Chris Hoffman, owner of Secondhand Rose in Downtown Lodi, buys gold from customers for the current market rate. (Marc Lutz/News-Sentinel)

The gold exchange

Lodi consumers look to precious metals when Dow goes down

Gold. That shiny yellow rock has been legendary since the beginning. King Midas would turn everything he touched to gold. Heaven's streets are paved with it. It's in them thar hills. And when the economy is on a roller coaster ride of uncertainty, consumers and investors turn toward the malleable metal for a little more stability.

As the Dow Jones tumbled in the past few days, the price of gold skyrocketed, reaching a high-point of $901.50 an ounce on Thursday, then falling about 100 points as the market rallied. But as experts will warn, there are right and wrong ways — and ways to protect yourself — when dealing in gold.

Gold: Bought and sold

More than likely, anyone who watches TV has seen the commercial touting "cash for gold." You simply call the company, they send you an envelope and you stuff it with your unused gold jewelry and send it back to them. Within days, they say, you'll receive a check for what the gold is worth.

Unless the company you deal with is certified, this may not be a safe way to liquidate your precious metals. In most cases, it's deal local.

"We supply the local pricing for local people who don't want to ship their gold off to some unknown place," said Robert Hallam, the owner of Avenue Coins and Currency in Stockton. Hallam is certified through organizations such as the American Numismatic Association and the Professional Coin Grading Service. "If a dealer's not listed as an authorized dealer, it means one of two things: they are not authorized or they haven't been around long enough (in the business)."

Both ANA and PCGS keep databases of dealers and their activities with precious metals, so that consumers can know they're working with a reputable person. Both organizations, according to Hallam, have very strict guidelines to becoming a member and rely on the input of current members to base their new member decisions.

Though Hallam works with the public, he primarily works with other dealers to procure gold for recycling through a refinery in Ohio. In Lodi, he gets his gold from shops like Secondhand Rose and neighboring businesses on School Street.

Chris Hoffman, who owns Secondhand Rose with her husband Don, has a very specific purpose for buying gold from consumers.

"We're just trying to help people make ends meet," Hoffman said. When people bring their gold to Hoffman, she weighs it, determines the karat and pays according to the current market value. And it's not just jewelry. Hoffman said she has a dentist who brings in old dental gold for recycling.

To make sure you're talking to a dealer who's on the up-and-up, Hallam says that people looking to sell their gold should get as many different quotes as possible, because theft of gold has become an epidemic.

In the market for gold?

During unsure economic times, most people aren't looking to invest. In general, they are looking to hold on to what they've got and try not to lose any in current investments.

Boyce Inman, of Inman Jewelry Repair of Lodi, who also sells new pieces, said that lately he hasn't seen an upswing in people wanting to buy gold jewelry. Mainly, he said, people are looking to unload what they have, though he doesn't buy used gold. Inman will sometimes sell people's gold items on consignment, though.

When it comes to investing in gold, there are a couple of ways to go about it.

"You can buy coins, like Krugerrands ... but they're bulky and expensive and you have to keep them safe," said Kent Steinwert, president and CEO of Farmers and Merchants Bank in Lodi. "You can also buy gold stock through investment companies. Many are reputable and many are not so-reputable."

Steinwert said there are also companies that you can buy gold coins through which will hold and store them for you. It's important to know the current price of gold, Steinwert said, and to know that it's an unregulated industry.

"Gold can be very volatile. We've seen it in the $200 (an ounce) range and more recently in the $1,000 range," Steinwert said. He also pointed out that the economy is fundamentally very strong, so people should do their research and stay safe when investing in gold.

Making gold pan out

If a person doesn't want to spend money to invest in gold, or doesn't have gold to cash in, he may still want to see if he can find some just lying around ... on the ground, that is.

Bryan Shock, of Gold Prospecting Adventures in Jamestown, has been panning and prospecting for gold since 1981, and teaching people to do the same through his business.

"You can be walking on bedrock, look down and find a two-ounce or five-ounce nugget," Shock said. Other forms of finding gold that Shock teaches is panning in creeks, sluicing — where silt and water is fed through a long rectangular box — and finding it with a metal detector.

A great deal of Shock's customers (whether schools on field trips or families on day trips) come from the Lodi area and throughout the valley.

Though many might come to Shock with dreams of striking it rich, he said they end up finding wealth in other ways.

"Once they get here and we explain the process to them, they find it can become a recreational thing with the family," Shock said.

And if they do find gold? Then what?

"They can take it to us or any jeweler up here, and we'll buy it," Shock said.

Contact Business Editor Marc Lutz at marcl@lodinews.com.