What Opportunities Will Business Closings Create for Precious Metal Investors?
While we were listening to talk radio last week, we heard someone call in and ask a timely question.
“Businesses all around me are closed and some will never reopen,” the caller said, “and I am wondering whether that will create an opportunity to buy their assets and inventory at low prices?”
If businesses do close, their owners will have to liquidate their inventory. Many stores, from clothiers to kitchen supply stores to hardware stores, will probably sell their unsold inventory to companies that specialize in liquidating businesses. There will also be business liquidation auctions where fixtures will be sold.
Ethical Considerations
There are several ways to think about buying inventories and fixtures from failed businesses . . .
Some people think it is an ethical thing to do, because it helps the owners of failed businesses recoup their losses.
Some people think it is an unethical thing to do, because it takes financial advantage of the owners of the businesses that failed.
What do you think? Will you feel good, neutral, or bad about buying inventory and fixtures from companies that never recovered from the coronavirus pandemic?
Opportunities to Buy Most Precious Metals from Failed Companies May Not Arise Anyway
Yet the fact is, there are fundamental differences between buying general unsold inventory (shoes, hammers, electronic devices) and precious metal inventory (unsold jewelry, coins and bullion). That is because the value of precious metals is more strictly tied to the trading prices of gold, platinum, silver, palladium and the other precious metals.
For example, a beautiful gold bracelet that contains $500 worth of gold is just not going to be sold to the general public for $50, even if it was part of the inventory of a jewelry store that closed. If a jeweler is closing a business, he or she might sell display cases and other equipment at low prices, but will find ways to liquidate unsold inventory that will recoup more of its value. That jeweler might sell inventory to other jewelry stores, have private sales for current customers, or call Specialty Metals Smelters and Refiners.
The one exception to that is that certain companies that are closing might have quantities of gold, silver, platinum and other scrap that will be sold at advantageous prices. If a jewelry factory closes, for example, it might be possible to go to a business liquidation sale and buy items like jewelry findings, gold chain, silver soldering supplies and other scrap at advantageous prices.
But mostly, we hope that our entire economy, and thousands of American businesses too, rebound and come back strong from our current crisis. A robust and thriving economy is good for all of us.
All of us at Specialty Metals Smelters and Refiners send you every good wish. And remember that we are here to answer your questions about investing in precious metals. Call us at 800-426-2344.
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