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Unsolicited Questions From Real People — The Jeff Clark Mailbag: Volume 3

Jeff Clark, Senior Precious Metals Analyst, GoldSilver 
JAN 14, 2019

GoldSilver’s Senior Precious Metals Analyst Jeff Clark gets all sorts of questions from our customers and others curious about the unique world of precious metals investment. Jeff, having grown up in an active precious metals mining family and as a lifelong precious metals investor, is uniquely qualified to provide answers born of his experience and decades of industry study.

Today brings us Volume 3 of The Jeff Clark Mailbag, an ongoing series that will feature some of the most frequently asked and interesting inquiries Jeff has received, along with his answers.

Every Mailbag will always include just one thing: real, unsolicited questions from real people and Jeff’s honest answers to those questions.

Why do people bite gold coins to test them?

It’s usually just gold they bite, and that’s because gold is a soft metal. If it’s real gold your teeth would feel some give or would leave a mark, whereas if it’s fake it wouldn’t. Other metals are harder and for the most part can’t be tested that way.

Of course you wouldn’t want to test investment grade gold this way, because you want it to be in good condition for resale. The best way to make sure you buy real gold coins is to buy only from a reputable dealer.

What do I need to know to start purchasing old gold and melting it down to sell for profit?

I don’t know what you mean by “old gold”, but gold is valuable regardless of the form its in, so the odds of actually buying it and then reselling for a profit are low.

You’ll have to go to a refiner, and the problem you’ll run into is that most refiners don’t deal with small retail accounts. Those “we buy gold” shops usually turn in gold to a refiner only after it reaches a certain amount.

You can Google refiners in your area and see if any will buy gold from you and what their rates are, but honestly you’d be better off buying investment gold now since it’s undervalued and then plan to resell once it’s overvalued. And that’s likely, as this video shows.

How will asteroid mining affect the price of gold and silver?

It won’t. It would have to extremely rich ore (it’s not) and then the cost of mining would have to be competitive (it’s not). It would probably cost $100,000 per ounce to retrieve the gold at this point in time (and even that may be low), and the product sells for $1250/oz.

But a good question, because a supply shortage is coming—check out some of the charts in this article.

It bears mentioning that the situation in silver’s even worse.

What should replace gold as the standard for backing all currency?

The US has had full gold backing, partial gold backing, gold convertibility, and today no gold backing. Here’s a good review of the history of gold in the US:

GoldSilver Infographic: History of Money and Currency in the USA

To answer your question, mankind has found throughout history that gold has served as the best backing of a currency. It’s rare, doesn’t need feeding or fertilizer, is indestructible, you can’t make more of it, and it’s consistent the world over. Almost nothing else meets all these criteria simultaneously, so gold is the best backing for currency.

Will we get another gold standard? Probably not, because most politicians hate it, but it will depend on how bad the crisis gets. But there is an economist who thinks the next crisis will be worse than the Great Depression, and his work is compelling.