Business

<< Previous   of   Next >> Henny Ray Abrams / Associated Press  (click to enlarge) Window shoppers stop in front of a store on 47th Street in New York's diamond district Wednesday.   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Thursday, November 12, 2009 Gold skyrockets as dollar grows weaker Associated Press CHICAGO — The new gold rush is on. The price of the precious metal is soaring, hitting a record $1,119 an ounce Wednesday — confounding market analysts who thought there was no way gold would remain so expensive when it first cracked the unheard-of $1,000 mark last year. The remarkable run has implications far beyond savvy investors. In New York's diamond district, more people started showing up late last year to sell their gold, and the crush hasn't let up, said Anthony Iannelli, owner of Iannelli Diamonds. “They're bringing in jewelry from the '70s and '80s they don't wear anymore,” he said. “They're following the news and see prices are high. They realize they have a little cache and want to take it out of the vault.” Typically, gold is a safe place for investors to park their money, not something they buy to make money. It doesn't earn any interest, and because it's always sought-after, its value tends to be fairly stable. This time investors are buying gold to protect themselves against the falling dollar. Currencies are weak investments around the world because of record-low interest rates. Foreign banks that hold substantial amounts of U.S. debt, such as China's, want to diversify their holdings. News earlier this month that India's central bank bought nearly $7 billion worth of gold from the International Monetary Fund triggered a frenzy of gold buying. The surge has been remarkable. Gold is up 7 percent just this month, and 26 percent for the year. Some forecasters see it going to $1,200, $1,500 or beyond — unless the buying frenzy comes to a halt. Some analysts are panning the gold speculation. “You just don't see increases like this over the short term” that last, says Steve Condon, director of investor advisory services for Truepoint Capital in Cincinnati. “This isn't materially different from gambling.” Nevertheless, people across the country are cashing in. More than 100 people a day now come to sell their gold at Ernest Perry's antique and estate jewelry store in Charlotte, N.C., up significantly in recent weeks. But the rising price of gold has put a dramatic dent in jewelry sales, already suffering from the recession. Far fewer customers are looking to buy gold jewelry because of the soaring price, Perry said. “I think it will just about kill the gold jewelry business” if the price rises and remains above $1,500 an ounce, Perry said. He predicted silver would become the primary metal used in jewelry if gold prices drive customers out of the market. For the most part, though, demand for gold is coming from investors and speculators, not from people who actually want to use it. Perry said customers looking to sell their gold should go to dealers with plenty of experience and expect to get, on average, about 70 percent of the current price. And there are other ways to get into gold than selling family heirlooms. There are gold funds, publicly traded gold mining companies and gold bullion or coins, depending on what makes someone the most comfortable. No way is certain to be the safest or most lucrative. And of course, there's no guarantee the bubble won't burst. READER COMMENTS Log in or register to post new comment | Log out weaker dollar = higher prices . people in this country are really stupid when it comes to economics. The dollar goes up, gas prices go down. The dollar goes down & gas prices go up. Gee, so it is with "precious metals". This also goes for everything you buy at your local shopping place. Everything you buy is no longer built, or in many case... grown, in this country ---so there is virtually no way to control the price of the item ---as it is compared to the price of the dollar ---which is falling in value. Since the 70's, we have turned our nation from a producer, into an importer. In other words... we are a nation of consumers, with no real income to buy these products, as we do not produce anything to sell. We rely upon our past wealth & credit to milk us out of every cent we have. Don't blame democrats or republicans for this, as BOTH support this insane economic policy. Just understand it & realize there is nothing you could have done to prevent it. No doubt... the "end" of this policy can be seem on past episodes of Sesame Street. Unfortunately, no one on WALL Street seems to care, nor do politicians, or YOU, as consumers, comprehend. cme everett | Nov 12, 2009 3:42 am | 0 replies | View all | Post reply | Request removal

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