The gold price kissed $3,500 last week before backing off. The yellow metal’s price has churned violently up and down $50 to $100 daily. For some gold bugs this price level seemed unimaginable without there being shooting in the streets. It’s the Central banks that are violently depreciating the value of their currencies.
While some central banks buy, the average Joe and Jane are digging through inherited jewelry boxes for gold to meltdown. “Everyone’s like, ‘If I have some gold jewelry, if my grandparents or my mother or father left me something, maybe I can get some money for it since everything else is down and inflation is killing everyone’s purchasing power and consumption,’” said Alex Arakeloglu, a sales associate at Capri Jewelry in downtown Los Angeles. “I hear it all around the Jewelry District.”
The LA Times reported, “For [Rosie] Juda, 56, it’s about taking advantage while gold is a hot commodity. The timing is especially fortuitous, with two daughters in college and hefty tuitions to pay.
“‘Priorities in your life change. Do I want all this stuff sitting in the safety deposit box’ the retired set decorator said. ‘Let it go, it’s just time.’
“Over the next two hours, jeweler and collector pored over nearly 40 pieces, separating them into neat piles. Kazanjian persuaded Juda to keep some of the rarer items as-is, and will redesign a few others to give them a fresh look.
“The largest was the melt pile, a mound of discarded jewelry for which Kazanjian offered to pay Juda $9,500 — a figure she calculated by estimating the grams of pure gold in each piece and multiplying it by the current market price of the metal, before subtracting melting and processing fees. She’ll write Juda a check at the end of the session and take the items to a refinery in the Jewelry District.”
Lui Salina, manager of Capital Pawn in Great Falls, Montana told reporter Aneesa Coomer, “As the price [of gold] has gone up, we’ve been seeing people want to sell theirs more because they bought it at such a lower price. A lot of what we see that people are really wanting to get rid of is bullion. As far as jewelry and stuff, we still see quite a bit more with prices this high.”
Famed investor Warren Buffett, unlike his father Howard (pen pal with Murray Rothbard), is not a fan of the yellow metal. He called the precious metal a “sterile” asset, telling Berkshire Hathaway Inc. shareholders in a 2011 letter that “if you own one ounce of gold for an eternity, you will still own one ounce at its end.”
True enough, but, as Ardell Halvorson, the owner of Ardie’s Coins in Billings, told Aneesa Cooper, “When I started the business, [gold] was $255 [per ounce] back in 1993. So it’s gone up about 11 times since then. It’s quite a difference.”
Others see it differently. Merryn Somerset Webb writes on Bloomberg that gold’s price has her nervous…for the short term.
We here at Merryn Talks Money have been writing for years about how gold is the best portfolio insurance there is. You should have it, but also you should hope it doesn’t go up too much. That’s because if it does, it’s mostly because something has gone horribly wrong somewhere. Inflation, geopolitical disaster, currency instability, sovereign debt sustainability worries, trade wars—that kind of thing. Think of gold as a full-on fear asset and you’ll get the idea.
The late Burt Blumert once told me “in tough times fortunes change hands.” For some, that time has come.
