Ounce for ounce, pound for pound, few things are worth more than gold.
It’s the hottest commodity around and it’s becoming even more popular for investors.
This modern-day gold rush has people rummaging through jewelry boxes and drawers to trade yesterday’s treasures in for cash.
Some of the reasons for selling are practical. When Shelley Smith needed money for grad school two years ago, she sold off gold jewelry that belonged to her mother, who had recently passed away.
She didn’t want to resort to student loans and said the gold had no meaning to
her. “I know my mother
would (approve of) me using it for betterment,” she said.
She made $3,500 from the sale, half of what she needed to obtain her degree.
Geoff Beattie, owner of Barclay’s Fine Custom Jewellers in Oak Bay, has been buying gold on a daily basis from clients like Smith.
He knows the rush is on.
“Everyone is aware that gold is at an all-time high,” he said. “People read it in the paper and since it’s been peaking, it is now at $1,500 an ounce. People are bringing in their gold if they are not wearing it.”
About 12 years ago, he said, gold was selling at between $350 and $400 an ounce. “We did do the odd trade of gold, but it wasn’t anything near what it is today.”
Brian Kotila, manager of Olde N’ Gold on Fort Street, said the reasons for people selling are as varied as the customers.
“But there are two main thrusts: people who need the money or don’t need the merchandise,” he said.
The past two years have been busy for Beattie. “Once it got over $800 and broke $1,000 it was seen as a milestone. Who knows what will happen? It could go up or down. It’s not the first time that gold has spiked and dropped dramatically.”
Bruce Crowle, vice-president and investment advisor for RBC Dominion Securities Victoria, said the pricing is a matter of supply and demand.
“The gold market is not a huge market. One of the big factors in gold pricing is the fact that no additional supply from mines has come into place in the last 10 years and the demand for gold for investment purposes has skyrocketed in recent years,” he said.
India, Russia and China are buying much of the gold. The sixth-largest holder of gold is SPDR Gold Trust, which trades on the New York Stock exchange and owns more than $53 billion of the material.
“When you buy gold and hold it in vaults around the world, there is less supply in the marketplace,” Crowle said.
Years ago people wanting to buy gold would purchase it through a jewelry store or their local bank and then pay to insure it and store it.
These days it can be bought and sold on a daily basis in RSP accounts, investment accounts and exchange-traded funds.
“Historically, gold has had a relationship with inflation and a lot of investors move to gold when there is uncertainty in the world,” Crowle said. “In our opinion, gold is meant to be a portion of a client’s overall investment portfolio and not to make up their entire portfolio.”
For those looking to divest of gold, ads on TV suggest mailing it in for cash. Beattie doesn’t recommend it, adding that people looking to sell should go with someone they trust.
“We are recyclers of gold. People sell it directly to us and then we send it to the refinery in Toronto.”
There are many other jewellers who are reputable and safe for this transaction, he said.
“A lot of people are reluctant to put metal into an envelope and send it off to a business. The prudent thing to do is deal with people you know and shop around to see if you are getting a fair price.”
Beattie has had people in his shop looking to sell more than $5,000 of gold jewelry, but the majority are in the hundreds.
Past predictions of gold’s pricing have been inaccurate, Crowle said, but it has been in a bull (rising) market for 10 years after a few decades of underperformance.
– with files from Emma Prestwich