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No magic formula for Gold
by Francine Sawyer

Tom Faulkenberry has seen the price of gold go as high as $1,028 an ounce.

He has also seen the price fall low.

He has spent decades as a gold and coin dealer. He knows the price will fluctuate and it does not make him wake up at night in a cold sweat.

At his store, Tom's Coins and Antiques on Middle Street, he is either buying or selling gold all day long.

He said many people are selling gold now because they say they need money.

"There are any numbers of factors that influence the price of gold. Inflation and world turmoil play roles," he said.

He said there is no magic formula.

"The value of gold is affected by emotion," he said. "For example, looking at the possibility of Hurricane Gustav in the Gulf has jumped oil prices, and that is just on the possibility of a hurricane. If the hurricane moves in and develops oil prices will go up because oil production will shut down in the Gulf. That will drive the price of oil up and it will also drive he price of gold up."

He offered another example of "emotion." He said word could come out that housing starts were up last month. "That would be great for the economy but it would drive the price of gold down," he said.

As the price of gold goes up or down, collectors or investors are motivated to buy or sell. "It's exciting when it is moving in either direction, but when the market is stagnant and not moving either way, there is no motivation to buy or sell," he said.

While the price of gold goes up and down like a thermometer, Faulkenberry said, the best way to describe how the up or down prices do not effect him is to draw two pictures.

"One picture is a $20 gold piece and one is a picture of a paper dollar. Ask this question which one is going to remain stable? If paper money was stable, why would the government quote the exchange rates on a daily basis?"

He said another way of thinking would be a person with a pile of gold in one hand and a dollar bill in the other. "Which would you put faith in? The gold, of course," Faulkenberry said.

He said he does not give up on the gold business, no matter the market.

"The value of currency is what we believe it is as consumers. If we think a 1974 dollar is worth the same as a 2008 dollar, we would all be broke," he said.

Faulkenberry offered several analogies as to how gold keeps its value.

When he graduated from college in 1974, he bought an Oldsmobile Cutlass for $6,300. He said a comparable car would cost $40,000 today. But roughly the same amount of gold that would have paid for the car in 1974 would buy the equivalent car today.

He gives another example: the price of a 1925 car. He said it would have cost $800. "That's 40 twenty-dollar gold pieces. Today the car would cost $40,000 and with today's prices that would be 40 twenty-dollar gold pieces." When customers come into his store to sell gold coins or gold pieces to him, he goes to a New York gold exchange network to get the up-to-the-minute price.

He can get the price quote for gold, scrape gold, gold coins, silver coins, gold and silver bars, platinum and palladium.

He said the recent bombardment of commercials on television advertising the opportunity to sell scrap jewelry and getting top dollar should be thought out carefully.

"I have had several customers come in and tell me that they sold gold to the businesses advertising on television, but did not get top dollar," he said.

Faulkenberry began collecting coins when he was 7 years old. In 1976, with a business degree from East Carolina University he worked part-time on the weekends in the precious metal business.

He realized he made more money on the weekends than he did during his other job with his father, who had an automobile parts business in Havelock.

While he is the only certified personal property appraiser in New Bern, and is also a real estate broker and a licensed and bonded auctioneer, he keeps his hand in gold.

He recommends that people put 10 to 20 percent of metal investment into their portfolio. "It's like an insurance policy. When the dollar is weak because of inflation, metals will help balance the value of the portfolio.

He said it is not a hard and fast rule, but generally when stocks are not doing so good, metal is doing OK.
 



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