Lemmings Continue to Pay Too Much For Investment Gold
We commented back in September 2008, that some 'investors' with more money than sense were paying excessive premiums for gold coins.
It seems to be getting worse!
The behavior of lemmings is much the same as that of many other rodents which have periodic population booms and then disperse in all directions. Lemmings of northern Norway are one of the few vertebrates who reproduce so quickly that their population fluctuations are chaotic, rather than following linear growth to a carrying capacity or regular oscillations. It is unknown why lemming populations fluctuate with such variance roughly every four years, before plummeting to near extinction.
The behaviour of real lemmings seems very similar to that of human lemmings. For the past few months, we have seen and heard of people paying stupidly high premiums to buy very ordinary, common gold bullion coins. Paying an unnecessarily high premium contradicts one of our first advice guidelines about investing in gold, namely "Buy in the Cheapest Form".
While for many years it was believed that the population of lemming predators changed with the population cycle, there is now some evidence to suggest that the predator's population may be more closely involved in changing the lemming population.
There are plenty of people out there who will happily take advantage of lemming behaviour by asking and getting very high prices for sovereigns, Krugerrands, gold bars, or any other form of gold bullion that buyers are stupid enough to pay too much for.
While many people believe that lemmings commit mass suicide when they migrate, this is not the case. Driven by strong biological urges, they will migrate in large groups when population density becomes too great. Lemmings can and do swim and may choose to cross a body of water in search of a new habitat. On occasion, and particularly in the case of the Norway lemmings in Scandinavia, large migrating groups will reach a cliff overlooking the ocean. They will stop until the urge to press on causes them to jump off the cliff and start swimming, sometimes to exhaustion and death. Lemmings are also often pushed into the sea as more and more lemmings arrive at the shore.
The suicidal behaviour of human lemmings is harder to understand. Humans are generally reckoned to have the highest intelligence of all animals. The "investment" decisions of the human lemmings who pay 27% premium for Krugerrands is almost impossible for any normal, rational person to understand.
Today we happened to notice that an eBay vendor had just sold 8 Krugerrands at prices between £655 and £675 each. This is between 17% and 21% premium. When we looked at the recent purchasers feedback, one of them had paid an incredible £745 plus £10 postage for a very ordinary 1974 Krugerrand. This auction ended on the 5th January at 15:49:48 GMT. The 3 p.m. gold fix on that day was £587.73, making a premium of 27%.
We can only conclude that the buyer has more money than sense!
Myth or Reality?
The myth of lemming mass suicide is long-standing and has been popularized by a number of factors. In 1955, Carl Barks drew an Uncle Scrooge adventure comic with the title "The Lemming with the Locket". This comic, which was inspired by a 1954 National Geographic Society article, showed massive numbers of lemmings jumping over Norwegian cliffs. Even more influential was the 1958 Disney film White Wilderness, which won an Academy Award for Documentary Feature, in which footage was shown that seems to show the mass suicide of lemmings. A Canadian Broadcasting Corporation documentary, Cruel Camera, found that the lemmings used for White Wilderness were flown from Hudson Bay to Calgary, Alberta, Canada, where they did not jump off the cliff, but in fact were launched off the cliff using a turntable.
Due to their association with this odd behavior, lemming suicide is a frequently-used metaphor in reference to people who go along unquestioningly with popular opinion, with potentially dangerous or fatal consequences. This is the theme of the video game Lemmings, where the player attempts to save the mindlessly marching rodents from walking to their deaths.
Nobody seems to be compelling the current crop of human lemmings to stampede into overpriced gold. They appear to be doing so voluntarily. Like real lemmings, we suspect they cannot read, and do not take advice, but simply follow some kind of primeval urge into a state of mass hysteria.
Help a Lemming
It seems a shame to let untold numbers of human lemming throw away their money like this. If you know of any human lemmings, perhaps you could do them a favour. Read this page to them. You may need to speak slowly, and probably also to repeat yourself, but it's all in a good cause. You may also wish to read a few of our other investment advice pages to them. Failing this, perhaps you could get them sectioned under the Mental Health Act.
Don't Buy From Dishonest & Greedy eBay Sellers
Sure, this is easy advice to give, but how does one know which eBay sellers are dishonest, and which are honest. The easy answer might be to say that they are all crooks, but this might just the sort of hyperbole that only Jeremy Clarkson could get away with. Over a period of time, we are starting to believe that there are more dishonest eBay vendors than there are honest ones. Certainly almost all of them are happy for buyers to pay over the odds, and because there are a majority of "private" sellers, possibly small or part time dealers, few of these will worry about goodwill. These are predators who will take your money if you are stupid enough to overbid.
On other pages of our website, we analyse the economics of buying and selling investment gold bullion via eBay, and we conclude that, in normal markets, it will be a waste of time and effort for most buyers and sellers. There is also a high risk factor of fraud. We would only advise you to buy investment gold on eBay as a gamble, and don't expect to win!
One clue to dishonest eBay vendors is to look at the photographs they use. If the photographs look like those on our website (or the sites of other bullion dealers), then there is a very good chance the vendor has "borrowed" (stolen) them. This is dishonest. If you are stupid enough to buy from dishonest people, don't be surprised if they cheat you too!
The reason we noticed the 8 Krugerrand mentioned above is that the vendor mine2blue used our copyright photographs of a Krugerrand without our permission. Naturally we reported him to eBay along with the rest of today's catch.
The market is in constant flux, but we have a few pages of "best buys" which we try to keep current. Sensible alternatives include newly minted sovereigns instead of secondary market ones. These will cost a few percent more than we normally charge for "our choices bullion sovereigns", but will still be bargains compared with the eBay lunacy we have already mentioned.
As an alternative to one ounce Krugerrands, we have regular supplies of newly minted Australian one ounce gold coins, including Kangaroo Nuggets, and Chinese Lunar Calendar coins. Again these cost slightly more than we normally charge for "our choice one ounce bullion coins", but only slightly more, and certainly much less than the lemming prices. quoted above.
The Lemmings Computer Game
The behavior of the creatures in Lemmings is based on the popular myth that lemmings mindlessly move into danger en masse. In order to save at least the required number of lemmings, the player must determine how to assign a limited number of eight different skills to specific lemmings that allow the selected lemming to alter the landscape, to affect the behavior of other lemmings, or to clear obstacles in order to to create a safe passage for the rest of the lemmings, sometimes even by means of sacrifice.
Sounds like the human lemming on eBay, except that, while we are trying to save them from their own stupidity, greedy eBay vendors are trying to encourage them in their suicidal behaviour.
The goal is to guide a certain percentage of the green-hair, blue-shirted lemmings from the entrance to the exit by clearing or creating a safe passage through the landscape for the lemmings to use. Unless assigned a special task, each lemming will walk in one direction ignoring any other lemming in its way (save for Blockers), falling off any edges and turning around if they hit an obstacle they cannot pass. They die if they fall from a great height, fall into water or lava or off the map, or get caught in a trap; they also die after being assigned the bomber skill.
As in the game, we will be doing well to save even a few lemmings from their own destructive behaviour. Unlike the game, in real life, it feels so much harder to make any difference.
When playing the computer game, only a simpleton would feel sorry for the lemmings. Perhaps it's a psychological flaw in our character that we can't stop ourselves wanting to help the real life eBay lemmings!
Mike Dailly, the first employee of DMA Design and one of the programmers for Lemmings, has provided a detailed history of the development of Lemmings entitled "The Lemmings Story". Dave Jones, founder of DMA Design and more recently, developer of Grand Theft Auto (Is this a feature of eBay Motors?) and Crackdown (In price on eBay?), also has commented on the development and success of Lemmings.
Originally, the concept of the gameplay results as a quick demonstration of being able to create an animated character in a 8x8 pixel box as part of development for Walker, a sequel to Blood Money.
Is "Blood Money" another name for extortion?
We can't help wondering what the highest price, or premium, is that somebody has been daft enough to pay. If you have heard about a higher price, or higher premium, paid, please let us know.
September Silly Season
2008 was the first year things failed to get back to normal.
In October 2008, it already looks like gold buyers are in a festive and merry mood.
Nearing normality in November?
We hear that our order for 5,000 x 2008 new "bullion" sovereigns from the Royal Mint is still on or ahead of schedule, and we should receive them on or before the 8th December date we were previously given.
We also have an order for a further 5,000 new "bullion" sovereigns, which we believe will be ready for us on 6th January 2009.
We would remind potential investors to read our "flexibility" page, part of the gold investment advice section of our website.
You may wish to look at our gold investment advice page.
Please be aware that for callers to our showroom hoping to buy Investment Gold we must see two forms of identification. Please see our identification page for further details.
There are now live spot gold prices available on this website, please see our gold prices page.
Don't be a Lemming