Gold Fever Hits Montana

By Mike Stark, Billings Gazette, Mont.

Jan. 16–There’s gold in them thar … teeth?

Yep, and gold fillings along with necklaces, watches, clasps, rings and anything else containing that precious metal has been a hot commodity, especially in the past few weeks.

On Saturday, more than 150 people poured into Ardie’s Coins on Grand Avenue over six hours. Many of them were looking to buy or sell gold, which has reached record prices — not accounting for inflation — fluctuating on either side of $900 per ounce since late last week.

Silver is also at a 28-year high.

“It was standing-room-only,” owner Ardie Halvorson said of last weekend’s rush. “It was definitely a record day.”

Down the street at First National Pawn, customers have walked in carrying jewelry, coins and other items scrounged up to take advantage of the bullish prices, said manager Ryan Johnson.

“People have been digging around,” he said.

Some have even rummaged up their old teeth with gold fillings. Johnson said they often drop the teeth into soda pop to separate out the gold fillings. That gold can then be smelted and used later for jewelry or other products.

Gold business picked up at the pawnshop about three weeks ago and has been brisk as the price continued climbing.

“It’s skyrocketing, but we expect it to go higher,” Johnson said.

Part of gold’s value, of course, is its rarity. All of the gold in the world that’s been refined so far could fit in a cube 60 feet tall, wide and deep, according to an estimate by the Los Alamos National Laboratory. Most comes from Africa. Most U.S. gold production is in South Dakota and Nevada.

The price of gold has long been tracked by investors.

It hit a record in 1980 at $875 per ounce, which is more than $2,000 in today’s dollars.

It remained below $500 until about two years ago, when it began a sustained climb. Prices rose steadily in 2007, from $625 an ounce in January and approaching $900 at year’s end.

It finally topped that milestone on Friday. After reaching a high of $913, it closed at $901 on Tuesday.

The prices may make gold investors happy, but they’re also a window into the public’s concerns about the U.S. economy.

Billings commodities broker Scot Miller said strengthening gold prices have often been seen as a barometer for concerns about inflation. It may also be a reflection of worries about the weakening dollar, the mortgage crisis, the sluggish stock market and rumblings about a possible recession approaching. Underlying all that may be that the Federal Reserve allowed interest rates to remain too low for too long, he said.

“Obviously, there’s a certain amount of money looking for an alternative place to go,” Miller said.

Precious metals like gold have been seen by some a safer bet in turbulent economic times.

“We’ve been spending about a million (dollars) a month for the last three months,” said Wayne Miller, of Wayne Miller Coins in Helena.

The seller-to-buyer ratio has been about 20 to 1 at his shop. Those who do buy are banking that prices will continue to climb.

“I’ve been telling people to sell into these run-ups,” Miller said.

One man came into his store on Tuesday to sell $20,000 in gold that had been sitting in a drawer at home, he said.

With higher prices, gold dealers are on the lookout for scammers. Most gold pieces include carat markings. There’s also an acid test for quality.

So where will gold prices top out?

Miller said he’s been waiting for months for a price correction, but it hasn’t happened. He figures it may dip down to around $800 sometime in the coming months but could also rally back, making a run toward $1,000 an ounce.

Halvorson said that price, once unthinkable in the precious metals market, may be within reach. Much depends how the national and international economic picture shakes out.

For now, gold dealers are just trying to keep up with the changes. A dry-erase board with precious metals prices in Halvorson’s shop sometimes gets changed twice a day.

“We’ve been busy,” Halvorson said.

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Copyright (c) 2008, Billings Gazette, Mont.

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