A Golden Opportunity

BY MILLIE MUNSHI
September 20th, 2009

With gold jumping above $1,000 an ounce, inquiries from people interested in selling it have jumped fivefold in two weeks at the House of Kahn Estate Jewelers in Chicago.

“Every time we hit the $1,000 mark, we see this phenomenon of people stepping in to sell their gold,” said Tobina Kahn, a company vice president. “They sell their old jewelry sitting at home, things they got as gifts. They need instant money.”

“The days are over when gold was just a luxury jewelry item,” said Kahn, whose Chicago store is at 60 E. Walton. “Now, people want to sell it or melt it.”

Randy Cohen, co-owner of the Royal Pawn Shop, 428 S. Clark, says a $24,000 solid gold Rolex watch was pawned for $7,000 last year. Today, he says, he’d probably have to give the guy $9,000.

“Every day we buy tons and tons of gold,” Cohen said.

Standard Bank Ltd. predicts prices will rise 7.8 percent by the end of the year, to $1,100, and Barrick Gold Corp., the world’s biggest producer, is spending $5.6 billion to bet the rally will continue.

“I think it’s going to keep going up,” said Kahn.

Consumers rushing to cash in have scrap sales, including used jewelry, estimated to rise 22 percent in 2009, said Philip Klapwijk, the chairman of industry researcher GFMS Ltd.

People are selling as the recession sends the jobless rate to the highest level since 1983. The economy has erased $13.9 trillion in household wealth, according to the Federal Reserve.

The jewelry wasn’t worth nearly as much five years ago, when gold lingered around $400 an ounce on the Comex division of the New York Mercantile Exchange. The precious metal also fell as low as $253.20 in 1999, a year when the S&P rallied 20 percent and the U.S. economy grew 4.8 percent.

This month’s rally above $1,000 was sparked by signs of a rebounding economy and concern that increased government spending will stoke inflation.

“There’s not that much difference in value between $950 or $1,000 gold,” said Michael Musheyev, an EZSellGold co-owner. “But when everyone sees that $1,000 level, or they hear about it in the news, it makes them go gaga.”

But Kahn warns that a lot of gold jewelry is not 100 percent gold and won’t fetch the $1,000.

“People want a quote over the phone, but they have to bring it in,” she said.

A survey by Bloomberg showed 10 of 12 analysts, traders and investors expect gold to top its record.

“I think it’s going to keep going up,” Kahn said.

Bloomberg News with Sun-Times staff

House of Kahn Estate Jewelers
60 East Walton Street
Chicago, Illinois 60611
USA
312-943-9937

House of Kahn Estate Jewelers
231 Peruvian Avenue
Palm Beach, Florida 33480
USA
561-655-3743

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