News » Citydesk

Is Gold Golden?

"Somebody's going to get stuck with a lot of gold."


Record-high gold prices and the speculation about them have become the topic du jour across the nation. The New York Times, Wall Street Journal and other news outlets have questioned the world's renewed interest in the yellow ingots--with prices ebbing closer to the highs of the early 1980s--suggesting that an over-valuation of gold could lead to a new economic bubble waiting to burst.

But is it really an investment alternative for Treasure Valley citizens?

Historically, as paper currency has plummeted the demand for commodities-based investment has surged, with both investors and the average Joe putting their income into something more tangible--gold and real estate being the obvious choices. With the real estate market in the tank, people are turning to gold, driving the price up to a temporary high of $1,409 per ounce on Nov. 9.

That price is about 70 percent of the record-high value in the early 1980s--well below the "record high" decried by the media. That begs the question: What will the future of gold be?

"Channel 7 came in 2008 when the prices started to rise ... we had a massive surge [in gold]," said Bob Ingersoll from Boise's Bargain Pawn. "We were buying and selling left and right. Now, most of these people are selling us gold that they've been accumulating for over 15 to 20 years."

He feels that the "gold bubble" has got to burst--and soon.

"Somebody's gonna get stuck with a lot of gold," he prophesied.

George Soros, founder of the Open Society Institute, has been quoted ad nauseam claiming the same result. But people continue to look toward gold, citing the Fed's controversial quantitative easing plan to inject--essentially "print"--more American dollars into the world economy to drive costs down and maintain near-zero interest rates to keep development chugging.

If real estate was the fashionable investment pre-2008, gold is apparently it for 2010. And it seems some of that sudden interest is spilling over to other commodities markets--at least here in Boise.

"In the last two weeks we've seen a lot more silver than gold," said Dan Templeman, owner of The Treasure Valley Coin Exchange. "This month silver rose so much more than gold ... whose price has mostly stayed the same."

When asked about his opinion on the reason, he said: "I have none ... there are just too many variables."