Here’s something interesting I found in Madrid: a vending machine for gold! You wouldn’t normally expect a commodity to be sold in a vending machine, but somehow gold might be special…
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Still cannot believe they don’t accept cards! What a waste of market opportunity. I think there must be another shady reason for the existence of this machine other than its pretending to sell gold…
You buy the 2 ounce gold with the design you pick using your credit card. Very much like a Franklin Mint of vending machines. You give your “gold stature of liberty coin” to your sweetheart who wonders, “What do I do with this?” Oh, on the other side next to the water fountains is a vending machine that sells water.
Las Vegas recently got such a machine, too. See, e.g., http://www.goldennugget.com/amenities/gold_to_go_atm.asp
This is very interesting. Salespeople in gold shops get heavily paid as they woo the customers buy wearing the same jewellery on themselves and they persuade people in choosing the designs.
Vending machine removes the salesperson experience so it will be interesting to see what kind of customers are targeted at such shops.
Maybe vending machines could replace markets in other commodities too. Pork bellies, for instance.
Dan- You have a typo in your bio in the upper right of this page.
Hi, I’m a big fan (from Spain). Are you speaking anytime soon in Spain? I’ll have to check that gold vending machine out!
They are in Germany as well and allow people, who wish to own gold as an investment, to buy it in small amounts without paying the exorbitant fees demanded by banks. There is also a plethora of small shops offering to buy gold in small amounts such as jewellery, tooth fillings, coins etc.
Dan, the guys put out the vending machines to address a niche brought about by economic uncertainty. In Asian cultures it has been common to buy jewelry as a sign of prosperity and for rainy day money. Not long ago, we did the same in Europe. Even today after every crisis commodities such as gold sore and with the current uncertainty about the Euro, the small nuggets attract a lot of interest from all folks. Let me know and I can put you in touch with the people behind the business idea.
Well gold is often sold as “paper” and because they want only cash, are you are receiving a piece of paper with the amount of gold you “own.”
I am a skeptic that the machine can offer you physical gold being the price of gold is fluctuating like mad and is now at an all time high. (or it may be EBAY gold, which can be a weighted metal covered in gold, but not a pure product. (even though it states that it is)
Ooops, I forgot to also add ” oooooooooh shiiiny!”
I think there is another reason and why they don’t need to take Credit Cards. In 2001 I met a group of Spanish real estate developers in South America, after the Euro was introduced. They bought all kinds of gold watches and jewelry as well as partying like hell. When I asked, how they can afford this, they told me: “Well, after next year we can’t!” They needed to spend any pesetas they hadn’t declared! I believe with the Euro under pressure they machines will continue to pop up – as cash only.
I think they do not have a credit card option, because it decreases the problem of fraud. If the machine is good at detecting counterfeit currency, it’s going to be pretty hard to defraud the machine.
Dan
If you want to hedge the depreciation of the dollar with precious commodities, I would go long gold rather than silver. Silver is at all time high against Gold. If you are long gold you would have the tailwind at your back rather than facing the headwind.
Silver Update
One of the participation banks in Turkey started giving gold sheets from ATM machines. Ok, jewellery may be acceptable, but I can not get the point of their view of giving sheets of gold. I really could not guess who the target segment is.
Dan,
I’m really disappointed that you didn’t offer an explanation for why people have a special regard for gold, because I’ve always wondered about that.
This post reminds me of another post you did on the value of a different commodity: black pearls. This made me think of that, because your post on black pearls inspired me to write about the Gold Standard and how the value of things seems to be arbitrary (http://allyourcode.wordpress.com/2010/12/13/what-is-value-reflections-on-the-gold-standard/). In the case of black pearls, it’s somewhat easier to understand why they’ve come to command the value that they have, because there was a single event in history that caused black pearls to go from low value to high.
With gold, it much less clear. It seems that people have prized gold since the early days of recorded history. It’s also remarkable that different cultures similarly place high value on gold. I don’t think this can be fully explained by its chemical/physical properties, or its rarity.
Since economists love talking about “value” so much, it’d be nice if we had a clearer idea of what that actually means.
Daniel
I could be wrong but I understood that gold was used to stabilize the value of currency. The majority of the gold above ground is held by governments, banks and other institutions. We all know about Ft. Knox which holds about 6% of the above ground gold. Because the value of my money is based on the value of gold then when the value of gold goes up so doesn’t the value of the money in my pocket. With other metals such as copper, when the supply of copper goes down then the value goes up. Also the value of a hamburger on the show “Survivor”. I believe that gold vending machines are novelties or sucker traps and no more.
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nice informative post, thanks for sharing.
very very interesting.
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capital gold
I don’t think this can be fully explained by its chemical/physical properties, or its rarity.
I agree, as palladium, platinum etc. never are not prized as much as gold. Why?