All that glitters is not pure gold
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Dear Mr. Berko:
In October 2008 I asked you if I should buy 300 shares of Universal Display, then trading for $12 a share. You said I was “nuts,” but told me to place an “open order” at $5 and, if it executed, to place an “open to sell order” at $10. In November I bought 300 shares at $5, sold them in January 2009 at $10 and made $1,300. Enclosed is an advertisement from the highly prestigious New York Mint offering a new gold Koala coin from Australia for $180. The coins are 24-karat and 99.999 percent pure gold and will be eagerly sought after by collectors, according to my conversation with a person at the mint. They only have a few thousand of them, and I’d like your thoughts about buying seven coins with my Universal Display profits. If the price of gold doubles in a year to $1,800 an ounce, I’d more than double my money, because these Koala coins also have a collector’s premium added to their value. Please tell me what you think of my idea. Or do you think I should buy back Universal Display, which is now $7.78 a share? Please answer as soon as you can because the mint person tells me there are not “many coins remaining” and I don’t want to miss a golden opportunity.
M.M., Jonesboro, Ark.
Dear M.M.:
I had dinner several months ago with a good friend who was visiting the States from Barcelona, Spain. He and his crew were doing research for a comedic European film series (sort of like “Candid Camera”) on U.S. television, radio and print advertising. It seems that Europeans have three favorite pastimes while visiting this country: 1. watching televangelist programs; 2. watching TV commercials broadcasting cockamamie claims to U.S. audiences; 3. listening to preposterous commercials on satellite radio.
Europeans believe that American consumers are dumber than Elbonians, who also drool like fools over product presentations on radio, TV and print media. Europeans are incredulous that we are so incautiously naive and effortlessly swayed. And I’m convinced that the reason most Americans don’t own more of those cute 135-pound, $4,000 Arcovian pigmy elephants is that pet shops have yet to offer them for $25 down and $25 a month.
I can’t “finger” out where you parked your brains after flawlessly following my Universal Display Corp. instructions this past October. But if you find them, they would tell you not to buy those damn-fool, silly coins at $180 a pop. Those things are a royal rip-off at $180, and the New York Mint, whatever that is, would be ripping you off royally. Jumping Jack Sprat, John and Jerry, that Koala coin contains only 0.04 ounce of gold. Now, if gold is $900 an ounce, then the gold content of that Koala coin is worth a niggardly $36 American. So gold would have to zoom up to $4,500 an ounce just for you to break even. That’s not expected to happen until March or April of 2046 and you may not be vertical then.
That New York Mint isn’t a mint, and it isn’t prestigious. It’s a clever, hotshot retail organization with 60 employees who sell highly overpriced stamps, books, jewelry, paper currency, ornaments, foreign coins and other baubles and kitsch to brainless idiots and suckers like you. Meanwhile, you can buy those Aussie Koala coins today on eBay for an overpriced $90 each. This should tell you that the very prestigious New York Mint is giving you a very prestigious royal shaft.
Forget about Universal Display Corp. (PANL-$7.78). I have a close acquaintance who has owned a block of PANL shares for almost a decade, and he zealously, fervently, passionately and ardently believes the stock has the potential to trade above $100. He’s been preaching PANL for 10 years and could eventually be right. However, I think cats will bark before this stock reaches $100.
In my opinion, the only way for PANL to trade above $100 would be a 1-for-12 reverse split. PANL’s business is the development and commercialization of organic light emitting diodes; the company licenses this technology to end users. But PANL hasn’t earned a pfennig, penny, peso or pound since Truman dropped the bomb, and in the last 10 years its cumulative losses exceed $130 million. The company won’t make any money this year even with its extremely impressive technologies, and 2010 doesn’t look promising either. I can’t imagine a compelling reason to own this stock, but it might be a good idea to place another open order, once again, to buy 300 shares at $5.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2009 Creators Syndicate Inc.
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