Buying the best cable.


The manager of the largest mutual fund of the 1980's, Peter Lynch, once remarked that you can tell a company's return to its shareholders by the lobby of the company's headquarters. If the lobby was opulent, he found the return to the shareholders to be less than, say, a lobby with more modest means. So if your stocks have lobbies like Oprah's carriage house, you might want to sell at market.

I think the same holds true for audio cables. Instead of HQ lobby decorating, look at advertising budgets. For the last couple of months now, the back covers of both Stereophile and Absolute Sound featured advertisements from audio cable manufacturers. Not that there is anything wrong with this except for the fact that to advertise in one of these pubs, especially on the back cover, takes mucho bucks. I can see taking the back cover for two or three months, but the last six? Where are they getting all this dough?

While we all know we are over paying for these things, rest assured that no one is playing the high end audio con game better than these cable manufacturers who apparently have a lot of folks fooled into thinking they are actually worth the money. These Bernie Madoff students hit their margin number out of the oark on two counts: the previously mentioned price gouging and the low COGS (Cost of Goods Sold).

COGS cannot be contributing much to their overhead. What would raise their COGS and crush their already exuberant profit margin? Lets see, is it the end plugs? If they claim to make the technical advances on bananas and RCA plugs then how come they do not look any different? They maybe made of some special material in some special way, but how much does that cost? It can't be technology, Volta, Ben Franklin and Ampere all proved many years ago, before 2A3 tubes were invented, that conductance makes it work. I can make the case that conductors sound different (for example, silver sounding better than copper etc) but I cannot make the case for different kinds of copper or pure copper sounding different. Sorry, they are commodities.

Gold, Silver, Copper all trade on the COMEX exchange as commodities. Commodities have fixed prices, and metals are measured by the ounce. I really wanted to know the real price of a cable so I did some price checking. The spot prices on gold, silver, copper per ounce are:

Gold - $1249 / Oz, a solid gold cable, about 16 oz, $19,984
Silver - $19 / oz, a solid silver cable, 16 oz, $304.00
Copper - $ 2.85 / oz, a solid copper cable, 16 oz, $45.60

I figure that 16 oz will get me .5M.

Ah, I think I will go with a solid silver cable. Add about $10.00 for some nice connectors, some rubber tubing etc. - another $5.00 There is a cost of labor + shipping,another $20.00. So my COGS is $339.00.

What about my profit? Well that's easy, if I want to advertise back cover on my favorite magazine, my cost to you is $3700.00. But, you should hear them! They sound better than any cable you ever heard! They are made a special way, with pure lead-free silver ! (get it?)

Please email me if you want to buy my cables, I am working on my back cover ad copy now.

All the best,
Vic