By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
Some aspects of the gold craze provide a sense of déjà vu — especially the fear-flavored, right-wing sales pitches. In the 1990s, it was fear of a "new world order." Now it's fear of a liberal president. And always, there's fear of economies imploding and the paper dollar's value falling to zero.
Republic Monetary Exchange, for example, advertises heavily on conservative stations KFYI (550 AM) and KKNT (960 AM), the latter of which sometimes dubs itself the "Republic Monetary Exchange Studios." Last year, Republic Monetary sponsored a motorcycle ride to benefit the families of fallen law officers.
On a macro level, no new cases like North American Coin have arisen, but warnings have sounded of boiler-room operations that use high-pressure tactics to overcharge customers. Goldline, the company endorsed by Glenn Beck, has faced such accusations — and one call to Goldline proves critics correct.
When New Times inquired about the price of gold with Goldline, a sales representative suggested buying Swiss 20 franc coins, which contain about one-fifth of an ounce of gold, for $404 apiece. On the same day, about a dozen gold dealers on Web sites such as www.austincoins.com, priced the same coins from $273 to $311.
Whatever a person's political stripe, it's wise to heed the words of experts: Potential gold buyers or sellers should shop around to get the best deal. Those planning a deeper plunge into the purchase of precious metals as an investment ought to become knowledgeable about the game.
Deal with the wrong characters, and you might end up struggling to recoup your losses 20 years from now, like the former customers of Clark and Unkefer.
No one knows why or when gold became humanity's favorite treasure.
Anthropologists cite its gorgeous, warm, shiny-yellow appearance and malleability as reasons that humans — long before civilization — considered it to have intrinsic value. And, of course, the rarity of gold helps make it special. If all the gold mined throughout history were melted down and fashioned into a giant cube, geologists say, it would measure just 66 feet on each side.
Gold's status as a basic, universally accepted form of money means nearly everyone would like to own a pile of it — at least long enough to sell it, anyway. It's a highly liquid commodity, able to be turned into cash faster than nearly anything else.
Greed for gold has destroyed friendships (as depicted in Treasure of the Sierra Madre), and empires (see the Spanish conquest of the Aztec empire).
Both gold and its little sister, silver, indeed have come in handy for people throughout history during times of economic calamity. When currencies fail, as they did during the French Revolution and post-World War I Germany, gold still spends like cash. Governments have a history of debasing their money — ancient Rome's debasement of silver coins is a famous example. When the Roman Empire was healthy, its coinage contained plenty of pure silver; near the end of the Empire, it contained mostly junk metals.
Consider this fact: No "fiat" currency (that is, money declared to be money by a government) has lasted forever. Mike Shedlock, who publishes the popular Global Economic Trend Analysis Web site, wrote in an extensive June 2007 article about money that "government-mandated fiat currency simply does not work in the long run. We have empirical evidence galore — every fiat currency in history has failed, except the present one, which has not failed yet."
Then again, it's also true that all governments in history have failed, except for existing ones. How can anyone prepare for a United States that even closely resembles Germany after WWI? And if such a catastrophe unfolds, will gold get you through? (In this Road Warrior-esque view of total financial collapse, conservatives like Glenn Beck suggest that you'll need guns to keep that gold).
Putting aside the world-gone-to-hell theory for buying gold, there's the more practical reason: making money.
The lead-up to the exorbitant gold prices of today began in 1971, when President Richard Nixon ended a 25-year-old system of trading in gold at the fixed price of $35 an ounce. Gold prices started going up big-time after that and peaked in the record-setting years of 1980 and 1981.
Demand for gold climbed steadily through the 1970s, following Nixon's move and an economic downturn called stagflation, a term used to describe a time of high inflation and unemployment. As gold entered a period of extreme fluctuation in the early 1980s, some people made a boodle — while those who got into the game too late got hosed.
Buyers in the first days of January 1980 could snatch up gold for about $550 to $650. Then, on January 21, the price spiked at $850 an ounce. Yet, by January 31, it had lost a quarter of that value and ended the year below $600.
For the next 25 years, gold prices ranged from about $300 to $450.
No doubt, those kinds of wild fluctuations make many Americans think twice about buying gold at today's price of roughly $1,200 per ounce.
Gold boosters note that the trends are different this time. Gold's big rise in 2006 hasn't descended to the $450 or so seen throughout much of the 1980s and 1990s.