The Gold Standard: Some Buyers Are Choosing Alternatives – but for Others, There’s No Substitute

By Bob Caylor, The News-Sentinel, Fort Wayne, Ind.

Dec. 20–GOLD PRICES — ranging from about $780 to $830 an ounce in the last month — haven’t been this high in a generation, but the boom isn’t hurting businesses that trade in the beautiful, costly metal.

At Fairfield Rare Coins, 3101 N. Clinton St., Jim Fairfield said the upswing has even been good for business. “Investors who bought gold at $300 or $400 are cashing in,” Fairfield said. More people are bringing in gold jewelry to sell, and buyers betting that $800 gold isn’t the top of the market continue buying gold coins.

The all-time price peak was $850 per ounce in January 1980. Adjusted for inflation, that’s $2,283 an ounce.

Even jewelry shoppers aren’t stopped cold by the price of gold, although “there’s a little sticker shock,” Fairfield said.

Some dodge the high prices by buying alternatives. The increase, said Aimee Utterback, president of Klingler Jewelers, 7557 W. Jefferson Blvd., has affected gold chains most as more people consider sterling silver.

Fairfield says the trend in wedding bands is toward titanium — “but that’s a fashion thing and unrelated to the price of gold. There is no substitute for gold. It’s been a store of value since before Christ walked the Earth.”

Utterback says in her business, gold is still overwhelmingly preferred in wedding bands and engagement rings. She sees only a slight move “in gents’ bands, to tungsten carbide and titanium.” Platinum is no answer: It costs twice or triple what gold does.

Utterback, who took over the business from her father, Bob Klingler, two years ago, says she only rarely buys gold from customers. When she does, it’s generally as part of a trade for jewelry.

The rising price of gold — up about $100 an ounce in the last two months, after doubling in the last three years and tripling in the last six — causes some problems, even if it doesn’t hurt overall sales. Fairfield said the wholesale price for common gold jewelry, such as gold chain, has risen in step with gold bullion prices.

“For gold chains, bracelets — standard 14-karat — I used to pay $10 or $11 a gram wholesale. Now I’m paying $22 or $23 a gram. It’s tough to keep up. I have things marked at $20 a gram retail,” he said.

“There hasn’t been a big jump in collectors,” he said, a segment important to his long-term success.

But, on balance, the rising value of gold is good for Fairfield’s business. Whether the trend is a reflection of scarcity, the increasing affluence of gold-loving Asian entrepreneurs, the weakening U.S. dollar or worries over the price of oil, it’s driving more shoppers to eye his display cases of gold coins. Because he depends on turning a small profit on many transactions, the surge in interest helps him.

“Sales volume is up, and that makes more profit for me,” he said.

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Copyright (c) 2007, The News-Sentinel, Fort Wayne, Ind.

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