tag:blogger.com,1999:blog-6089228851855763774.post1783321193974157336..comments2024-03-29T07:10:06.022+08:00Comments on Gold Chat: The Gold Value Chain Part III - ManufacturingBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6089228851855763774.post-71957077944527394222014-03-07T13:20:08.326+08:002014-03-07T13:20:08.326+08:00mikeyj80,
Rarely these days are leases physical. ...mikeyj80,<br /><br />Rarely these days are leases physical. Usually you lease unallocated from a bullion bank and it is a separate transaction to take physical delivery if you want to.<br /><br />I suppose that if you are starting up a business then you would take physical. In an ongoing operation the metal lease is just rolled when it comes to maturity and may be part paid back or additional lease as one's working inventory changes.<br /><br />It is much like borrowing cash for a business, cashflow requirements change and so you would have a mix of long and short term loans.<br /><br />Leasing I understand is unique to precious metals as it doesn't spoil and there is so much above ground inventory relative to supply/demand flows.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-13780079932664005832014-03-07T11:47:48.111+08:002014-03-07T11:47:48.111+08:00Bron, this is eye opening for me as I am very fami...Bron, this is eye opening for me as I am very familiar with buy and hedge but this lease is blowing my mind!<br /><br />When you 'lease' do you actually take physical ownership of gold or is it a price hedge? I read that you actually take the gold and use that to make your coin or bar...<br /><br />Does this lease have locality to it? Meaning you lease gold and it comes to the perth mint, later you buy gold to repay the lease, where does that have to go?<br /><br />Are there shipping costs associated with this transaction or do you lease from unallocated accounts and then pay them right back?<br /><br />I appreciate any response as I do wonder if there is application here in other markets like grains where often there are stocks that sit in the delivery mkts for extended periods of time.<br /><br />Thanks.mikeyj80noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-11193261675367732342012-06-15T09:23:33.294+08:002012-06-15T09:23:33.294+08:00MikeB,
Yes there is some cash flow associated wit...MikeB,<br /><br />Yes there is some cash flow associated with the lease rate, I didn't include it because lease rates are current very low, circa 0.5%, which would about $5 in this example flowing out in step 7.<br /><br />There would also be cash outflow for interest on the $10 loan.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-78858051473562158142012-06-15T07:54:15.828+08:002012-06-15T07:54:15.828+08:00Hi Bron,
Some excellent examples but I think I am ...Hi Bron,<br />Some excellent examples but I think I am missing something. I don't see any cash flow related to the leasing costs. You did say if your credit rating was good enough you could lease without posting collateral. However there still has to be some cash flow associated with the lease rate right? I'm probably missing something obvious. Can you point it out to me?MikeBhttps://www.blogger.com/profile/03527665937549185434noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-7657850372726677672011-10-19T22:04:37.433+08:002011-10-19T22:04:37.433+08:00youtube- brotherjohnf
investingadvicebygeorge.blo...youtube- brotherjohnf<br /><br />investingadvicebygeorge.blogspot.com<br /><br />http://www.goldchat.blogspot.com/<br /><br />Thought i'd share with you if you are new, my top 3seamonsterswellhttps://www.blogger.com/profile/04993854929514224845noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-82995508810607240212011-05-15T11:02:31.995+08:002011-05-15T11:02:31.995+08:00Bron, thank you for your reply. Excellent blog, I ...Bron, thank you for your reply. Excellent blog, I wish I found it earlier.SGnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-33022119353068770382011-05-11T11:35:43.104+08:002011-05-11T11:35:43.104+08:00Most important is to ensure your business "mo...Most important is to ensure your business "model" does not involve exposure to metal prices.<br /><br />Never buy stock on the hope that the price won't fall before you sell it to customers.<br /><br />You may not be able to access futures markets or leasing, but you could hedge yourself using contracts for difference for example.<br /><br />Alternatively, only buy from a supplier at the same time as you sell the product to the customer.<br /><br />Also be aware that the bullion business is low margin, so turnover of any stock you have is important - better to sell it quickly for less margin rather than trying to sit on it for a few more percentage margin.<br /><br />Demand can dry up quickly if prices move significantly, in which case you can be stuck with stock.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-16576479378801325572011-05-11T09:55:46.495+08:002011-05-11T09:55:46.495+08:00What would your advice be for a young entrepreneur...What would your advice be for a young entrepreneur just starting a bullion/coin retail business?<br /><br />Also, the information about leasing was extremely insightful. I have always wondered how larger businesses hedged themselves against a decline in gold.Anonymousnoreply@blogger.com