LAFAYETTE -- Why would the recent unrest in Libya and the Middle East prompt a Lafayette-area resident to sell an old pair of silver candlestick holders?
Simple, says David Hummels, an economics professor at the Purdue University Krannert School of Management. The political unrest 5,000 miles away is contributing to the steady rise in gold and silver prices seen in Indiana jewelry and pawn shops.
"People have it in their heads that (gold and silver) is an inflation hedge," Hummels said. "When inflation starts going crazy, people want to hold onto 'real' assets, and those can be in the form of real estate or basic commodities like gold and silver."
Gold was selling recently for more than $1,400 per ounce, and the silver price was on the rise, hovering around $35 per ounce. By comparison, many started paying more attention to gold and silver sales in mid-2008 when the prices were around $1,000 per ounce for gold and roughly $18 per ounce for silver.
At Vierk's Fine Jewelry in Lafayette there has been traffic from people looking to buy and sell precious metals. A resident in the past few weeks brought in a pair of pre-1930s Tiffany & Co. silver candlestick holders that fetched about $1,500, jeweler Jeff Vierk said.
In addition to the number of customers bringing in broken gold and silver jewelry or other trinkets to sell, Vierk has many customers coming in to purchase large investments.
"People are worried about the economy and the U.S. dollar, or they're not making much money on some other investments, so they're looking for something that might have some upwards movement," he said. "I have some who do some extremely large transactions. It's not uncommon these days to do a half-million" dollar sale.
In those cases, Vierk said customers usually are setting up a trust, and he has to go out to the market to help locate physical metals and have them sent to the investment site. Customers aren't driving away from Vierk's with their back seat weighed down with gold and silver.
At A-Z Exchange in Lafayette, however, employee Levi Metro said he has seen customers come in and buy up the entire store's silver inventory.
