Gold Rush: Soaring Prices, Unscrupulous Precious-Metals Dealers, Right-Wing Paranoia -- We've Been Down This Yellow-Brick Road Before

Page 3 of 9

Record gold prices can frustrate people of limited means, who are suddenly paying a lot more for Valentine's Day presents and wedding rings. But there can be benefits, too, if you cash in unwanted jewelry with one of the gold-buying shops that have sprung up around the Valley.

Modern-day gold fever also has brought the possibility of shenanigans.

The gold-buying outlets — often just a couple of rooms, an inexpensive gold-testing kit, and a financial backer with a boatload of cash — could easily be taking in stolen goods. Unintentionally, or not.

The shops, which most cities license as secondhand dealers, are regulated by ordinances that are difficult to enforce. The city of Phoenix, which has licensed more than 600 secondhand dealers, deploys just five police officers to verify compliance with the 10-day waiting period that dealers must observe before sending the cashed-in jewelry to companies that melt it down.

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.

Because the customer base for gold is perceived to be right-wingers, it is hawked by the likes of conservative broadcasters Glenn Beck, Rush Limbaugh, and Gordon Liddy.

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).

KEEP PHOENIX NEW TIMES FREE... Since we started Phoenix New Times, it has been defined as the free, independent voice of Phoenix, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.