My first job with The Perth Mint was as an Administration Officer in their now closed Sydney retail outlet. It was an exact copy of the Perth shop, both in fitout (jarrah cabinets) and stock (jewellery, bullion and numismatics). I sat downstairs in an office doing, well, administrative things, but it also involved cashing up the till and stock control. The fact that I spent each day counting cash and gold bars and coins might account for why I'm still in this business 14 years later - maybe tiny specks of gold rubbed off the thousands of bars and coins I handled and it has seeped into my skin.
Anyway, the shop was lightly staffed and the job somewhat boring so any chance I got I would run upstairs to cover lunch breaks and the like. I’d worked in retail while at university but this was a completely different ball game. For example, you didn’t give refunds at the original selling price but did “buybacks” at current prices. This was investing, of the pointy end style. People would hand over $5,000 cash, get a lump of gold, and then come back later and exchange that lump for $4,800 or $5,200 cash, as the case may be. Unlike virtual numbers in a stock broking account that you could rationalise away, the results of your investment decisions were very physical and thus very real. I loved it.
Behind the waist high jarrah trading counter were some price screens with buy and sell prices of the various coin and bar sizes and the last and current spot price. Only two types of people would come in – those with cash in their pocket or a lump of gold – and without fail they would all ask “So where is the gold price going” or “What’s the gold price going to do” or some such variation. It was a natural enough question considering they were investing, not buying a pair of shoes, but a minefield for me on the other side of the desk. I couldn’t give or imply any sort of advice, otherwise they might be back if I got it wrong asking for a “refund” and I’d be in trouble with the boss.
I soon realised that “If I knew the answer to that question, do you think I’d be behind this counter” was a response that didn’t go down too well. You wanted to do business with everyone, so you had to say something and if you had any integrity, you had to say the same thing to both buyer and seller, which would likely mean getting one person’s business but not the other’s. What to do?
Eventually I hit upon two foolproof answers:
“The price has been going up”
“The price has been going down”
or if I felt a bit more talkative:
“Yesterday the price was $380, today it’s $385”
“Yesterday the price was $385, today it’s $380”
The beautiful thing about it was that it was factual (not advice or a prediction) and amazingly, the same answer worked with both buyers and sellers!
I found that if the price had gone up, buyers felt that they better get in before it went higher whereas sellers felt they should sell at the top before it fell. If the price had dropped, buyers felt it was a great opportunity to buy at the bottom before it went higher but sellers interpreted it as the time to sell before the price dropped further.
I realised that the person walking into the shop with cash in their hand had already made the decision to buy, the judgement that the price was going to go up, and would interpret my factual statement to fit their preconceived view. Similarly, the person with gold in their hand had already decided to sell, no matter what I said.
It was a lesson in human behaviour and retail psychology. It was also a personal lesson to look at new information afresh and always challenge/test my current theory or view.
Anyway, the shop was lightly staffed and the job somewhat boring so any chance I got I would run upstairs to cover lunch breaks and the like. I’d worked in retail while at university but this was a completely different ball game. For example, you didn’t give refunds at the original selling price but did “buybacks” at current prices. This was investing, of the pointy end style. People would hand over $5,000 cash, get a lump of gold, and then come back later and exchange that lump for $4,800 or $5,200 cash, as the case may be. Unlike virtual numbers in a stock broking account that you could rationalise away, the results of your investment decisions were very physical and thus very real. I loved it.
Behind the waist high jarrah trading counter were some price screens with buy and sell prices of the various coin and bar sizes and the last and current spot price. Only two types of people would come in – those with cash in their pocket or a lump of gold – and without fail they would all ask “So where is the gold price going” or “What’s the gold price going to do” or some such variation. It was a natural enough question considering they were investing, not buying a pair of shoes, but a minefield for me on the other side of the desk. I couldn’t give or imply any sort of advice, otherwise they might be back if I got it wrong asking for a “refund” and I’d be in trouble with the boss.
I soon realised that “If I knew the answer to that question, do you think I’d be behind this counter” was a response that didn’t go down too well. You wanted to do business with everyone, so you had to say something and if you had any integrity, you had to say the same thing to both buyer and seller, which would likely mean getting one person’s business but not the other’s. What to do?
Eventually I hit upon two foolproof answers:
“The price has been going up”
“The price has been going down”
or if I felt a bit more talkative:
“Yesterday the price was $380, today it’s $385”
“Yesterday the price was $385, today it’s $380”
The beautiful thing about it was that it was factual (not advice or a prediction) and amazingly, the same answer worked with both buyers and sellers!
I found that if the price had gone up, buyers felt that they better get in before it went higher whereas sellers felt they should sell at the top before it fell. If the price had dropped, buyers felt it was a great opportunity to buy at the bottom before it went higher but sellers interpreted it as the time to sell before the price dropped further.
I realised that the person walking into the shop with cash in their hand had already made the decision to buy, the judgement that the price was going to go up, and would interpret my factual statement to fit their preconceived view. Similarly, the person with gold in their hand had already decided to sell, no matter what I said.
It was a lesson in human behaviour and retail psychology. It was also a personal lesson to look at new information afresh and always challenge/test my current theory or view.
"I realised that the person walking into the shop with ___ in their hand had already made the decision to ___"
ReplyDeletealthough it sounds so simple, easy and trivial, this it is the most important key principle to rap your head arround.
The next considerations are:
1.) What influences the decision to stand up in the morning to walk into your shop.
2.) Only a person who has either cash or gold will walk into your shop.
Do you have any ideas about those aspects (except emotional trades)?
Greets, AD