BELLEVUE, Wash. -- The storefront at Bellevue Rare Coins is busy. So busy, on Saturday security video showed lines going out the door.
On a week day, the store sees plenty of people waiting to sell their old gold jewelry before the price drops any more. Meanwhile, others are sensing a buying opportunity and are purchasing gold bullion, Canadian Maple Leafs and other gold coins they can lock away in their safety deposits until the price of gold rises again.
The demand is so high, the store has to order more gold to sell. Most of the jewelry is bagged up and then sent to assayers and a future date with a melting torch.
So what’s going on with gold? In August of 2011, white gold hit a peak of $1,900 an ounce. But Monday saw the steepest one day decline in gold in over 30 years on the London exchange, down nine percent, off more than $140 an ounce after a lousy Friday. On Tuesday, gold was down again, at $1,378 an ounce in London, off another $17, but started the day higher.
Is this the sign that the gold bubble is bursting like the stock market did back in 2008?
“Gold is not like that,” said Prakash Vasudevan, one of the people who came in to spend thousands buying gold as an investment. “It’s a commodity. It’s like investing in real estate. It can have ups and downs, but you won’t end up losing.”
Gold prices took off as the world economy and the stock market crashed in 2008. But gold has risen steadily year after year back to 2001.
Gold industry experts say the price faces a mixed bag of indicators. Inflation remains low, which is a driver for gold and holds out promise for higher returns. But stocks are hitting new highs, which is a factor that tends to drive gold prices down. One reason for the sell-off: concerns that financially troubled Cyprus could start dumping gold reserves.
“There’s no doubt that a large sum of people believe this is a buying opportunity,” said Eric Hoolahan, Bellevue Rare Coin’s manager. “I don’t think it’s anywhere close to being over.”