If your place of work is anything like mine, right now somebody is organizing the Super Bowl pool. And, again, if your place is like mine, all the guys who can explain how the tight end should be used to beat the Cover 2 defense are confidently putting in their money, fully expecting to collect their winnings on Monday morning. It seems, however, the winner is always the one person in the office who doesn’t follow football at all and just throws in their entry to be “one of the boys.” I’ll bet its the same thing in your office too!
So, when we introduced our “Nail the Close” contest back in June, where we asked you to predict the closing price of gold at the end of the year, we fully expected the winner to be someone throwing in a number without much thought or analysis, just for the chance to win the free lunch. And, like our annual guess in the office Super Bowl pool, we couldn’t have been more wrong!
When we announced the contest back in June, gold was trading at just over $1400 an ounce. The closing price on December 31 was $1207.40, which was down 28% for the year, and the first annual loss since the year 2000. Out of the hundreds of entries we received, the closest guess belonged to Michael Hansen who predicted $1207.48!
Michael has been a sales associate at the Kay’s Jewelers in Pineville, North Carolina for the last seven years. We caught up with Michael and asked him how he did it. “Basically, I just thought $200 lower made the most sense. Gold traffic in our store was down, and reports were it was slow everywhere. So, I just went $200 lower, and picked random numbers for the last dollar and cents.”
Michael says he has taken some of the DCA courses, but has no background in commodities or gold trading and just went with his feelings about the market. For being our winner, Michael will join me and other members of The 24 Karat Club Board for a special lunch during the Atlanta Jewelry Show, March 8-10.
Our contest generated numerous entries, many from store owners, fashion gold buyers, refiners, and others who work with gold on a daily basis. Most of the entries missed the mark by $200 or more.
The contest really highlighted how despite all of our expertise and exposure to the market, we really don’t know where the price of gold is heading. And, for most of us, the cost of gold is the largest single expense we face, whether as a raw material or the major part of a finished piece. Not knowing what the cost of gold will be six months or even a year from now certainly makes planning, budgeting, pricing, not to mention printing brochures and preparing advertising, very difficult. With all the unique problems facing jewelers, gold’s volatility and uncertain pricing is one problem that will never go away.
While everyone may have an opinion on the future direction of gold (and hundreds of you took the time to enter the contest and tell us), its obvious that no one can know for sure, not even the “experts.” But, there are areas where the experts know their stuff, and their advice and help can be useful and valuable. That’s what makes The 24 Karat Club so special. Fifty-five members who have dedicated their professional careers to serving the retail jewelry industry, all of whom have been selected for their integrity and leadership, and all of whom are willing to share their expertise in areas where they have proven over the years that they know what they are doing.
Need to know where the price of gold will be in three months? Good luck! But if you need help on any other aspect of the jewelry business, there is solid advice waiting for you at The 24 Karat Club. Just check the directory on our web-site, www.The24KaratClub.org.
I’m looking forward to our lunch with Michael and getting his thoughts on the future for gold. Maybe he’ll have some stock tips for us as well!
Howard Kelrick is President of Finger Mate and a board member of The 24 Karat Club, SEUS. Finger Mate manufactures and installs expandable ring shanks and sells to retail jewelers throughout North America. Contact Howard at 954-458-2700 or e-mail Howard@FingerMate.com.