A Holiday Gift Worth Its Weight In ... ? By Bradenton Herald
November 26, 2007
Yogi Berra's right. It is deja vu all over again. In 1980,
gold was trading at its all-time high of $850 an ounce. During
the meteoric run-up, many investment analysts and precious-metals
pundits predicted it would soon surpass $1,000. They're doing
With gold recently over $800 an ounce, "experts"
again are forecasting the same peak. Why? I wondered. Maybe
it's because 1,000 is a nice, round number. More likely, it's
because we have worldwide unrest, an unpopular war and oil
prices at record levels. Add to that the fact that wealth,
disposable income and opulent spending in China have never
been higher. Given those factors, I'd make the same prediction
- sort of like calling the winner of a race when the leader's
a full lap ahead.
But wait! Last week, gold dropped more than $10 an ounce
in just one day. Perhaps it's just a hiccup. Either way, gold
remains the expensive holiday gift of choice in the form of
jewelry, coins and bullion.
I suppose that, too, is understandable considering that biblically,
the Magi (three Wise Men) brought gifts of frankincense, myrrh
and gold. Frankincense was considered a gift for a priest.
Myrrh was a burial ointment. How bleak. Anyway, today they're
moot. Few of us would now recognize either and might even
call a Haz-Mat team if they showed up at our door. But gold
- the traditional gift for a king - is still universally desirable.
Wherever it's headed, those who think gold is going higher
are buying. Others who think it has peaked are selling. Either
way, whether you're stocking up or cashing in, it's critical
to know what you're doing.
For investors, gold coins are far and away the best bets.
The .999 pure gold American Buffalo, Canadian Maple Leaf and
Chinese Panda coins trade for hefty premiums above the "spot"
value. American Eagle gold coins are only .916 pure but also
sell for a higher price. Also at .916 purity is the South
African Krugerrand. They're out of favor though are discounted
up to $15 per ounce less than other gold coins.
For those on a budget, the American Eagle coin comes in smaller
sizes, including 1/10- ounce, 1/4-ounce and 1/2-ounce sizes.
When used in jewelry, the smaller sizes are far less conspicuous
On the subject of jewelry, when purchasing a gold necklace,
bracelet or earrings, BE SURE to buy from a reputable dealer.
Gold jewelry is rarely pure. Other alloys, such as copper,
silver and nickel, are added to harden it for everyday use.
Naturally, the actual values of 12-karat, 14-karat and 18-karat
gold are less than if they were pure 24-karat.
As for gold-plated jewelry, unless you're planning to break
up, I'd think twice. "Plating" means just that.
A super-thin layer of gold has been coated over most any base
metal to make it shiny. The little gold they contain will
fade quicker than a bad relationship and has little if any
When selling gold, always remember Smokey Robinson: "You
better shop around" is the mantra. Banks no longer trade
cash for gold. We went off the conventional gold standard
long ago. And, while pawnshops may be convenient, coin dealers
regularly offer better prices. Still, shop around. Gold prices
change hourly, and one dealer may be eager to pay more than
So, where will the price of gold end up by Christmas? Even
$1,000-an-hour gold analysts don't have that powerful a crystal
ball. It's best to remember how industrialist J.P. Morgan
responded when asked how the stock market would perform. His
response: "It will fluctuate." That golden advice