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Gold's Price Surge Spurs Sellers, Investors

Posted on: Thursday, 11 May 2006, 21:05 CDT

By Charlotte Tucker, York Daily Record, Pa.

May 11--It's not quite a modern-day gold rush, but if the price of the yellow metal keeps climbing, it might be.

Bill Crone, owner of Crone's Coins in West Manchester Township, said he's seen more activity both from buyers and sellers of gold recently, as the price of gold has surpassed the $700-an-ounce plateau.

Wednesday afternoon, gold rose to a 25-year high of more than $705 an ounce.

"I've seen customers who bought in 1980 when it was real high," said Crone, who's worked in the shop -- once his grandfather's -- for 48 years.

Those customers from 1980 are finally able to sell their gold without taking the huge losses they would have faced if they'd sold when gold was at $400 an ounce in early 2004.

So far, Crone said, he hasn't had anyone come in seeking to sell class rings or other jewelry for scrap, but he doesn't rule out the possibility. During a spike in gold prices in 1980, many people sold class rings for their value in gold.

"We're about $100 (an ounce) away from that," Crone predicted.

Gold prices topped $700 an ounce Tuesday for the first time since 1980. The price of gold has risen 40 percent since November, a figure that doesn't surprise coin dealer Ray Copenhaver, owner of Copenhaver Coin Exchange in Hummelstown.

"It's a supply-and-demand thing," said Copenhaver, who said he thinks instability in the Middle East is a major reason for the current spike in prices.

"If the gold is being bought up by countries to use as payments for wartime efforts, then there's less of it to go around," he said. Crone, Copenhaver and Dennis Steinmetz, who owns coin shops in Lancaster and York, were divided about the immediate future of the gold market.

"I think this market has teeth," Steinmetz said. "We'll probably see an adjustment at some point, but then we might see it go up again."

The all-time-high price of gold was $875 an ounce in January 1980.

Copenhaver said he doesn't take many risks with his gold investments.

"I can't say I do think (the prices) will keep going up," he said. "I don't hold onto gold thinking it's going to go up. I take my 5- or 10-percent profit and move it along."

Steinmetz said the customers in his two stores who are buying gold are mostly interested in the American Eagle gold bullion coins, which are minted in tenth-ounce, quarter-ounce, half-ounce and one-ounce sizes. The coins are sold strictly for their gold value.

Other coins -- such as the historic U.S. gold coins minted between 1795 and 1933 -- command prices for their rarity beyond just gold value.

The U.S. Mint's platinum bullion coins also have benefited; platinum hit an all-time record price of $1,265 an ounce Wednesday.

Those who are selling gold coins now are mostly people who have inherited coins from parents or grandparents and are liquidating now that prices are high, Steinmetz said.

Of course, gold isn't just for investments.

Jamie Bovender of Oletowne Jewelers in West Manchester Township said he hasn't been doing much buying lately.

"Luckily, the gold that we have in the store was purchased way before the gold market went up," he said.

If the price stays high, he said, the price of gold jewelry would go up, too, for jewelers and their customers.

"Technically we wouldn't be raising prices, but the prices would be higher because we're paying more for the gold," Bovender said.

GOLD FACTS:

--24-karat gold is considered pure gold, and 12-karat gold is considered 50 percent pure.

--The average man's gold wedding band weighs one-third of a ounce. With gold at $700 an ounce, that man's ring in 24-karat gold would be worth about $233, while a 12-karat ring at that weight would be worth about $116. A ring made of 14-karat gold would be worth slightly more than the 12-karat ring. These are values on the ring's metal content, not its artistic design.

Source: Bill Crone, Crone's Coins

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Source: York Daily Record

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