide. I've run the same PowerPoint slide, ofpoint slide. I've run the same powerpoint slide of what? Because people always ask me you're, you're, you know, dave, you're in the goal, you're in the goal business. Where's it going? And I always have the same answer if I knew, I'd be in a caribbean island right now. Yeah, I'd be having a conversation with you. But so what happens is you can see, I'm not in a caribbean island'm in Buffalo, new York.
Speaker 1:The opposite of a Caribbean.
Speaker 3:Island. But I did say when I, when I did start at United, gold was around 300 and the lowest it got to in the first like two years was 254. So it was $254. So think about that, I mean really cool point, going up almost $2,900, $2,800 in the 30 years. Going up almost $2,900, $2,800 in the 30 years, Like it's a big deal. Like you said about the gold price last year, what people don't seem to understand is like last year in January gold was $2,000 and it finished the year at 2,800. So I think you mentioned earlier gold went up like 34%. It was literally the greatest asset class.
Speaker 3:When it comes to investing, it was better than stocks, better than bonds, better than class. When it comes to investing, it was better than stocks, better than bonds, better than REITs. It was better than Bitcoin going. Last year it was better than everything. And then what happens? You look at this year gold starts, gold starts. I mean, it's already 3,000. It's edging up from where it ended up last year.
Speaker 3:And the problem right now is, I think, when it comes to the jewelry market, and also the one thing jewelers don't like, or no one likes, is volatility, and now what happens is a $50 swing up, $50 swing Now. I mean, I'm looking right now, I got CNBC playing it and it's like I see gold down like $60 right now. So why is gold $60 down now? Right, you know why. And if someone just placed an order yesterday, or they paid $60 higher for something, you know they don't always feel that great about it. Yeah, you know, it's just a mental thing.
Speaker 3:But go back to what you say. It's like this is what are some of the factors if that basically, uh, affectable? The value of the US dollar, the US interest rates, the economic conditions in a country. Now what happens is, aka, like China, but now you can actually throw in their tariffs, Strikes and other pipeline issues when it comes to actually getting it out of the ground and getting it to market. The geopolitical factors you know we're living that right now and every country we live in that right now. The supply from producers and the demand for jewelry. That's just demand from the consumer, Okay. Inflationary trends. The gold reserves Like I know they were going to go. Try to go into Fort Knox and see if gold was there.
Speaker 3:I haven't heard a report if the gold's there yet or not.
Speaker 1:I haven't heard it either. My boss actually asked me to ask about what if they go in, and it's not, and it's all gone.
Speaker 3:It's me to ask about what if they go in and it's not? And it's all gone, it's not there. What if they go on? It's not there. The investment demand, speculation in the market for the traders that are speculating, and a safe hazing, a safe haven. You know, you know where people, stocks are too valuable, so they run to gold, those are like the 10 factors that actually affect the price of gold. And, like I always tell people, it's even like from that standpoint, even if you fix five of them, they're still or teal with five of them, five of them are still out there running wild. So what happens is and after I used to say this, I used to say and there's one thing that always happens If somebody fires a missile, all bets are off. So if someone fires a missile, how does that change the gold market? And then, believe it or not, after I said it, after one of my seminars, a missile was fired, one punched you in another.
Speaker 3:Gold went up that day $50, okay, right away, and by the next day it returned. You know, so it's like what's actually moving it. So it's that volatile at this point. You know, like I said, every one of these little things that I just listed are part of the influence, but what is really the main driver? I think was really what your question was what was really the main driver? And I think it's all the drivers, michael. I think it's all of them Fascinating, no matter where you're coming from.
Speaker 1:You know you outlined, you're you outlined, you know 10, 10 points and out of the 10, I'd say like seven of them are like real green lights right now, or or you know they're on full blast and I guess you know that does seem like it should cause a goal to keep going up, but it's actually at the point, at least for everybody all my friends and my family I've worked in jewelry long enough that they know that I'm in jewelry and my parents actually asked me just the other day hey, why is gold so high?
Speaker 1:Because apparently it was on the news and they're like, oh, it's still going up and I guess I wanted to ask, and I guess I wanted to ask, with gold being in the forefront of the news, being in the limel in 2021, that when it was in the spotlight, it drove the price up while it was in the spotlight. In addition to the other factors you just outlined, Do you think that that is also one of the outside impacts that is driving things forward? Is that people are thinking about it and talking about it more as an asset?
Speaker 3:Well, I think what happens is it's funny. We come from the industry, right, we're coming from the industry, so we think it's in the forthright, we think it's right there. But, to be honest with you, the problem is it's really not, because what happens is back in 2009 and 10, ok, gold price going up was on cnbc bloomberg every hour of every day. It was exploding. The local news was talking about it, everything was talking. It was in paper, it was in the newspapers with everything go now, now move the, now go ahead. 12 years, 13 years.
Speaker 3:I'm not sure it's in the spotlight as much to people outside of our industry. It is to us. What happens is is if, even if you watch CNBC, if you're, if you're home, if you have a home office, or you got a computer in your office and you're watching and it's on a TV and stuff like that, you'll see our bloomers like that. They don't talk about gold that much at all in like an eight hour day. Now we do because we live it, we're taking phone calls from customers and all that type of stuff, and they're like because we live it, we're taking phone calls from customers and all that type of stuff and they're like where's it?
Speaker 3:it's always like where's it going to go? Should I sell or should I buy? You know what I mean? Those are the main questions, but I don't know if it's prevalent to the public. Yes, your parents asked you about it and all that type of stuff because they know you're in the industry or stuff like that. But I talk to a lot of retailers themselves. We have a lot of retail customers, okay, and what happens is, to be honest with you, they're actually having a great year and what happens is very rarely is anyone really asking about the goal price when it comes to, and very rarely are a lot of the retailers actually changing their price structure on $100 going up or $100 going back or $200 going up or back. Now, the tariff situation, that's brand new. So how that will affect it and all that stuff, because they're actually buying.
Speaker 3:But the gold price itself usually what happens is bridal controls, what 75% of the market when it comes to jewelry, the brides aren't asking how much the gold is. So, again, they're looking at the is, they're looking at the ring, they're looking at the natural diamond or the lab gold, whatever they're going to use. But what I see from the retailer standpoint is I see a lot more. I see it's more expensive to buy gold, but also too is I think what's happening is now that the gold price is so high just like your parents asked and all that stuff I almost think that there's a perceived value, that the jewelry is more expensive now. That that's why people are actually having a good year.
Speaker 3:A lot of our customers are having a good year because it's almost like one of those things where you would think it would go reverse like the gold price is higher, like it's going to be less and less. We're not seeing it. Now you could probably have someone doing a chat saying you know we're taking a beating here and all that stuff, but most of the customers from high end to middle of the ground to like to even the pawn shops they're not seeing it. You know they're not. The effect of the gold price is really not changing a lot of the buying habits of the consumer and most jewelry companies are actually having a good first three months of the year.
Speaker 1:Wow, and you know it's really an interesting effect because, like you said, you know I would have expected the perceived value of gold to drive down the attainability, if that's even the perspective of it, but it sounds like you know, hey, gold is valuable and it's up, and, like you said, brides aren't asking you know what the price of gold is, they just want a ring.
Speaker 1:I wanted to ask do you think, though, that this might have knock-on effects in other aspects, For example with custom jewelry? Do you find, or would you predict, that, with the price of gold, people only have a certain budget you know they have X budget and if cost of material, especially when it comes to the metal and not the center stone most likely is eating up, instead of it costing 70% of the value of the custom jewelry project, it's now taking 80% of the budget, Do you find that that might have a negative effect on custom jewelers in the future, or do you think that they'll just have more opportunity to mark things up? And people aren't asking about the price of gold anyway, so it's just going to be whatever it is.
Speaker 3:And I think that second point of yours is actually more valid, and I think about when you say the term custom, custom Well, what does that say? Custom, that means it's especially made just for you. Okay, and really right, for, like all the software programs that are out there now that the retail jewelers use that they're designing a piece and the brides are changing this stone and changing this head and all that stuff. Well, you're customizing it. At that point it's like going to get a custom paint job on a car, right, it's like, well, it's customized so they can throw more margins in there and all that type of stuff. They don't have to carry the inventory as much as they have to, you know, because what happens is everyone wants to, everyone wants to, you know, design their own piece and all that stuff.
Speaker 3:And that's a big part of the issue too is, you know, when you go back to the gold stuff, I get gold's not unlimited. So I think what people always think from the refining and all that type of stuff like it's, you know that there's going to be plenty of gold, there's going to be plenty of silver, plenty of platinum, plenty of palladium out there. You know, it's just like no, it's got to come. It's either coming out of the ground or it's coming. Basically, using the terms, you know we've been a United. It's been a big promo of recycled metal. A lot of our metals will recycle. Now you know there's a. There's a big push in the industry to strip the term recycled and put repurposed, re-imagine, redefine. That's when the language police is getting involved and just trying to change the term. But at the end of the day it's already above ground. It's not going to disturb the earth anymore. They're not going to create any more issues in that point.
Speaker 3:So the metal itself like it's just like one of the things that comes in the gold industry, michael, right now is they want a lot of certifications, third party audits to say you're green, you're clean, you're doing it right, yada, yada, yada. The problem is where we at United used to have a compliance department of one person. Now it's up to seven, because what happens is we have to grab all this paperwork from everyone, have it all in a file, have it all computerized. So when we get audited by these firms that say that we're doing the job the right way and all that stuff, because that's what our customers want, that what happens is that we're covered. Well, that also adds to the cost of the metal that we're supplying to the manufacturers who are then making it for the wholesaler and to the retail.
Speaker 3:So I go back when you summarize it all. I just don't think the metal's a big play when it comes to customs at all custom at all because also too, you can go from gold to platinum. So you had gold at 3000 and platinum at a thousand let's say just on let's say, on wedding, on engagement rings, you can.
Speaker 3:You can do that by putting your metal costs in. The third, you know 80% of the 80% of the market is gold and probably only 20% is like platinum. So platinum's always got a long way to go versus the gold. Market owns like 80% of the bridal and all that type of stuff from the yellow and the white. So I think what happens is is. I just don't see that the price of gold is really affecting the retailer from the customer. Now there might be a bunch of retailers that come on and just blow my theory away, but I just don't feel it. You know what happens is is. You know I'm gonna take, I'm gonna borrow something from someone who once said remember, jewelry is only bought for three reasons in the world love, lust or guilt oh nice, let's do that, that's good, every piece of jewelry fits in one of those categories and sometimes, depending on how much trouble you're in, it can fit in two of those categories.
Speaker 3:So that's um. So that's if you define jewelry as as what it is. You know, enjoying the United States is different than you know the gold when it factors into the jewelry, versus like overseas, like in India and all that type of stuff. You know, I have five guys that work for me in India that run around and you know the gold's bought and the jewelry's bought there as as celebrations for everything.
Speaker 3:They have, you know, celebrations and they buy gold for their children. They buy, you know, gold for their, for their spouses, and all that stuff. In the US it's never been like that. Jewelry is barely given on Valentine's, christmas, mother's Day, maybe a religious holiday. It could be a bar mitzvah, it could be a christening, it could be a communion, anything like that, a confirmation. It just isn't pushed here as much as it is overseas when it comes to the gift giving portion of it.
Speaker 1:Wow, you know that's a really illuminating kind of perspective on it and I think you're I really appreciate you sharing your expertise. All right, everybody, we're going to take a quick break and hear a word from our sponsor.
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Speaker 1:And now back to the show. Back to the show and we're back. I wanted to ask I'm always fascinated with these I guess, unrelated effects that connect industries. For example, there's this term called trash pop. Trash pop is a genre of music that's epitomized by Kesha and T-Pain a couple of these people that were really popular during the well for, but it was fascinating to see the connection. Nowadays they're seeing an increase in trash pop and I was wondering if we will also see these connections between other industries, like jewelry, for example. If we might be having, with this increase in tariffs, increase in speculation in the market, things like that, will it affect jewelry in a similar way as what it did in 2008 and 2009? I was too young to be buying jewelry back then. What trends were you seeing back in 2008 and 2009 around jewelry, and do you think we will see similar trends in the coming years or a few years if a recession shows itself?
Speaker 3:In 2008, 2009 and 10,. The biggest thing that happened is the gold market going up actually probably saved the industry. What happens is everyone went to we Buy Gold. So I always tell people. You know what happens. And the problem is a lot of retailers turned into pawn shops Because what happens? It was the only way traffic was coming in the store. They had big signs we Buy Gold. Someone paid cash, someone paid checks, someone gave account credit, because I always told people as people were walking.
Speaker 3:As a customer walking into a retail store, it's so much harder for me to get you to buy something versus if you're coming in with some scrap gold or whatever like that, for some necklaces and earrings that are broken. It was so much easier for me to take that gold and give you money. So what happens is that point saved a lot of retail stores because before that, in seven and eight, you know, the market really wasn't selling a lot. There really wasn't a lot of jewelry being. You know it was. It was still kind of finding its own way as gold price was increasing because it got too expensive. People got, people got too expensive. I mean, gold got expensive.
Speaker 3:So then what happens is it flipped it and everyone started selling their gold. So a lot of jewelers were able to make a lot of money during that time, where some of them spent it and had a good time, but some of them put into new store design, maybe a second location. Some of them socked that money they made for a rainy day. Some of them bought more of their own inventory. So that trend back then called the trash pop trend, or like you just said, actually helped the industry tremendously, you know. And so what happens is is you forecast it now? You, now you bring it to where it is right now like trash pop.
Speaker 1:I'm hoping I'm talking about nickelback either no, no, it's more like it's an indicator because it was so popular at the same time.
Speaker 1:But what you're talking about with how often can you walk into a store and have the store give you money?
Speaker 1:Not very often, but we're seeing, actually related to that, a huge rise.
Speaker 1:I actually just did an episode pretty recently about one of our recent guests and sponsors, National Rarities.
Speaker 1:They do these estate buying events and they from when I've spoken with retailers who have done these events, they say it's very invigorating for their client base because it brings in new clients that have never been in the store before and it also gives them the opportunity to remarket and have them sign the check back to the store for, you know, X percent or something like that, which is a win-win-win for the customer, the retailer and also national rarities, because everybody is pleased with the end result. But I'm curious to see if that is kind of it seems like we're kind of following a lot of the same steps, especially with what's going on with gold. It's beyond my understanding some of the times, but for when I don't understand something I'm trying my hardest to look at past examples to see if I can kind of find the roadmap that's already sort of played out and it sounds like there are sort of things that we can infer from in in a historical past national rarity is very good, very good company.
Speaker 3:You're very good. I know, I know them well and um, what they're doing is now it's no different than what happened in 2008 and 2009. So that model where you go into a store, you set up something, you don't know what's going to come through the store, you know what happens and literally it's almost like a gold buying type of situation buying gold they're bringing in, they're picking up a state drawer that's being sold. You know, someone's selling a grandmother's ring, not knowing that the grandmother's ring has a ton of value because it might be an old Cartier ring, it might be an old Tiffany ring, that actually it's almost like. It's almost like vintage. So what happens is in the craftsmanship and all that stuff comes back and it's like a win. Like you said, it's a win-win for everybody on that. So I see the repeat of that.
Speaker 3:Now I haven't seen gold parties come back up, which is ironic, because parties, what were those? So what happens? Back in nine and ten, you had companies that really what happens is is they would have someone you know house the gold party for the neighborhood and then what happens is they invite everyone, everyone bring some of the gold. They have someone there that could scratch, test and give, give money for the people in Jewish, so they actually have a party, maybe serve some hors d'oeuvres and all that type of stuff that went on prevalently back in 2009-10. Wow, I still have a friend of mine now that actually he does gold buying events through churches and what happens is he makes a deal with the church and then what happens is they promote it in the bulletin and then what happens is he gives a portion of that stuff that he buys back to the church. It's a win-win-win for everybody, because what happens is, like I said, they're just those different things. So I'm seeing that a little bit come around Because also like the gold parties and stuff back in 2010,.
Speaker 3:That got very corporate. I mean there were like that got very corporate. I mean there were people that were going down to the Caribbean. They were going down the islands and what happens? They rent out a hotel suite for the weekend advertising the local paper and bring this, bring this stuff, you know, and people will be like and this is this is really going B to C versus like what's happening, like like now, stuff like that. So they like a company, national rarity, sets up, sets up at a retail spot and what happens? They advertise and stuff like that. And you're right, those, those that owner and those jewelers, those sales people, that's a that's a time for them to. What happens is if people are bringing in their scrap or they're buying something and they have an account credit and then they can shop at the store. That's a win-win all day long.
Speaker 1:Yeah, what a really interesting concept, because I could see how, yeah, you could go to these sort of sleepier areas and people have leftover stuff. That sounds very enticing. I could see how that would work out and I feel like that's, yeah, very similar to what National Rarities is doing. But just to kind of drive this home, I want to ask two quick questions at the end. The first is with gold becoming more popular and maybe gold buying becoming more popular with the increase in gold, I wanted to ask are there any best practices or resources that you can point people to in order to be buying safely? Because increasingly I've seen I see it all the time on the internet where people buy really good knockoffs of the Canadian maple leaf and it's actually what lead. That's gold plated and they use really thick gold plating but the core of it is lead. Is there anything that you would recommend people brush up on if they are interested in maybe getting involved in buying gold?
Speaker 3:Gold magazine. Exactly what you said Caveat emptor. Right, let the buyer beware. That's number one. Listen, is there a lot of fake out there? Yes, also, too, is there a lot of under carotid material out there? Yes, what people don't understand sometimes in some of the talks that I give is 10-carried, 14-carried and 18-carried. In the US it basically has 10-carried is like 41.67% gold, 14-carried is 58.34% and 18-carried is 75%. That is the gold percentages.
Speaker 3:Now what happens in the US versus over in Europe? We have tolerances, so the tolerances is you can still be at 5803 and still be considered plum gold, 14 karat. What people don't understand is the plum law went into effect in the beginning of the 80s, which basically means anything that was bought before that was actually 13 karat or 13 and a half karat, ok. So what happens is you think it's 14 karat, then it's going to be like 58% pure. It's not. Some of this stuff is like 54, 53%. So when you're buying and if you're buying tight, I'm always a big believer is I always think that in every business, especially in the jewelry business, we've all pushed the margins down to nothing and the margins need to go the other way. What happens is I'm always a believer is building your buffers when you're buying and all that type of stuff.
Speaker 3:Yes, there's some great testers out there. You can go for everything from a simple scratch test now to like electronic testers that you can buy. You can also buy little x-ray units. You know some are expensive, some aren't cheap. I mean some other like people talk about the nitron gun where it's like twenty thousand dollars but it can test the piece. It can. It can penetrate a little bit of the plating. There is a lot of heavier plated pieces out there. You know that will actually fool. You know certain scratch tests and all that stuff. You know it's really. Do your due diligence. Don't trust, don't. You know you have, don't just eyeball it and do the eyeball test because that's that's some of the issues that come into play.
Speaker 3:Because, as a refiner, I always tell people when they send in the lot, there's always what I call the expectation. They send in a bag of 14 karat scrap or 10 karat scrap and they have already a number in their head yeah, it's, it's supposed to be. And then what happens is I always tell them we're the report card, we're not using little electronic test or a scratch test, we're actually going to melt it, we're going to do fire assays, we're going to do ICPs, we're going to do x-rays, we're going to tell you in science exactly what's in there. And I always equate to like it's a customer's expectations. So I always, I always equate to like it's a customer's expectations. So I always. I always use what I call a lot of my slides. I use what's called the hamburger ad, where you see on, you see on Burger King and out whatever, where you are in the country, mcdonald's, and also you see the picture of the perfect burger.
Speaker 3:Yeah, it looks great. Yeah, you know, as I know Michael, go into that restaurant and it looks nothing like that. Yeah, I'm like it's the expectation versus the reality. So I'm always trying to say what happens is to make sure, when you're buying whether it be a retail store, you're going to start a gold buying operation, all that type of stuff that you have the right buffers and the right education, just like you were asking.
Speaker 3:There's some great books on Amazon. There's a real good one written by actually a gentleman by the name of Ralph Amador, and what happens is it's about gold buying techniques. It's an easy read and once you get it on Amazon and, believe it or not, if you actually Google my name on Amazon, it'll actually come up that book. That book will actually showcase the whole gold buying thing, from how it started to all the equipment that's out there, how it's tested. You know the different pitfalls and all that stuff. So there is some, there is some literature out there and obviously the internet. You know there's a lot of people who are teaching some of the websites and all that type of stuff.
Speaker 3:But I'm always like, if you're going to buy, you know, I, I used also, I also use the the used car valuation on KBB. Hey, I also used the used car valuation on KBB. Hey, we're going to trade in a car. I looked up online before I went to the dealership my car is worth $13,000. That's what it said trading value is. Then you get to the dealer and they're like we're giving you 11. Yeah, but the internet said it was 13. Yeah, but what we're willing to give you is 11., just because something's valued a certain way. Way, you got to make sure that you're doing the the right amount of testing and all that stuff and just I'd say, always put your buffers in there I really, I really do agree, and you got to make your, everybody's got to make their scratch, you know.
Speaker 1:So, I guess, just just to kind of round it out right now, when we started this, uh, this interview, uh, the price of gold was at $30.55. It is now $30.44. So it's gone down 11. Now I guess, david, if you had to make a prediction professionally, maybe do you think that gold will continue to rise in the coming months or year?
Speaker 3:Or is that not?
Speaker 1:something you would speculate?
Speaker 3:on. I think in 2025, we're going to hit 3,500.
Speaker 1:3,500,. Wow, that would be pretty crazy.
Speaker 3:What happens is remember, it builds steps, the way it has to do. What I tell people all the time is you know gold gets to 28,. Then she builds to 29,. She'll fall back down, like it builds its base and it moves the base up and it moves the base up and it moves the base up. When you blow through a couple of price, like a couple hundred dollars, really quickly, you're going to have a pullback. It just doesn't accelerate that quickly. So you're going to have a pullback, but the trend is going up. The trend's been going up for a long time.
Speaker 3:Just pull up a graph. Go to Kitco. Everyone knows what Kitco is. Go to Kitco. You can see the price of gold. You can put in a long chart of 20 years or five years or one month. You can see the base building up. So that's really what's going to happen, or that's what's happening. Well, I believe. Could it go back down? I don't think you'll ever go back below $2,500. I think the base at $2,500 is well built and well supported and I think that is also at 28. At 3,000, it's still messing around. I think last week it went as high as 3,159 or something like that. So 3,159, if that's high and you're down to what it's already fallen like $140.
Speaker 4:You know what?
Speaker 3:I'm saying, but it's building its base and it's going to continue the climb. Now it might hit 3,500 a couple times. It might hit it once and fall back down, but the trend right now on gold price is on the increase and I equate it to gas. So what happens? Remember people used to freak out when gas was $3. They didn't want the $4 a gallon. People like they traded in their SUVs and they want more hybrid and smaller cars. Now what happens is people $4 gas doesn't even bug them anymore, like it's part of the equation. Now they'll get spooked if it gets to $5, right, I mean obviously in California and different places it's a little different, but for the most of the norm, if it gets to $5, people will once again feel I have less money in my pocket and all that type of stuff.
Speaker 1:I think that's a lot like the gold price Once it reaches a certain thing, people don't get spooked by it. David, I can honestly say this is one of the most interesting episodes I've ever done. I really appreciate you sharing your expertise. This is something that's very topical, but something I'm going to be following along probably for the next bunch of years if it continues this crazy run. I really can't thank you enough. So, david, you said you have a book on Amazon, and if people were to just Google David Siminski on Amazon, they'll be able to find your manual.
Speaker 3:It's a book written by an associate of mine, ralph Amador, but it's a great book when it comes to just the intricates of buying gold, buying silver, buying platinum and palladium. So it's a great book when it comes to the just the the intricates of buying gold, buying silver, buying platinum and palladium. So it's a. It's an easy read. It's I think it's like $24, no cut here. I don't get a spiff or anything like that. So it's just the point of just, if you're looking to get into it or questioning, or a good sales training tool for your associates. It's something you should consider.
Speaker 1:I appreciate that and I'll try to link that in the show notes below. But thank you again, david, I really appreciate it. Everybody, yeah, just be smart out there, buyer beware, and just maybe write in. Tell me if you're getting more into gold. I'd love to hear. Thank you again, david, everybody. We'll be back next week, tuesday, with another episode. Cheers everybody, bye. All right, everybody. That's the end of the show. Thanks so much for listening. My guest this week was David Sminski and he's a refiner with over 32 years in the jewelry industry. He was a really great guest. This episode was brought to you by Punchmark and produced and hosted by me, michael Burpo. This episode was edited by Paul Suarez with music by Ross Cockrum. Don't forget to rate the podcast on Spotify and Apple Podcasts and leave us feedback on punchmarkcom slash loop. That's L-O-U-P-E. Thanks. We'll be back next week, tuesday, with another episode. Cheers, bye.
