Uncertainty in the global market is pushing gold prices to historical heights.
The situation has some people cashing in and others buying to insulate themselves from stock market fluctuations and possible currency devaluation.
“Gold, and especially gold with other precious metals, has historically been the place to put your money in times of uncertainty,” said Raimo Marttala, chairman of the Vancouver Island University’s economic department.
Marttala said the demand for gold is partly psychological, because people are worried about the state of the global market. He said Canadian currency hinges on how well the economy is run.
Economic problems in the U.S. and Europe are fuelling the increases.
There is no reason for the U.S. to default on its loans, Marttala said, but the political environment is creating problems. But in Europe, Greece, Portugal and Spain don’t have the financial capacity to pay.
“In terms of the global economy, there aren’t too many bright spots and that feeds uncertainty. Where do you put your money?” said Marttala.
The situation erodes confidence in currencies and leads more people to invest in gold, which can devalue, but has never become worthless, unlike some currencies.
Wayne Sampson is cashing in on the high prices. He recently sold two cufflinks inherited from his parents. He’s sold items before and was watching the gold market carefully over the past couple months.
“The price of gold, geez I can’t believe it,” said Sampson.
People coming in to sell gold is a daily occurrence for Lance Marsh, a gemologist and owner of Marsh & Son Jewellery Service.
He’s been buying gold for the last five years and in the jewelry business for 20. Marsh said he was surprised how much gold is in the community.
“The gold market has nearly doubled over the last two years,” he said. “People get a lot more money from the items they sell.”
Bill Carter, owner of Bastion Jewellers, can’t keep up with the demand for people interested in buying bullion – gold bars.
Jeff Ross, owner of Gold Silver Guy, said some seniors are investing because they lived through a time when their money was devalued overnight and they don’t want to get caught in that situation again.
Carter cautions sellers to shop around and get multiple estimates. He also warns against sending gold to buyers through the mail, saying people should only part with it once they have money in their hands.
“Shopping around is really the wise choice. The prices people give are dramatically different,” said Carter.
Carter said gold has increased steadily. About five years ago, it was trading at $600 and 10 years ago it was going for around $300. Gold prices hovered around $1,770 mid-week.
“It’s the highest it’s ever been,” he said.