Saturday, April 5, 2008

America Liquidates its Hard Assets

“Gold is coming out of the walls,” said Joseph Grunberg, a pawnbroker and jewelry shop owner in the Diamond District of Manhattan.

He said his clientele is the rich and not-so — a stockbroker came into his store recently to sell his $30,000 gold watch, but he’s also seen people hoping that their old class ring might help pay the rent. “It’s a mega-mega business right now,” he added.


But after watching the price of gold soar this winter, Ms. Wallace, who is unemployed, decided to send off for melting her United States Mint coins commemorating the Statue of Liberty, the Constitution and the founding of the Jamestown colony in Virginia.

In the end, she was paid $5,000, far more than the coins’ value as collectibles, she said. “Is it really what I wanted to do?” said Ms. Wallace, who lives outside Columbus, Ohio. “No, not really. But it made the most sense financially.”


This article in the New York Times primarily explores the emotional cost people are paying as they cash out their family heirlooms. But no one stopped to take note of the broader implications of the fact that there is apparently widespread incidence of families who are now down to liquidating the silverware in order to stay afloat. Does that not just send a cold shiver down your back? What next will these people have to do to pay their bills?

I just hope none of these folks are liquidating the hard assets just to put the money in their bank savings account. There they stand the significant risk of having the real buying power of their family heirlooms shrink away along with everything else that's associated with paper dollars. Those people will do better to keep the gold, silver and gems, where any further currency meltdown will further improve their value.

God forbid anyone is turning around and putting it in the stock market, which has been as volatile as the weather of the last few weeks.

No comments: