There is an endless curiosity about the gold bullion business - not only how it works, but exactly how many people are buying physical gold. Gold is just not a well-known element in the US.

The fact is, you might have found yourself discussing your stocks and mutual funds at parties (circa 2000 especially), or chatting socially about real estate (in 2005, was there any other topic?), but today when we see increasing inflation in everything BUT stocks and houses, the happy chatter seemed to have stopped. And you don’t hear much about gold.

Gold as an investment has been good, of course, more than tripling in price since 2001. So today it may be socially acceptable in some circles for you to brag about the performance of your gold Exchange Traded Fund (an ETF such as GLD, for instance), or your gold mining mutual fund. But if you have taken physical possession of gold bullion, it’s not really something you are likely to crow about – to do so would seem miserly, anti-social, or possibly invite comparisons to Scrooge McDuck.

So gold bullion sales will always be a mystery, and, for security reasons, a well-kept secret.

For our part, we increased our dollar sales volume for the seventh consecutive year, but in truth, sales of gold bullion were only good, not great. We actually sold less gold in 2007 than we did in 2006. After all, gold prices averaged a bit over $600 in 2006, and nearly $700 in 2007, thus making gold some 15% more expensive on average in 2007 versus 2006, but our sales did not increase 15%. So, while dollar sales were up due to the higher cost of gold, unit sales actually fell slightly.

Why did our unit sales fall? A few explanations come to mind.

First is the simple shock of higher gold prices, which has a psychological effect on potential buyers. Gold’s price increases over the past three years have greatly outstripped inflation, both real inflation and the laughably inaccurate official “CPI” scores. Soaring gold prices during the final four months of 2007 also made many potential buyers hesitate. Gold’s steamroller surge from September 3rd levels at $672 to November 26th’s $830 London fix seemed particularly abrupt, and during that time there was no real corrective phase for those looking to ‘buy the dips.’

Secondly, there just seems to be less money out there in individual hands. People’s commission checks are smaller than expected, many small businesses are less profitable than previously, and we no longer have the plethora of cash-rich gold buyers who sold real estate at fabulous prices in 2003-2005.

The third reason for flat domestic gold bullion sales is probably the most bullish factor for the gold market going forward. Simply put, gold awareness in this country is still quite feeble. Not only are we not in a US gold buying mania, but Americans for the most part wouldn’t know how to purchase gold if they wanted to. Yet, inevitably at some point in the course of the dollar’s travails, gold will become popular again in the US. Because, in the end, what else protects you so thoroughly, simply, and efficiently when your home currency is rapidly buying you less and less of everything?

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We will be taking a week off as usual this year, starting about noon on December 24th. On Wednesday, January 2nd, we will return ready for the New Year.

We will have new 2008 gold Eagles in stock by Tuesday January 8th, as well as 2008 gold Philharmonics, followed shortly by the arrival of the 2008 gold Pandas from China.


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No matter what type of year-end festivities you and yours are going to participate in, remember that from December 21st onward, a harbinger of better times comes as the days lengthen, if only a minute or so each day, over the next six months.

For thousands of years humans have marked the day in which the sun makes its lowest and shortest transit across the sky. The paradox is that the Winter Solstice marks the official beginning of winter in the Northern Hemisphere, yet at the same time brings the promise of spring and renewal as the days start getting longer.

Here in the desert of Arizona, where winter is not much of a threat, we’re already buying our Spring Training tickets, and pitchers and catchers are scheduled to report in just a few weeks.

So light a candle, or a whole tree, in celebration of the season’s change. Because in a few days, we can all say, “Things are looking up.”

-Richard Smith