Coin dealers see many Hoosiers investing in gold and silver

By Robert Annis

Recession prompts many to turn to gold and silver, according to coin dealers

"People are getting scared," Bernhardt said. "They're taking money out of other accounts and putting it into gold. They see it as an insurance policy, but one they don't necessarily want to cash in. If gold rises (a lot), it means everything else has tanked."

The U.S. Mint reported nearly 1.2 million gold coins were sold in 2008, almost triple the number of the year before, and more than 36,500 sold during the first week of 2009.

Gold closed Friday at $854.60 an ounce, while silver stood at $11.32 an ounce. Over the past year, silver dropped nearly $4 an ounce, but the price of gold fluctuated from $700 per ounce to $1,009 per ounce, increasing just 5 percent.

With the Dow Jones Industrial Average hovering in the mid-8,000s and unemployment reaching a 16-year high last week, many investors say they would happily take such a modest return but expect the price of gold to rise even higher.

National experts continue to debate the value of gold. Rick Aristotle Munarriz of investing Web site The Motley Fool suggested gold could be outperformed by Google stock this year, while the Fool's Christopher Barker endorsed a Citibank report predicting gold could reach $2,000 an ounce this year.

According to John Smith of Smith's Coins in Lafayette, co-sponsor of a coin show Sunday on Indianapolis' Northeastside, the number of investors has increased, but overall attendance at the show has dropped, as many hobbyists no longer can afford the pastime.

Sales of rare coins might be down, but one vendor at Sunday's show said he had sold the bulk of his silver U.S. Mint coins less than two hours after opening.

Bernhardt said most of his customers are putting 5 percent to 10 percent of their investment funds into gold, "just in case," but Indianapolis resident Dan Ashman estimated 75 percent of his investments are tied up in gold and silver coins.

"I've put more money into coins than I have my 401(k)," he said. "In the end, I think I'll get a better return on my investment."

Fred Warsco, Indianapolis, feels so confident about precious metals that he completely divested stocks and bonds from his portfolio several years ago.

"It's working out great," he said. "I've had almost no losses. People started calling me, asking for advice after they lost 40 percent of their investment in the (stock) market last year."

Although many analysts expect stocks to remain volatile over the next few years, Bernhardt advised caution.

"There are so many people, particularly on the Internet, saying conflicting things," Bernhardt said. "There's a lot of bad advice and information out there. You've got to be careful."

The high price of gold, combined with the desperate economy, apparently has led many Hoosiers to cash in their gold valuables to use the money for expenses. Bernhardt said most visitors to his coin shop lately were looking to sell coins, not buy them.