Where is the Best Place to Buy Gold Paydirt? Vol 2 "the ROI"
Our goal here is to educate or provide information on pay dirt and gold to the best of our ability for the consumer. With many years of buying and selling gold it is only fair to provide what really takes place in the gold world. Many seekers of paydirt offend turn to Youtube or reviews for feed back so they can make the best educated decision on where to make a purchase. After all it is your hard earned money you spend on a hobby.
A common myth as some have claimed is gold is purchased for less then spot! This is some what true but not really if you are lucky enough to find cheaper gold, it is usually dust for about 95% of spot. But also remember there is usually shipping and insurance that literally take that up to 100 to 110% based on gold size right off the get go. Some reviews claim gold buyers pay as low as 60% and that is like finding a pallet of gold bullion, free for that taking and a forklift waiting to lift it into a free new truck.
Nugget size and price can be compared to walking a parking lot looking for money, we often find pennies, maybe a nickel, dime, quarter but vary rarely find a dollar let alone 100 dollar bill. These opportunities are not all that common like finding a 5 gram nugget. dust would be like finding pennies in a parking lot in relations to rarity on up to 1 gram nuggets and 10 dollar bills.
How to extract important information from reviews based on ROI based reviews!
( There are a few reviewers that do a fun and entertaining job of reviewing a product, very important or misleading information is all too forgotten)
1. shipping- is a cost of a product that has to be calculated in ROI (return on investment) anyone using a computer or phone can calculate the cost of shipping. as low as $2.45 under 6 oz first class up to 6.60 small flat rate box (discounted for shipping a lot)
2. Packaging- often not discussed in ROI because there is no way to calculate a spot price or common cost of packaging. Here at Klondike klinkers this is what entails packaging.... the bag, the label, product id, shipping mailer, mailer sleeve, tape, the shipping label( ink/ paper) The sellers time, drying, collecting, packaging, and shipping.
3. The actual cost of gold and the size premiums with shipping and insurance. Gold spot price is a based price on bullion and fair enough base for raw gold to be used to assess a return on investment.
4. Fees based on the payment processor, paypal 3% sales tax. a general rule is 10% right off the top for this.
How to figure a proper ROI
weight the gold and separate under 12 mesh, 12-6 mesh, 6-4 mesh, and over 4 mesh. These mesh sizes carry premiums of 95% up to 130%. We generalize this to 95, 100, 110- 120, 130% of spot.
PAY DIRT ROI EXAMPLE
Imagine you paid $100 for pay dirt and receive 1.75 grams in a 1 pound bag.
Current spot price is ($39.96 per gram).
100 paid minus fees and tax at 10% leaves $90 ....
Minus shipping on 1 pound 6.50 = $83.50 with about $1.00 to $1.50 for shipping, packaging supplies, and time. $82 seams a fair estimate of what it costs before gold.
Gold cost per gram at this point $82/ 1.75= 46.85 per gram IF IT IS ALL DUST! At this point break out the gold premiums at an average of $2.50 per gram after premiums and shipping/ insurance of the gold being shipped to the seller. here is the more complicated part.
$82- premiums/ ...1gram -2.50 and -3/4 of a gram @ 1.87 = $4.37.........$82 - 4.37= $77.63/ 1.75 gram = about $44.36 paid per gram.
Take the per gram price and divide by what was paid = ROI 77.63 /100 = (.776 % actual return on investment) most reviewers calculate ROI based on what was paid and what they received at spot price or lower.... EXAMPLE $40 per gram times 1.75= $69.93/100 = 69.9 % ROI with out any consideration of tax, shipping, fees, actual gold cost, and time to complete an order start to finish.
Most sellers aim for 1-2 dollars per gram profit but there are a few different ways to beat some of the fees and remove some cost per unit, we will say cheating pay pal the 3% and thus also the tax of about 7% leading to 10% savings is not legal there fore we do not do it. Uncle Sam requires his part and the payment processor should be paid for their service. Using friends and family puts you at risk as a buyer and seller, the IRS will find it and pay pal will also find it and come collect it usually taking more than what was saved....Buyers are at risk because technically you are donating the payment you have just made and do not have to receive anything and there is nothing a buyer can do to get it back. (not a risk we would be willing to take).
We hope you have taken away a little something from this long blog on ROI, if you had enough patients to read it.
In the many years we have been in this market we have seen just about everything/ reviewers can some times work with a competitor of a seller or may not know the whole truth. They may not even know that their opinion of a product can destroy little companies. This in no way is a slam against any reviewer or seller most everyone does a great job and is honest.
As always remember to have fun doing what you do! We hope your prospecting adventures are fruitful, keep adding more great memories to your story!