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21st century gold rush

"In 1968 I could buy a gallon of gas for three silver dimes, and in 2008 I can just about get a gallon of gas for three silver dimes," says a customer to Coin Corner owner Nick Crocker Friday. The customer, who felt the government was going to "hell in a handbasket," didn’t want to be identified. (CHRISTOPHER ANDERSON / The Spokesman-Review)

Many nervous investors turning to metals

Nick Crocker’s seen it again and again: Bad times are good for gold.

With every blow to the economy – from the mortgage crisis to the failure of economic giants to plummeting stock values – the solidity of gold shines brighter for some investors, said Crocker, who’s owned the Coin Corner in Spokane Valley for 29 years.

“It’s scaring the death out of the public,” he said. “They’re looking for something that if our dollar collapses – and I don’t think it’s going to collapse; I’m not a doomsdayer – they want to be able to go out and buy food and shelter and water.”

Gold prices have soared this week, posting the largest single-day gain ever on Wednesday and settling in around $860 an ounce on Friday. Prices for gold – as well as silver – have been generally good in recent years as the overall economy has struggled, but they’ve been volatile in recent months. Gold peaked at record levels above $1,000 in March before falling off by about 25 percent.

Now some analysts predict prices above $1,000 by year’s end.

“Gold is a typical hiding place for capital with no seemingly safe alternative,” said Brad Zigler, managing editor at Hard Assets Investor, a research Web site, in a Los Angeles Times interview. “Volatility will probably be the name of the game for a while, and that’s why people are looking at gold in the stormy financial atmosphere.”

Gold prices have climbed steadily since beginning to surge in 2001. Kevin Wolter, who owns Coins Plus in Spokane, said that some forecasters are predicting gold prices above $2,000 an ounce within a couple of years.

“It’s a hedge against inflation, and (a method of) capital and wealth preservation,” Wolter said. His business buys and sells precious metals, diamonds, coins and jewelry.

Wolter, who does a radio show called “True Wealth” on the American Christian Network, said his company has been doing “absurd” sales volumes in precious metals and diamonds, and people are also coming in with their own jewelry and scrap metals to sell.

“We’re seeing a real upsurge in (buying) jewelry,” he said. “People are sharp. They’re really keeping up with the market.”

The major advantage to gold and other precious metals, Wolter said, is security and stability. For many people – especially those who have doubts about the long-term foundation of the “paper” economy – the idea of preserving their wealth in something tangible is appealing.

“Precious metals go back to the beginning of written history as the pinnacle form of wealth.”

Interest in gold, precious metals and other “tangible” forms of wealth is bigger in the rural West – with its history of mining, as well as pockets of deep distrust of the government and monetary system.

“Sixty percent of my customers are true investors,” Crocker said. “They’re buying silver to make money, to watch the market go up and down. Forty percent are buyers because they’re scared to death of our government and what’s going on in our country.”

The Associated Press contributed to this story.