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Local

Skyrocketing prices, need for cash reasons people are selling gold

Aaron Brunson, an employee with The Gold Refinery, untangles jewelry brought into Kishwaukee Community Hospital in DeKalb on Nov. 12. After appraising the gold, Brunson paid the client $140.
Aaron Brunson, an employee with The Gold Refinery, untangles jewelry brought into Kishwaukee Community Hospital in DeKalb on Nov. 12. After appraising the gold, Brunson paid the client $140.

DeKALB – The garden level at Kishwaukee Community Hospital was filled last week with merchandise being sold to benefit the hospital auxiliary.

But the people sitting at a long table near the display weren’t selling – they were buying. Gold, to be exact.

The four-day buying event by Michigan-based business The Gold Refinery is one example of the surge in interest in turning unwanted gold into cash. As the price of gold has skyrocketed, Americans have seen a growing number of places willing to buy their jewelry and coins. Beyond the traditional pawnshop, there are events like the one at the hospital, mail-in services and storefronts that are strictly dedicated to buying gold.

Businesses like The Gold Refinery travel, buying gold jewelry, coins, even dental fillings. The host of the event is paid a percentage of the money the business makes from recycling the gold. Last year, the hospital auxiliary made $8,000 after hosting the same company, director Paula Von Ende said.

“For us, it’s a win-win,” Von Ende said. “People sell their gold and receive a nice amount, and the hospital auxiliary receives a portion of the sales.”

In India and the Middle East, the gold-recycling industry is well established, but it is a relatively new phenomenon in the West, said David Schraeder, spokesman for industry group The World Gold Council. The group’s third-quarter report on world supplies and demand for the metal showed the supply of recycled gold from Western countries has risen steadily over the past four years, boosting the world supply 41 percent over 2009.

According to the trade group, global demand for gold is high, particularly in developing nations such as China and India, where gold jewelry has cultural significance and demand is increasing for consumer electronics with gold components, like smart phones. The price of gold has risen about 22 percent this year, peaking at a record $1,424.30 an ounce Nov. 9.

Pat Delaney of Belvidere Collectible Coins has seen the number of sellers at his stores in Genoa and Belvidere steadily rise over the past three years. He attributes some of the interest to the high prices people can get for their gold and some to the need people have for quick cash.

“You really have two things working,” Delaney said. “You have the price that’s very high and the economy being bad.”

The price of gold is driven by the fact that it is an exhaustible resource and by currency fears in the global recession, said Stephen Karlson, an associate professor of economics at Northern Illinois University.

“Because a lot of central banks are effectively printing more money, there are people who are scared their paper money might lose value,” Karlson said. “Gold is an inflation hedge, and a lot of it is driven by fear.”

For people selling their gold, there is little downside to taking advantage of the high prices, Karlson said. But he cautioned there is a chance buyers might be investing in what economists call a speculative bubble.

“All of the money that used to be sloshing around in hedge funds or dot-com stocks or McMansions may be a lot of the money now bidding up the price of gold,” Karlson said. “No economist, no business guru, no fortuneteller knows the day or the hour at which a bubble will pop. But when it ends, a lot of people might end up holding the bag.”

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