Ever wonder how many stores there are, or how many restaurants, gas stations, tractor-trailers, there are? I often do. I just looked it up. There are 160,000 gas stations in America, over two million tractor-trailers in America with 300,000 on the road at any one time, and there are 660,000 restaurants in America, employing over 15 million workers. How many coin shops? 5,000, ranging from one-man operations to biggies (Who I am sure advertise on TV), and ten of them gross over $100 million a year. Colorado Gold, did over $110 million last year, with no employees, no shop, and no advertising. Just goes to show you that if you do something right, there’s no need to advertise, rent, or own a shop, or hire employees. One last figure. Last year, over $70 billion was spent on TV advertising. Guess who pays for it? You do.
Businesses have retail stores, and advertise, because they think, or really do need to have a shop and advertise. Maybe they do, for all I know, but my ten “Bijou Iced Creme Parlours,” in Philly, made me the largest seller of bulk ice cream in Philly, in 1970, selling over 100,000 gallons of ice cream, with not a dime spent on advertising. When I built the first one, an ice cream wholesaler thought I was nuts, since at time, a half-gallon in a grocery store (garbage, full of air and hideous butterfat content), was 99 cents.
The title of this is, that we are not a store, and I don’t think we need to have one. Chain grocery stores, it is said, operate on about an 11% profit margin, they are so efficient. Sears-Roebuck, was at one time, the largest retailer in America, but thanks to poor management making poor decisions, they are extinct. They did everything possible to stay afloat, after poor management making poor decisions, including selling, their famous tool line, “Craftsman,” and battery line “Die Hard,” but it was too late. Many large chains, such as “Western Auto,” “J.C. Penney,” “K Mart,” “Gimbles” (department stores beaten out by Macy’s), “Fox Theatres,” “Packard,” “Studebaker,” “Mercury,” ”“Pontiac,” “Oldsmobile,” “Whitmans” and “Schrafts,” chocolates, “National” cash registers, “Kodak,” “Polaroid,” “Radio Shack,” “Pan Am” airways, all went bust, and I miss them all. They were at the top of their lines, and it wasn’t the employees’ fault they lost their jobs, but top management. (J.C. Penney still hangs on by a thread, but top management, made a stupid advertising mistake, which practically killed them.)
The term “Keystone,” in retailing, means that the price asked is double what was paid for the item, wholesale. The typical retailer, marks up its merchandise by 30%, and growing up in my Dad’s drug store, 75 years ago, we marked up things 30%, which covered the store’s expenses (merchandise purchases, rent, electricity, repairs, labor, etc.), and my dad made a decent income, and didn’t advertise. All retailers, have an inventory of merchandise, so customers have a choice as to what they want. In my Dad’s drug store, we had Revlon (recently went bankrupt), Coty, Max factor, etc., in the cosmetics department, and lots of different magazines and newspapers, soda fountain varieties, and varieties of everything. As I remember, the yearly inventory, was about $36,000 worth of merchandise, and that would be probably ten of fifteen times that amount today, thanks to inflation. Coin shops, have show cases full of varieties of collectible, and antique coins, and bars, which they have to have, for customers who collet those rarities. Coin shops, have to mark up their merchandise, to get a return the inventory they have on hand. How much do they mark up? I have no idea, because we don’t deal in those things. We have no inventory, on which we have to raise prices on to cover inventory expenses, nor employees or rent, which have to be paid for by customers. We are not a store, and have no displays. All we have, is our web site, which has pictures of everything we have, and phone numbers, from which to order from, (my kids love to talk to their customers), and our close to 40-year A+ rating with the Better Business Bureau, speaks for itself. If you’ve gone on that long, and still have that rating, you must be doing something correct. I’ve noticed of late, that the TV ads for precious metals companies, have decreased, and I think there seems to be only one left, but I may be in error. Ask me if I care?
When I started doing precious metals in November, 1977, we only had gold Krugerrands, which of course, come from South Africa. Here’s an interesting fact about “krugs.” In South Africa, they use the ‘rand’ as money, and Paul Kruger, to them, is the same as George Washington to us. Kruger died believing the Earth is flat. So, Krugerrand is like saying ‘Washington dollar,’ and in South Africa, it is “Krugerrand.” South Africa, has the largest gun murders in the world, with over 20,000 dying each year. Last week in Soweto, (Southwest town), 15 were shot dead in a bar. At any rate, the gold mines in South Africa, are practically exhausted, with mines going down so many thousands of feet, that the temperature in them, is close to 160 degrees, so miners can only work so long, even with huge fans blowing constantly. Thirty years ago, a friend of mine, Neil N., went to South Africa, and said that the illiteracy was so great, and living conditions so poor, that when a man went to try for a job in the mines, he didn’t know left from right, or what a toilet was.
When I started, besides the Krug, we also had U.S. Gold $20 coins, (Double Eagles), which had .9675 oz. of gold in them, but so many were counterfeits made by communist nations, that you had to use a jeweler’s eyepiece to tell the difference. We didn’t think they were a good buy then, and I’m not sure now, since those counterfeits must still be around.
Krug’s popularity has decreased of late, and our most popular gold coin, is the 1 oz. Canadian Maple Leaf, whose purity is ‘four nines,’ or ‘xxxx’. The U.S. Gold Eagle, (three nines pure), is more expensive than the Maple Leaf, because it is made by U.S. government union workers at West Point New York, and that isn’t cheap. It weighs 1.09 ounces, and has one ounce of gold, but .09 oz of alloy to make it difficult to scratch. I’m retired, but if you want to go over old times, I’m at 970-249-4646.
Don Stott- don@coloradogold.com.