BY KAREN CAFFARINI, POST-TRIBUNE CORRESPONDENT
Record-high gold prices of more than $1,060 an ounce are creating a modern-day gold rush of sorts, with cash-strapped people hurrying to their jewelry boxes to dig up old class rings, earrings without a match and any other gold jewelry they can find to bring in extra cash.
But gold buyers and industry watchers warn not to get too excited. The $1,048 per ounce of gold bullion reported at the end of the the market Friday is the spot price, explained Tom Moriarty, owner of Aaland Diamond Co. in Merrillville, which buys gold, other precious metals and other items.
"The buyer generally pays more and the seller gets less. Everyone makes a profit," Moriarty said.
He said a 22-karat gold ring is 90 percent gold and will fetch more cash than a 10-karat ring, which is only 40 percent gold. The remainder he said is an inexpensive alloy to hold it together. He said wedding bands tend to be 10 or 14 karats, old class rings generally are 10 karats, but modern-day class rings have virtually no real gold in them and are worth nothing on the gold after-market.
He said the price of all precious metals -- including silver and platinum --have risen drastically, causing many people to come to his shop in the Twin Towers off Interstate 65 to bring in unwanted and broken jewelry, coins, even grandma's good sterling silverware. He showed one package containing a ring with no stone, broken chains and one earring of a set that someone had brought in earlier that day.
Moriarty takes the gold he buys to a smelter, who will melt it down for him to remove impurities so he can make new jewelry.
"Gold is completely recyclable. You may be wearing some gold today that was in jewelry Cleopatra wore," he said.
Jaishankar Raman, an associate professor of economics at Valparaiso University, said the price of gold and other precious metals is high worldwide right now for three reasons -- the poor economy, the fact that many people believe gold is a more stable investment than the stock market and an effective marketing campaign by those who want people to buy gold.
"Despite the fact that the stock market is up, people are still wary of investing in it. The price of gold is not just up in the United States. In India and Asia, the demand and cost are significantly higher," Raman said.
Published reports have also cited the weak dollar and the fact that the dollar may no longer be the currency of choice to base oil prices on have also caused the price of gold to rise.
Raman said while the price of metals could plummet, as it has done in the past, metals are a good investment if you are in it for the long haul as the prices have consistently risen.
As for selling your family jewels and grandma's silverware, he stressed caution.
"For some people, the gold is the only asset they have and they don't need it, so they might as well sell it. But be careful. You could be taken advantage of. Do your homework first," Raman said.
Moriarty agreed people could get ripped off by unscrupulous buyers. But, he added, people need to know that not everything is valuable. "Costume jewelry has no value and neither does silver. If something is sterling silver it will have sterling imprinted on it 99 percent of the time," he said.
