Gold prices create rush for cash

March 14, 2008 12:11:09 AM PDT
It's the new gold rush -- and this time it's not exclusive to California.

The price of gold reached a milestone today -- trading at more than one-thousand dollars an ounce for the first time.

It ended up closing at $993.30 cents an ounce, and many believe it's going to keep climbing.

It is easy to understand why they are lighting up at the prospect of getting rich off gold, but it is not that simple. One bit of advice is if you have gold hang on to it for a while, don't run out and buy it unless you really know what you are doing.

Nevertheless, a lot of people are opting for some quick cash.

When David Calderon heard that gold prices were shooting up, he decided it was time to cash in some family jewelry to help pay bills.

"My in-laws passed away so I was saving it for a rainy day and the time has now come up and I figured I could take advantage of it," said David Calderon.

He's not alone. It's getting busier at Farber-Tenenbaum, estate jewelers and appraisers in San Francisco, as more people wonder what their old jewelry is worth.

"An 18-carat ring would bring approximately $80 to $100 dollars depending on the thickness of it," said jeweler Daniel Tenbaum.

There's been an explosion of ads on TV trying to get people to unload their scrap gold.

Even though gold is approaching $1,000 an ounce, that's not what you would necessarily get for your jewelry. Rarely is jewelry pure 24 carats and there are fees involved.

There's a fee to test the gold when it's melted and for refining it -- money that comes out of your payout, and this may not even be the time to sell.

San Francisco State University economics professor Daniel Vencill believes that $1,000 dollars an ounce is far from the top price.

"I think by the summer it will be over $1,250 and it should probably peak between $1,500 and $1,600 an ounce before any let up in sight," said SFSU Economics professor Daniel Vencill.

But he says that doesn't mean you should necessarily run out and buy gold bullion.

"It may be that the stock market, to be playing around," said Vencill.

Professor Vencill says historically gold prices tend to be about 15 times the price of oil. So with oil now hitting $100 a barrel, he says it should follow that gold should reach $1,500 an ounce probably by a weak dollar.