Stocks are down. The dollar is down. Home values are down. But drop by your neighborhood coin or pawnshop, and clearly something is up. The price of gold is...
Stocks are down. The dollar is down. Home values are down.
But drop by your neighborhood coin or pawnshop, and clearly something is up.
The price of gold is soaring out of sight. And with its price nudging $1,000 an ounce, potential buyers and sellers are turning out.
For some Seattle-area residents, this is the time to sell. Pawnbrokers report women are pillaging their jewelry boxes and bringing in old gold pieces.
Most Read Business Stories
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Fired after organizing, Starbucks baristas turned down a payout and took their bosses to court
- Frontier cancels flight, citing maskless passengers
- 6 Dr. Seuss books won't be published for racist images
- The penthouse atop Smith Tower is on the rental market for the first time
“It’s people all across the board,” said Nancy Robinson, owner of Cash Company Pawnbrokers in Redmond. “People are selling their broken pieces. And women are selling bracelets from old boyfriends that they never wore because of bad memories.”
Robinson said sellers may get only $130 for a 10-gram (0.35 ounce), 14-karat necklace, but that’s triple the price of five years ago.
At Dave’s Jewelry in the White Center area, a salesman said the number of people pawning their gold has jumped about 50 percent compared with two years ago. Most are selling out of need, not greed, he said.
“Most of them say they need to buy gas. They’re serious.”
Daniel Hoolahan, manager of the West Seattle Coins shop, has had similar experiences.
“A girl walked in today with an ounce of gold, and she couldn’t pay her rent,” he said. “So she sold the gold coin her grandma gave her.” The young woman pocketed $982 and walked out satisfied.
It would surprise no one that sellers are taking advantage of the metal’s record highs. But the far bigger trend, gold dealers say, is the surge in interest from people wanting to buy.
Ross Hansen, owner of the Northwest Territorial Mint in Auburn, said gold sales volume has shot up eight to 10 times normal in recent weeks.
The other day, a client sat across from him, ready to invest in gold. “And if I told you who, you would know his name,” said Hansen, who wasn’t telling.
At West Seattle Coins, Hoolahan said he is seeing more new buyers. “Some people look like they haven’t much money on them, but they still want to invest in it,” he said.
Other Seattle coin shops confirm a surge in interest, though one owner said the buying and selling has been even.
Hansen said people are buying gold because they’re worried about the economy and the falling value of the dollar. The credit crunch, sinking home values, and soaring oil and food prices are making gold look like the safest place to put some cash. In times of crisis, gold tends to hold its value or go up, he said.
In addition, more interest-rate cuts by the Federal Reserve could send the dollar even lower. And when the dollar falls, gold prices generally rise.
Gold customers are “very concerned about the future economic prospects of the U.S.,” Hansen said. “You do get a lot of paranoia.”
There is, of course, one other reason people are buying. Chatter on the Internet that gold could shoot to $2,000 an ounce has attracted investors.
Experts, however, are mixed about the future of gold prices. A trader for MF Global in New York is on record for predicting gold could reach $1,500 an ounce if the Fed keeps chopping rates.
But Jon Nadler, a senior analyst at Kitco Bullion Dealers of Montreal, is skeptical. A gold-watcher for three decades, he expects by summer that bankers will get a grip on their problems, the dollar will begin to recover and gold will sink to “more-normal” levels of $650 to $750 an ounce.
Nadler argues that edgy hedge funds are ready to take a profit, while slowing demand from jewelers and growing supply will force gold back to earth.
In January 1980, as inflation soared, gold shot briefly to $850 an ounce. But speculators began to sell, and a year later gold had tumbled a third to $570.
Gold fans point out that even though the yellow metal may not bring riches to all, it could bring financial stability.
Bryan Geraghty, owner of Northgate Rare Coins & Precious Metals, said some customers are buying gold as a way of “forced savings.”
“We’ve had fishermen come in and they’ll buy some gold because that way they can’t hit [their savings] in the ATM machine.”
He’s seen retirees, doctors and lawyers spend tens of thousands of dollars on gold. Coins are more popular than bars, even though they sell at a slight premium. Geraghty says people believe they are safer because governments make them.
As for the future price of gold, the veteran coin dealer doesn’t hesitate. Geraghty is certain of what’s to come.
“It’ll definitely go up,” he says. “Or down, or stay the same. It’ll be one of those three.”