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The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017


By Robert M. Doroghazi, M.D., F.A.C.C.

Buying Jewelry: Gold, Diamonds and Pearls

Issue #468, April 30, 2017

    This may be just me, but I don’t like costume jewelry, and I don’t think I’ve ever given any as a gift. Rather, I’m going to give you some tips on buying the really serious bling: gold, diamonds and pearls.
    With all jewelry, there are 3 components to the cost at retail 1) the material, 2) the workmanship/fabrication costs, and 3) the retailer’s profit. Let’s start with a very low-end engagement ring: Say the ring costs the jeweler $500 at wholesale. They mark this sort of material up as much as 200% to a retail list price of $1,500. This is the bread and butter for your local jeweler: it’s what keeps them in business. The more expensive the diamond, the less the markup. For a quality, 2-carat stone, the markup is much less: A) there are fewer buyers, B) they are more sophisticated, and C) the jeweler only needs to sell one to make $5 or 6 or 7K.
    You buy your wife a tennis bracelet (if you buy this sort of thing for your girlfriend, you are “achin’ for a breakin’ and cruisin’ for a bruisin’”) that has 2 oz. of gold and sixteen 1/8 carat diamonds = 2 carats total. Two oz. gold = $2,600, the diamonds = $3,000. The workmanship is first-class and costs $1,000. The dealer’s mark-up is $2,400 = $9,000. Of course, don’t forget the sales tax of 7% = $630 = $9,630.
    Three years later you want (or need) to sell the bracelet. The jeweler, who was so pleasant and solicitous, wearing the neatest ¼ oz. US Gold Eagle cuff-links you ever saw in your life, now seems like a different person. They are serious, and anything but sympathetic. “Doc, I’ll give you $5,000”. “What, I paid almost twice that much. Remember when I bought this from you”? “Doc, the gold is worth $2,600, and the diamonds are pretty small (RMD comment: That’s not quite how they were described when you bought them), so they’re worth about $2,000. Diamonds have dropped a lot in value. But you’ve been a good customer, so I’ll give you $5,000. You won’t get a better price anywhere else” (RMD comment: unfortunate, but probably true).
    Here are the 2 main points of this newsletter:
No matter what the quality of the workmanship, in the end,
all jewelry is worth only the “melt” value of the components.
You want to buy jewelry at wholesale, not retail.
    My recommendation: only buy “used or antique” jewelry at the jeweler or pawn shop, at an estate sale, someone (usually an elderly lady) selling their personal collection, or an acquaintance who needs money. Your goal is to avoid the fabrication costs (which are a one-time thing) and as much of the dealer mark-up as possible.
    In Jan, 1973, I graduated a semester early from college and then worked 9 months at Granite City Steel. I bought a Bulova Accutron for $180 (about $1K in today’s depreciated money), billed as the first truly accurate watch, to within a minute a month. The mechanism was based on a tuning fork. If you held it to your ear, you could hear the tone (a professional clarinet player told me it was Concert G Sharp). The watch, after multiple repairs, finally died in 2009 (36 years, not bad).
    The local jeweler stood behind the attempts to repair the watch, and we worked out a deal. He had just taken in hock a 2002 model Rolex President, sold in 2007 and never worn; thus not “new”, but never used. I got it for 1/3 of the cost of the 2009 model. It was one of the best purchases I ever made, and the jeweler made an instant 10% profit.
    I believe your goal should be to have a quality watch with a gold case (not gold-filled, but gold), some gold cuff links (French cuffs are so much more classy than regular cuffs), and for your wife a good ring, several gold and jeweled necklaces (with or without matching ear rings), a quality string of pearls, and 1 or 2 gold and jeweled bracelets. You can never go wrong with diamond stud ear rings.
    I can just see you scratching your heads and hear you muttering “what has Doroghazi been smoking to recommend spending this kind of money on bling”. Well, many people won’t notice what you’re wearing, but the people with serious money, the kind of folks you want to impress, notice quality immediately, and may even ask you about it. This is heirloom-quality material that will hopefully be in your family for generations. “When grandma gave this to me, she said grandpa gave it to her on their 25th anniversary”.
    Another reason, and one of the main reasons people with “old” money often have serious jewelry, is because it is portable wealth. In 2009, Betty Williams, 1976 Nobel Peace Prize winner (along with Maired Corrigan for their work in Northern Ireland) spoke here at the U. of Missouri. She routinely traveled to some pretty rough places, and was wearing the most serious jewelry I’ve ever seen (the value had to be far into 6-figures). Diane and I agreed: it was her ticket out if things went bad.
    I have a friend born in Estonia just before the outbreak of WW II. Her father was a nuclear physicist. Whenever her mother got any extra money, she purchased gold jewelry. It got them on the last ship out of Estonia back to Germany when the Soviets invaded, and after the war got them to the US.
    Be patient; it’s going to take a long time to accumulate quality jewelry like this. And be opportunistic. Hopefully, this will be in your family for generations. 
    The DJIA and S&P 500 remain close to all-time highs, but haven’t broken out.
    1) If we get meaningful tax reform, it will unleash the animal spirits.
    2) The NASDAQ, led by big tech, broke to a new high (Amazon, AMZN, is revolutionizing retail. I’ll talk about that more next week). The Russell 2000, a broad measure of stocks, briefly broke to a new high, but couldn’t follow through.
    3) The VIX (Volatility Index) remains low.

    China launched its first air craft carrier made wholly in China. The flight deck at the bow slants upwards, as compared to all US carriers where the flight deck is flat.
    RMD comment: I use this to illustrate a point I learned early in my study of Medicine that applies to just about everything in life: when you do something different than everyone else, you’re either really right or really wrong. The only way there is progress is to challenge things that are wrong, but likewise, most things are done as they are for sound, logical reasons. Ex: if the book says to treat syphilis with penicillin and you use mercury, unless you know something no one else knows, you are wrong. 

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