The gold market logged its biggest one-day percentage drop in 30 years on Monday, but that may not matter for local gold buyers, according to Charles Halpern, one of the owners of Albert’s Diamond Jewelers in Schererville.
“Eight days ago, gold was trading at $1,588 an ounce,” Halpern said. “But these kind of fluctuations in the gold market can come and go.”
On Monday, the price of gold tumbled $140.30, or 9 percent, to $1,361. While gold has been gradually falling since hitting a peak of $1,900 in August 2011, the sell-off accelerated late last week.
At the end of the week, gold recovered some of its losses, trading near $1,400 an ounce
“Our buyers are mostly buying jewelry for themselves or as gifts,” Halpern said.
Many theories have contributed to the reasons for this drop. They include fears of global economic slowdown and reports that China’s economy may not be as strong as anticipated.
John Sunderland, owner of James & Sons Jewelers in Schererville, has his own ideas.
“There are billionaires and possibly governments that are manipulating the market,” Sunderland said. “With this little correction big players are buying up a whole bunch of gold at lower prices.”
Sunderland said the change can also be in the amount of scrap gold being sold.
“That volume was higher two years ago,” he said. “With so many of the small 'we buy gold' mom and pop stores, the business is not what it once was for gold buying. Regular retail in the jewelry market is healthy, so gold buying is not as important as it was at one time.”
Whatever the reason, Sutherland said, gold has certainly taken a beating in the last week.
“People are panicking and selling it a little, but when it comes to jewelry, this drop hasn’t affected the cost of my inventory,” he said.
Walt Breitinger, of Breitinger and Sons futures firm in Valparaiso and a Times columnist, agrees that the gold drop has been breathtaking.
“The recent gold drop was the most it’s ever moved in a day,” Breitinger said.
He said one of the reasons may be the global demand for metals has triggered liquidation or profit-taking.
There are two groups of people, he said — those who feel gold will rise again due to inflation and that this is a healthy correction. Others believe gold has gotten way too high and the bubble has burst and there are fears that gold may be part of a deflationary phase.
“For years, gold was seen as a safe haven and people oftentimes park their money in gold,” Breitinger said. “It’s been around a long time and is often perceived as a good store of value. Now, the safety has shifted to, ‘let’s sell the gold while we can.’”