MOUNT VERNON — Investors who placed their faith in the world’s most popular precious metal are striking gold. With gold prices at an all-time high, more and more investors view the precious metal as a safe investment in uncertain economic times.
One local dealer of precious metals wasn’t surprised.
Mike McKee, owner of Mount Vernon Coin & Collectibles, tracks precious metal prices daily, and said he wasn’t surprised at the spike in gold prices. McKee is a self-proclaimed gold bug — someone who believes gold is still the most recognizable and valuable form of currency, as opposed to paper currency, which is highly subject to economic factors such as inflation.
Gold futures climbed to $880 on Tuesday, their highest level ever. In January 2007, gold was $650 an ounce. Analysts say prices are ever-increasing because of skyrocketing oil prices, turmoil on the international stage, the mortgage crisis and talk of a recession in the United States. An ounce of gold for February delivery peaked at $884 on the New York Mercantile Exchange on Tuesday, almost $10 higher than the previous record of $875 set in 1980. It later settled at $880.30. The declining U.S. dollar and rising oil and other commodity prices have made gold appear more attractive and safer for investors, particularly long-term investors.
This should come as good news for people with old gold jewelry, gold coins or trinkets containing gold, some of which may be stowed away and half-forgotten.
McKee said such items are what he calls “scrap gold.” Their value is determined not by what they are — a ring or a coin — but by the amount of gold they contain.
“Now is a good time to sell,” he said. “It may get better, but it probably won’t get worse.”
McKee said inflation should be considered when discussing the record set this week. Gold prices today are, in effect, much less than what they were 28 years ago, he said. In 1980, gold reached a then-record $875 an ounce, which, when adjusted for inflation, would be about $2,115 to $2,200 today.
McKee said he expects to see an increase in the number of people bringing in scrap gold to sell. He said that for whatever reason, it takes the public a little awhile, perhaps two weeks, to react to an increase in the precious metals market. He said some may never have considered selling their gold or silver until the prices have skyrocketed; others keep their items until prices reach the level they want.
“Speaking locally, all it portends to me is it brings people into market to sell,” he said. “Personally, I think gold will go even higher, but I don’t really know where.”
McKee said the higher gold prices go, the more he pays for the scrap gold and the more he makes when he sells it. But record-level gold prices can benefit everyone involved, he said. He said some of the people who now call asking about gold prices should have invested four years ago when he opened up at his current location at 9 W. Gambier St.
At that time, gold prices were less than half what they are now. McKee added that some local residents did invest in gold and other precious metals at that time, and are now reaping the benefits.