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NEWS Times Herald Story
- Dollar Woes Push Gold Up Dollar woes push gold up By NICHOLAS DESHAIS
When the price of gold surpassed $1,000 an ounce on Thursday and the United States dollar hit a 12-year low against the Japanese Yen, Blue Water Area residents were hit with two kinds of news: good and bad. "It's a double-edged sword out there," said Ryan Finley, associate national legislative counsel for the Michigan Farm Bureau. The low value of the dollar has made American commodities - such as corn, wheat, soy and dairy products - desirable for other countries. Michigan-produced food is going everywhere: Latin America, Australia, China and even to Iraq through the State Department. The surplus sounds great but, as the demand goes up, so follows the price. Combine that with the low value of the dollar and bad news isn't far behind. "When you look at that dollar, they're projecting a 4% increase in the cost of food," Finley said. "Americans are still going to have the cheapest food in the world, but the price is going to go up." A couple of years ago, a bushel of corn was below $2.50. Now it's $5. Hit by a freefall with no end in sight, the once-mighty dollar's clout is evaporating worldwide as foreign businesses and individuals turn to other currencies. The dollar steadily has eroded in value against the euro, the Canadian dollar and other currencies since 2002 as U.S. budget and trade deficits ballooned, but fears of an American recession and credit crisis have sent the dollar to stunning lows amid predictions the slump will continue for a long time. That affects everyone from business leaders to the person who enjoys casual shopping in Canada. Experts say the bleak U.S. economic forecast means it will take years for the dollar to recover its value and prestige.
But the ballooning currency of our northern neighbors could bring benefits for us. "We're speaking to more Canadian companies about establishing their bases here," said Doug Alexander, executive director of the Economic Development Alliance of St. Clair County. In 2002, the Canadian dollar fetched 62 American cents. Just six years later, the Canadian dollar has surpassed the value of the U.S. dollar, with one U.S. dollar translating to only 98 Canadian cents. "It also makes exports more viable," Alexander said. "The change in the dollar supports all kinds of exporting. It's kind of like the rising tide raises all boats." The weakening dollar has caused the sharp uptick in the price of gold, which has jumped nearly 20% since the start of the year after rising nearly 32% in 2007. Lower interest rates - and the prospect of more cuts by the Federal Reserve - bringing the dollar's value down makes dollar-based commodities such as gold cheaper for foreign buyers. The weak currency also has made gold more attractive because the precious metal is a hedge against inflation, the general rise of prices for goods. Pat Coughlin, owner of American Diamond Importers in St. Clair, has felt gold's rise. "It has changed us over night," Coughlin said. "People are selling us their gold in droves." Coughlin said he was reluctant to buy gold at first because he "didn't want to be a pawn shop." But now he organizes home gold parties. At the end of the night, he cuts a check for 10% of his night's earnings to the party's host. "It's not the Tupperware party your mom used to go to. ... Last night we had two parties. One hostess got a check for a little over $1,000, and she turned around and gave it to the cancer society."
Most people, Coughlin said, give up their old, unfashionable jewelry from the 1970s and 80s and turn their profit into car and house payments. He estimated the average person walks away with $300. As the price of gold increases, Coughlin is sure to continue making money. But he said he's wary of prolonged growth. "Some people say it might reach $2,000 (an ounce). I hope not." American Diamond Importers is a jewelry shop, and Coughlin worries if the price goes too high, he'll be out of business. "A $300 bracelet a couple of years ago is now $900. My customers don't want to pay that."
Gold digging By BOBBY AMPEZZAN "Nature's first green is gold," wrote the poet Robert Frost, and never was that more true than at the party Kathy Patterson threw this week on the eve of spring when her friends traded gold for green.
Nearly a dozen women converged on Patterson's Old Farm subdivision
home in Fort Gratiot carrying Ziploc bags of old gold jewelry. At
the kitchen table sat Linda Latorella, a gold buyer, and Amy Andrews,
a goldsmith, both from American Diamond Importers in St. Clair.
With jeweler's loops to their eyes, they examined the often antiquated
jewelry under an Ott light. Cash, after all, is king, and Pat Coughlin, owner of the St. Clair jewelry store, said bookings have climbed to about one each weekday and two on weekends for gold parties. He started coordinating the parties about a year ago, when the price of gold climbed past $600 an ounce. This week, the price of gold has dropped precipitously - from more than $1,000 an ounce Monday morning to below $950 by the end of the week - but compared to the weak U.S. dollar, gold increasingly has become a currency. Some convenience stores around the area have signs out front that read, "We buy gold." North River Party Shoppe, which is within walking distance east of Patterson's subdivision, is one of them. Herman Yentz, an insurance agent who lives in St. Clair, will have a gold party on Thursday at the Colonial House Banquet and Event Center in Port Huron. The party's a fund-raiser for the Blue Water Area Chamber of Commerce's Community Benefit Fund. The fund will be bolstered by 10% of the total value of gold exchanged. It also will make an additional 5% from any future gold parties played hosted to by attendees of Thursday night's event. "It's fun. I was going to do a gold party myself at my house, and I thought, why not do it on a bigger scale?" Yentz said. Stacy Westrick of Marysville played host to a gold party this week, and she said mixing business and pleasure makes for a nice dynamic. "People come in, they wait their turn, they visit, then they walk out," she said. "It's very social - the wine and the cheese - but if you have something to do, you can go, and (unlike other sales parties), there's no obligation to buy anything." The amount of money jewelry will fetch at gold parties depends on the quality of the metal. Most of the jewelry handed in is 10- or 14-karat, or 42 to 58% pure gold. If this is melted down, which is the case with a lot of jewelry bought at the parties, much of the metal's value is lost in the process. Some of the jewelry has kitsch or theme value, Coughlin said, and that is usually sold on the Internet instead of melted down. The gold buyers say they get a class ring at nearly every party. They also get a lot of jewelry fashionable in the 1970s and 1980s, such as Playboy bunnies and Italian horns. Latorella works at the parties with a small bottle of hand sanitizer in front of her. It is not uncommon for buyers to get gold crowns with the teeth still attached. "We get so many wedding bands," Coughlin said. Many come out of divorces, but some people find their rings out of fashion, and they transfer the stones to new platinum bands, for instance. "Yellow gold is out of fashion right now. White gold, platinum and silver ... silver is the hot metal right now," Coughlin said. Andrews said the stories behind the jewelry are touching. Just last week, Andrews said another gold buyer was handed a ring from a woman who was "hard up for cash." The ring was the first one her father ever had given her, and she clearly was distressed about parting with it. Andrews said the gold buyer advised her to keep the ring, and she did. These parties "are a good way to get rid of jewelry you have no emotional attachment to. Plus, they're hilarious," Karri Seim of Port Huron said. "Usually, you go to parties to purchase things. This one, you walk away with cash." Debbi Cox of Fort Gratiot said she's not as interested in the money as she is in the idea of recycling. "This was just a lot of stuff I didn't wear, so it just kind of seemed silly (to keep it)," she said. |
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