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'There is fear out there': People are taking advantage of higher gold prices

Kitco News

Photo courtesy of House of Kahn Estate Jewelers

(Kitco News) As gold prices hit multi-year highs in 2019 and beginning of 2020, people lined up to sell their most precious gold items, citing fear of the always-rising stock market, according to one American jeweler.

The U.S. has a growing aging population that is looking through their old jewelry boxes and taking advantage of higher gold prices to support their lifestyle or help their kids out, House of Kahn Estate Jewelers president Tobina Kahn told Kitco News last week.

Kahn, who owns two family stores in Palm Beach, Florida, and Chicago, Illinois, reported a 50% increase in business in 2019 as people rushed to sell their gold.

Kahn said that selling grandma’s old jewels offer a great opportunity now with February gold futures trading at $1,582 an ounce, up 0.79% on the day.

There are more people selling than buying gold at the moment, she pointed out.

“There is a lot of fear out there, which helps gold. We have a virus out there. It is beyond bad. People are making their own beliefs on what they hear in the news,” Kahn said.

The economic situation is looking bleak and the retired population, which is living longer, needs additional funds.

“People are realizing there is something wrong with the stock market. Average American is becoming smarter. They are realizing there is something wrong with this mathematical equation … Why are the tech stocks up that much? People see it as a false sense of security,” Kahn said.

The fear comes from political and economic uncertainty. “Political tensions are a problem. People see the impeachment and they become worried. There is so much sensationalism around this,” she added.

Photo courtesy of House of Kahn Estate Jewelers

The Federal Reserve is not going to be raising rates this year, Kahn stated, noting that more and more people see the advantage of owning gold.

“People are very concerned about inflation. They want to protect their wealth,” she said. “A lot of them are living on a fixed income. Their bank accounts are not paying the interest they need to sustain their lifestyle. They don’t want to take a risk at their age.”

Low-interest rates are a real problem for savers, Kahn explained. Why not sell something that is not being used instead?

Almost every person in the U.S. and Canada has a gold item that is just sitting in a box somewhere and not being used, Kahn said.

“Maybe they got as a gift 20 years ago. It is outdated. But the price on that item is not going to be outdated,” she said. “They can get a high price on gold items these days. We see older people living longer and requiring more funds to live the lifestyle they need. And children and grandchildren do not want these old items, they rather have the money.”

When it comes to gold coins, Kahn advises people to keep the coins in their original shape and not transform them into jewelry format.

“Older people have coin jewelry. And this is back in the 1960s. They would get a coin for a wedding and they would make it into jewelry. The coin value is ruined. Nobody thought in the 1960s, that gold would be what it is today … When gold was at $300 an ounce, no one was paying attention,” she said.

Photo courtesy of House of Kahn Estate Jewelers

And now, with the U.S. debt is more than $20 trillion and central banks around the world buying up gold, people realize the benefits.

Kahn sees gold prices rising to $1,800 by year-end as geopolitical uncertainties continue to boost the precious metal.

“When central banks like China and Russia stop buying gold, then I’ll worry,” she said.

The jeweler also pointed out that it is a healthy sign that gold is not going down below the $1,550 an ounce level. “For gold, a steady incline is a lot healthier than just going up $200 in a day … [And now] gold will never go down to $1,100 anymore,” she added.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.