Gold prices continue to skyrocket

Jessica Harmison-Olson: Maxon is purchasing gold from clients 30-40 times per month.

Shawn Gallagher recommends clients invest no more than 5% of assets in commodities like gold.

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A precious metal has become even more valuable this year.

The price of gold surpassed a benchmark level of $3,000 per ounce in March and some analysts don’t expect the commodity to reach a peak anytime soon, amid concerns of economic health and stock market volatility. According to the World Gold Council, gold prices were at $3,373 per ounce as of June 4, climbing from $2,624 since the start of the year – a nearly 29% increase. 

Goldman Sachs Research predicts gold will rise to $3,700 an ounce by the end of 2025.

Ben Newhouse, CEO of Vineyard Asset Management LLC, said several factors are contributing to gold’s price rising, including a traditional view by investors of the commodity as a hedge against inflation, as well as them having a greater sense that geopolitical risks have materially increased.

“Gold is often viewed by investors as a safe haven to park their money when the risk of potentially catastrophic events rises,” Newhouse said via email, citing uncertainty about the Russia and Ukraine war possibly proliferating into a regional or continental conflict, or an escalation of a world trade war. “Essentially, the crazier the world seems to be getting, the more likely it is that investors desire to own gold to protect the value of their wealth, thereby driving up its price.”

On the rise
Gold is a commodity sold and purchased at Springfield area jewelers such as Maxon Fine Jewelry. Co-owner Jessica Harmison-Olson said there’s been a significant uptick in clients bringing in gold to sell. While a year ago typically up to 10 people would come in per month shopping their gold, the jeweler is now making roughly 30-40 purchases every month this year.

Harmison-Olson said she quoted work on a custom pendant that had gold in it around eight months ago and a client recently got back to her after initially declining to move forward with the job. In the interim, the price of gold rose nearly $1,000 per ounce.

“It’s a global impact,” she said. “It’s a really good time for folks if they have pieces that are sitting in the jewelry box they’ve inherited or things they don’t wear anymore, we are buying from the public multiple times a day. That way they can get a premium that we’ll pay.”

As clients can make more by selling gold than they could a year ago, more of the commodity is becoming available for Maxon to reinvest, Harmison-Olson said.

“We can either melt it down or we have an extensive estate case, so we can really provide some nice preowned and vintage pieces to our clients at great deals,” she said.

Hedging risk
Shawn Gallagher, a financial adviser with Piatchek & Associates, said customers at his firm periodically ask him about investing in gold.

“We believe in something called a 5% rule, which is that you shouldn’t have more than 5% of your assets in one thing, whether that be O’Reilly [Automotive] stock, Nvidia or gold, Bitcoin, whatever you want to sell,” he said, noting the price of gold historically is volatile. “We’re like, ‘Hey, if you want to do that, that’s fine.’ We’re not very big believers in this belief of physical gold.”

Physical gold consists of bars, coins and jewelry, but most gold investments typically involve funds, futures and stocks, officials say.

Gallagher said the stock market is still growing at a good clip, particularly in May, and is a better overall investment than gold. The S&P 500 rose over 6% in May, its best month since November 2023, while the Dow Jones Industrial Average was up roughly 4% for the month.

“The way we invest usually is broad-based (exchange-traded funds),” he said of his firm’s work with clients. “A lot of those have some gold in them. A lot of mutual funds have gold investments in them. If they’re buying gold at that kind of right size amount, they’re not overextended.”

It’s a strategy also recommended by Newhouse, who said his firm seldom talks with clients about gold investments. He said Vineyard’s recommendation to own gold and other precious metals depends on the size of a client’s portfolio and their risk tolerance.

“Gold can certainly play a meaningful part in a client’s portfolio. However, we tend to use a fairly low dose of it within a portfolio for a variety of reasons,” he said, noting they also recommend limiting exposure to 5% within a diversified portfolio’s asset class mix. “We certainly do not make owning gold a focal point of any portfolio because there is an abundance of speculation and volatility risk involved with owning gold. Just as we’ve seen it rise in dramatic fashion over the past year, it can just as easily – and often does – have its value decline over a short period of time, as well.”

At Maxon, Harmison-Olson said as the gold price continues to rise, the sales offers for the metal likely will as well. The dozens of deals the jeweler makes monthly doesn’t even include the offers that aren’t accepted, as some clients are shopping around for best prices or have second thoughts.

“Somebody could come in and sometimes they’ll just have a pile of scrap gold, maybe chains that are tangled, little earrings that got crushed, or that could have a really nice 100-year-old vintage diamond ring from great-grandma,” she said. “We don’t always buy, but we will always make an offer. Now whether the client accepts that or not is another thing.”

Occasionally, Maxon staff will clean out a drawer and find an old bag that shows gold pricing from years ago, some tracing back near the company’s start in 1972. Harmison-Olson said she’s found some listing the gold price at $500 an ounce.

“Back then, people thought, ‘OK, it can’t go any higher.’ Well, now it’s nearly $3,500 an ounce,” she said. “So, it’s funny to see those little pieces of history.”