Gold Hits Record: A Rush to Buy in Sherman Oaks

With the price of gold hitting a record high Wednesday of $1,800 an ounce, business has been booming at Continental Coin & Jewelry Co. in Sherman Oaks.

(Editor's note: Gold prices closed at $1763 an ounce Thursday)

"It's been very busy all week. People are coming in and buying a wide variety of gold products," said Jeff Ringer, one of the managers at Continental Coin, at 5627 Sepulveda Blvd.

"Mostly customers are buying gold coins and gold bars, and the value of them keeps increasing as the price of gold continues to rise," Ringer said.

Weakness in the economy seems to be driving much of the demand for gold.

"People see gold as a safe haven in difficult economic times. Some investors are losing faith in the dollar," Ringer said.

"It's been a bit of a frenzy ever since the gold price started shooting up over $1,500," said a saleswoman named Tanya, who declined to give her last name.

"This is what happens when markets start to overheat," she said. "It's like what happened to real estate: Prices start going up and people think it's a good time to buy, so they drive the market higher."

Continental Coin has been in Sherman Oaks for more than 40 years, and in that period the price of gold has fluctuated widely, but generally climbed upward.

In the early 1970s, gold was below $100 an ounce. After big price swings both up and down over the years, the gold price has been rising since financial markets around the world have become more volatile.

Gold prices broke the $1,700 an ounce barrier earlier this week, and at the close of trading Wednesday, gold was selling at $1,800, an all-time record high.

But with the price having hit a historic high, the question is: Isn't this the wrong time to buy gold?

"Nobody really knows how high the price of gold is going to go. People have been saying for quite a while that gold could hit $2,000 an ounce," Tanya said.

Still, not everybody agrees that the precious metal presents a golden investment opportunity.

"Buying out of panic is not a solid investment strategy," said financial adviser Pamela Marshall of Marshall Financial Management in Los Angeles.

"Many people are buying gold out of fear, and when the economy begins to pick up, the fear will subside and gold will collapse," Marshall said.

"Gold can be a hedge against inflation," said Marshall, "but inflation is not an issue right now."

Other financial planners point out that gold pays no interest and there is often a cost of storage.

Financial planner Ben Lupo, with an office on Ventura Boulvard, has been a longtime supporter of gold as an investment. But Lupo is cautious about recommending gold for investors at this time.

"It really depends on the individual, what other kinds of investments they have, what period of time people are investing for," Lupo said.

Generally, financial advisers are reluctant to offer a blanket "buy" recommendation on any kind of investment because they say investment choices depend on people's financial situations, their tolerance for risk and the reasons they invest in the first place.