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Eyeing Dow, many go for gold
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Rick Fine, owner of Sandel’s Loan Inc. & Pawn Shop, 306 W. Federal St., said he doesn’t think the price of an ounce of gold can climb much higher than its current rate. Gold on Tuesday set another record high.
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Tom Bartholomew, owner of Tele Gold, 8051 Market St. in Boardman, said gold sellers are more scarce today than in late 2009, when the price for an ounce first topped $1,000. He said he bought three times as much back then, when gold was $1,000 to $1,200 an ounce.
- Dow Drops:
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- 8/11: Big dip in Dow to drag on, analysts fear
- 8/10: Dow soars 429 points on Fed statement
- 8/10: Eyeing Dow, many go for gold
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- 8/9: How low will it go?
- 8/9: Local stocks see losses
- 8/9: A worldwide plunge: Experts predict 1 in 3 chance of another recession
- 8/9: As markets buckle, some investors look to buy
- 8/9: Questioning S&P’s political judgment
- 8/9: On Wall Street, fear takes over
By Karl Henkel
BOARDMAN
Michelle Pacella walked into Tele Gold Jewelers on Tuesday afternoon with the intention of unloading some old jewelry.
The 39-year-old former jeweler had three 14-karat necklaces and a 10-karat gold necklace.
By the time she left, she was $1,
238 richer, having capitalized on a golden opportunity.
“They’ve just been sitting in my closet and they didn’t really have a significant meaning to me,” she said of the jewelry. “So I thought, ‘Why not try and sell it?’”
Pacella shares a similar story with many from the last few months who have capitalized on the world’s biggest commodity boon: gold. On Tuesday, it set (another) record and is now valued at $1,740 a troy ounce on the Comex division of the New York Mercantile Exchange. (Earlier in the day, it traded at $1,782.50, an all-time high.)
It’s now valued at nearly the same amount as platinum, which Rick Fine, owner of Sandel’s Loan Inc. & Pawn Shop, 306 W. Federal St., said normally outprices gold by $500.
There’s no end in sight for gold’s value, but Fine said the peak could be coming soon, and the “gold bubble” could burst at any time.
“I couldn’t foresee gold over $1,200 an ounce,” Fine said. “You’re sort of reaching the point where it can’t go much higher.”
The price of gold is at a record high, but it’s below its most valuable level of all-time. Gold was $850 at its peak in 1980, which adjusted for inflation, translates to $2,400 an ounce.
It has risen about $300 an ounce in a little more than a month, surprising many, including Tom Bartholomew, owner of Tele Gold, 8051 Market St.
Bartholomew said the continued rise — it’s up 23 percent this year — has exceeded sellers’ expectations.
Their presence in his store isn’t what it was a few months ago.
“We bought more when it was at that $1,000 to $1,200 range [beginning in late 2009],” he said. “We bought three times as much. I don’t know whether it was because it was the first time it ever hit $1,000 or what.”
The sellers have seemingly cashed out.
The buyers, however, have and will continue to experience nightmares, Fine said.
“In retail, gold used to be between $15 and $20 per gram,” he said. “Now you’re talking $50 or $60 per gram.
“It’s the kind of thing where the average person isn’t going to be able to afford chains and bracelets.”
Such was the case of Sarah Corey of Boardman, who also visited Tele Gold, on Tuesday.
She said she’s been looking for a gold chain to hang a pendant since the Fourth of July and has watched as gold prices only continue to rise.
“I guess I’m going to have to wait on the chain,” Corey said grudgingly.
Flonnoya Franklin, president and CEO of FJF Wealth Management, said the gold rush has been an “overreaction” and that the value will soon crash.
“I wouldn’t touch gold right now,” he said. “If you look at any commodity ... I think it’s the most overdone on the upside or the downside period.
“I’d say buyer beware.”
The gold rush, as some are calling it, has continued as the nation’s economy suffers, and the U.S. dollar continues to weaken.
But if the economy bounces back, as it did Tuesday with the Dow Jones Industrial Average’s 430-point bump, gold prices should inversely react and return to more stable levels.
“People will go to gold when there’s any uncertainty, political unrest or the situation we’ve seen in Washington,” said Brian Laraway, partner and vice president of Bury Financial Group in Poland. “But there’s no dividends and no interest.
“People want to get rewarded for what they invest in.”
Laraway said above all, supply and demand will eventually take over and correct gold’s value.