Gold lost some of its glitter the past week, including a 9 percent price drop Monday, as investors unloaded the precious metal amid global economic worries and other factors.
Local businesses that buy and sell gold are keenly aware of the market, as the sharp drop - nearly 15 percent in the past 30 days - sometimes eats into profit margins.
"A few cases in the last few days, we lost money with the cost of gold going down," said Doug Keefe, owner of Beachcomber Coins and Collectibles in Egg Harbor Township, in business for nearly 40 years. "This business is not for the faint of heart."
Gold prices had skyrocketed in the past decade, mostly as investors grew to use it as a stock market alternative and a hedge against inflation.
But China's slowing economic growth, fears that financially strapped Cyprus would sell much of its gold, and low inflation were behind some of the recent gold selloff, The Wall Street Journal reported Monday.
Gold's annual value grew by double digits six times in the past nine years, including nearly 31 percent in 2007, 23 percent in 2009 and 27 percent in 2010, according to Goldprice.org. Prices on Tuesday afternoon were $1,369 per ounce, down about 19 percent for the year.
Instead of holding onto recently purchased gold until the market improves, Keefe said his business would rather sell it and use the cash flow to buy more gold at lower market prices.
"My personal opinion looking at the world, the economy, I feel gold will rise again," he said. "I don't feel this is the end where everything will drop off a cliff. … Have we seen the bottom right now? I'm not really sure. There's some indication is may soften a little more."
Frank Devlin, owner of Frank's Jewelers in Egg Harbor Township, said he diversifies to cover market changes, a move that benefited him when gold prices dropped.
He started liquidating his personal holdings as a gold investor in the fall amid signs from economic indicators he tracks daily, including the federal money supply as it relates to gross domestic product.
He also has been taking short positions on gold, locking in prices prior to the market drop.
"I hedge myself. I always look at the numbers, where I should lock it in. Otherwise you would get wiped out," said Devlin, who has been in business in Atlantic County since 1983.
"I have brokerage accounts. I can short the market or long the market to cover my position. There are different tools I have at my disposal," he said.
Devlin said he believes gold prices will rise again in the future, but not in the short-term.
"For the next several years, I think it will be flat to down. I don't think it's going to go anywhere for a while," he said.
During the past decade, gold's dramatic rise in price prompted many jewelry stores in South Jersey to emphasis products made with less expensive metals, such as silver and titanium.
"When the price of gold gets as high as it's gotten, it's very difficult to sell jewelry in general. That's why you're seeing so much silver jewelry manufactured now," said Michael Brown, the owner of M.S. Brown Jewelers, founded in 1950, with locations in Wildwood and Cape May Court House.
"We still carry gold, but alternative metals have taken the place of the person (for whom) gold is through the roof and can't afford it," he said.
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