Gold fever has hit Alaska anew, with anxious investors lining up to buy at $1,000 a troy ounce, and sellers unloading in the marketplace everything from gold teeth to wedding bands.
Photo by Margaret Bauman, Morris News Service - Alaska
Oxford Assaying and Refining Corp.s Toni Logan Goodrich stands before more than $500,000 worth of gold March 14. As gold prices reach $1,000 a troy ounce, investors are quickly buying the mineral. At the same time, sellers are unloading old jewelry, gold teeth and wedding bands.
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"When gold prices explode, we go crazy," said Toni Logan Goodrich, managing partner for Alaska for Oxford Assaying and Refining Corp. "We are selling more than we are buying; the opposite of what we expected, and it's not letting up. The higher gold goes, the more new faces we are seeing."
The last six weeks have been crazy, Goodrich said, and it's not just the gold. Silver is also at historic highs, at more than $20 an ounce, compared to the typical $5 an ounce.
While the bulk of business for Oxford Assaying is refining for the mining industry, the shop in Midtown Anchorage has been busy lately with customers coming in off the streets to buy and sell metals, particularly gold.
In February, the volume of checks going out for purchases was five times the norm for that month, and the trend is continuing into March, employees said.
"Historically metals have been used as a safe haven for assets," Goodrich said.
What surprised Goodrich is that the people who bought gold from January 1995 until prices started to rise in December 2001when prices were at $300 to $400 a troy ounce are not selling at $1,000 an ounce, but are buying more.
Those who bought at lower prices don't want to sell because they don't know what to do with the dollars, she said.
In November 2007, gold topped $800 an ounce for the first time in 27 years, and it has stayed there or higher ever since.
"The customers looking at protecting their assets are the upper middle class, people doing well. But they hear the dollar is not doing well, that the market may crash, so they are buying hard assets," she said.
Goodrich said she got an inkling something was up about a year ago, when a lot of stockbrokers started calling to say they wanted to invest in some gold.
"They were pulling their own dollars out of paper assets and putting them into gold," she said. "That was a clear indication to me that bad things are happening in the financial world. People in the financial market knew a year ago."
People also are buying silver, scooping up products ranging from 1-ounce silver eagle coins to 100-ounce bars.
"Silver is selling like crazy," she said.
Meanwhile, others who are having trouble making ends meet and worry about having enough money to put fuel in their vehicles are bringing in an array of precious metal object to be melted down, she said. They are placing on Oxford's counters old jewelry that was gathering dust, gold coins, gold teeth and wedding rings.
Goodrich points to the weakening dollar and the war in the Middle East, and said she sees no end in sight.
Steve Borell, executive director of the Alaska Miners Association, expressed little surprise.
"The price has not hit the price relative to what it was in the early 1980s," he said. "It still has $1,000 an ounce to go. The cost of fuel supply services is going up faster than the price of metals. As the price of oil goes up, the U.S. economy is in worse and worse shape. The balance of trade goes more and more to the Middle East, more and more money leaves our country, and the expectation is the price of gold will go even higher."
On the bright side for miners is that higher prices for precious metals means mining firms can raise more capital for exploration, Borell said.
Perhaps now the mines will make money and will have additional funds to invest in exploration.
"That's probably the biggest impact that we are going to see," he said.
Margaret Bauman is a reporter for the Alaska Journal of Commerce. She can be reached at margie.bauman@alaskajournal.com.
