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Investing in Gold & Silver

by Nov 1, 2023Magazine, Retail

Dimitra Lavrakas

Sheltering wealth through a metal umbrella

Gold rushes of the late 1890s swelled Alaska’s population by about 26,000, nearly an eightfold increase during the decade. Men and women left their homes and families to seek a shiny metal due to economic insecurity.

In 1873, the United States tied paper money to a gold standard, which led to gold dollars rapidly increasing in value ahead of paper currencies, and people began to hoard them. Within a couple of decades, a series of economic recessions and bank failures led to the Panic of 1893 and 1896, causing unemployment and financial uncertainty.

At the time, some argued for reestablishing a second metallic monetary basis using more abundant silver. That political argument failed, partly due to the adoption during the 1890s of the cyanide process of extracting gold from low-grade ore.

US currency has been completely severed from gold since 1971, but the metal still has market value as an investment commodity. Gold and silver have the peculiar quality of retaining value by virtue of their existence; whether tarnished or reshaped, the elements themselves are all that matters.

The everlasting luster that made the metals precious throughout history is also appealing to present-day traders looking for a solid form of wealth.

In Times of Trouble

“With the bank failures like the Silicon Valley Bank, it led to a panic nationwide,” says Jerry Cleworth, co-owner with Richard Hanscom of Alaska Rare Coins in Fairbanks.

The Federal Deposit Insurance Corporation (FDIC) announced in March it had entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, N.A. by First–Citizens Bank & Trust Company of Raleigh, North Carolina.

In its report, the FDIC said it will reexamine how it regulates larger regional banks such as Silicon Valley Bank, which had more than $200 billion in assets when it failed, although less than the $250 billion threshold for greater regulation.

Since the failure, customers are also stocking up on silver, Cleworth says. “The recent panic buying puts strains on companies that produce products for physical possession, and we sometimes see delays in shipping,” Cleworth says. “Several years ago, we saw delays in silver shipments that took up to four months to fill backorders. Currently, however, the industry has been able to keep up with demand, which is a good sign.”

What gold does, he says, is keep fairly steady value through economic upheavals, though there can be exceptions.

“In January 1980, gold peaked at $850 [per ounce] then did nothing for twenty years,” he says. “In the ‘90s, gold went below $300.”

In 2019, the price of gold increased by 18.8 percent, in 2020 it went up 24.4 percent. The years 2021 and 2022 were slower for gold, with the per-ounce price falling by 3.5 percent and 0.2 percent.

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“The gold price, like other commodities, has generally moved up in the long term due to the inflation of our currency,” says Jack Jensen, owner of Alaska Bullion & Coin in Soldotna. “Gold is historically considered a store of value over the long run and is sought after during times of economic uncertainty.”

In July, the Alaska Department of Labor and Workplace Development’s Alaska Economic Trends magazine reported the Commodity Exchange, Inc.—the primary futures and options market for trading metals such as gold, silver, copper, and aluminum—showed gold at $1,947.70 an ounce and silver at $23.02 an ounce in June.

“I think the biggest reason that gold has risen in value over the last few years is that people around the world are investing as a way to hedge against inflation,” says Mike Robuck, who runs Alaska Mint in Anchorage along with his wife Michele and their children.

Rich with Mines

Some gold and silver retailers make their living by trading with Alaskans who, to this day, extract wealth from mining claims around the state.

“We buy raw gold from many local miners around Alaska and the Klondike that we make into jewelry or sell as specimens,” says Robuck. “We are celebrating thirty-two years at Alaska Mint this year, as well as being in a family-owned business since the ’60s, so we have long relationships with many miners.”

On occasion, store owners go to the mines, small or large. “I have visited Fort Knox mine years ago,” Robuck says. “It is a big, interesting place. Local miners come into our shop. And when we can get a break out of the shop, we visit local mines in the state.”

For Jensen, his products come from other sources.

“We acquire gold and silver, mainly in bullion form, from dealers throughout the country as well as local folks selling to our shop,” Jensen says. “We do not refine or mint any precious metals in store.”

Some metals come from scrap metal like jewelry, which Lee St. Pierre, owner of Gold Buyers of Alaska Assaying & Refining in Eagle River, will accept, but St. Pierre will not deal with mortuary gold. It means sifting through human ashes, and he finds that morally repugnant.

“I think the biggest reason that gold has risen in value over the last few years is that people around the world are investing as a way to hedge against inflation.”

—Mike Robuck, Co-owner, Alaska Mint

He prefers to deal with miners working within the Tintina Gold Province, which extends in a broad arc from Southeast Alaska through British Columbia and the Yukon, into Interior and Southwest Alaska. “I get it from several different sources, but about 90 percent off the Yukon,” says St. Pierre.

To invest in gold and silver, many assayers and refiners in Alaska sell all forms: bars, coins, wafers, and rounds. Assaying is testing a metal to determine its purity, and refining takes an object consisting of any percentage of gold or silver to make a final product of only pure metal.

“Gold varies in assays, some 75 percent to 93 percent and some as much as 96 percent pure,” says St. Pierre. His advice to would-be investors: “Shop around if you don’t like what one place offers—assays can vary.”

The Lure of Precious Metals

“I grew up in Alaska and loved the history of the gold rush,” says St. Pierre. “I’m a jeweler by trade, and when things got tight in 2010 and 2011, I started dealing in scrap gold,” he says.

The glitter also drew in Robuck. “What really attracted me to it is the same thing that attracted all of those miners to the Klondike: the love of the sparkle in gold,” he says. “There is great satisfaction in taking a raw piece of gold, adding in some sparkling precious stones, and creating custom designs for our customers. Working one-on-one with the customer to create the perfect piece for them is really satisfying.”

His family has a history of dealing in metals in many forms.

“My parents moved up to Alaska in the mid-‘60s when I was four years old [and] they opened up their own jewelry store,” he says. “My brothers and sisters and I were raised in this business, and most of us decided to make it our career. That’s how I got started.”

Jensen has a family stampeder connection. “My ancestors immigrated to the United States through San Francisco in the early 1850s and the California Gold Rush,” he says. “I have been interested in gold since a young age, collecting coins, both silver and gold. Later on in life, I have pursued courses in history and economics with an emphasis on real money (specie).”

For Cleworth, his father put an 1887 nickel in his hand when he was in third grade, and from then on he was hooked. He recalls, “I just found one coin to be fascinating and wondered about the history of it and became a coin collector, but I didn’t know it would be a profession later.”

“Gold is historically considered a store of value over the long run and sought after during times of economic uncertainty.”

—Jack Jensen, Owner, Alaska Bullion & Coin

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