Gold has been a very popular trade for investors over the past few years, as prices doubled between 2008 and 2011 due to the global economic slowdown. While these rising prices have made investors wealthier, the general public has largely been on the wrong side of the trade, with so-called cash-for-gold shops springing up and acquiring gold jewelry.
PMX Communities Inc. (OTCQB: PMXO) aims to reverse this trend by providing easy access to gold for Main Street consumers instead of just Wall Street investors. With its gold dispensing terminals, the company sells 24 karat .9999 gold bullion bars and coins with unique patterns and designs that make them both a collectible and an investment.
World’s First Gold Dispensing Terminal
In December of 2010, PMX Communities tested the first US gold vending machine at the Town Center in Boca Raton, a shopping mall in Southern Florida.
On January 4, 2013, the company re-launched a new touch screen gold dispensing terminal with the ability to accept credit or debit cards instead of cash which was all the first terminal had accepted from its customers. The financial and operational results associated with the new MGIV machine haven’t been publicly disclosed, but the company noted in a recent phone interview that the machine regularly attracts crowds with numerous transactions per day.
Assuming the same average transaction as the first machine, the company could be generating strong revenues this quarter. A 20% to 25% gross margin would then result in good operating income per machine per quarter, with a presumably low overhead cost per machine in place.
Scaling this business model into multiple states and locations (the company is already launching its second terminal) could therefore possibly result in significant near-term revenues for investors.
Souvenirs, Collectibles & Investments
PMX Communities’ gold machines sell 24 karat .9999 gold bullion bars and coins with unique designs that are customized based on the machine’s location. Ranging in price from $99 to more than $799, the gold bullion bars and coins serve as souvenirs for tourists, collectibles for collectors, and easy investments for the general public.
The unique designs on the gold bullion bars and coins include 2-gram palm tree and eagle bullion bars for $189, 1/10-ounce Cleopatra and Caesar coins for $289 and a 10-gram lion for $799+. In addition to a palm tree 5-gram bar, there is a 5-gram bar designed with a hole in the center, making it possible to wear as a necklace, and a 1-gram bar with a hole that can be added to a charm bracelet or worn alone as a necklace. Moving forward, the company plans additional designs and patterns based on location and year.
These coins are priced with a 20% to 25% built-in operating margin and change when gold moves up or down more than 10%, while the company also agrees to repurchase any gold bullion that’s no longer desired by consumers. Given these dynamics, consumers can be sure they’re getting a fair deal relative to many other physical gold providers.
Looking Ahead & Other Considerations
PMX Communities gold dispensing terminals are a unique concept that could prove very successful in the United States and around the world. With two U.S. Provisional Patent Applications and an International Business Method Patent, the company may soon have exclusive rights to unattended precious metal distribution systems, methods and apparatuses, limiting potential competition.
The success of the company’s first MGIV gold machine has also set the stage for a second dispenser planned for Florida and additional ones throughout the U.S., Canada and around the world. With its low capital requirements and consistent profitability, these machines could generate significant returns for shareholders over the coming quarters and years.
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