wnyc.org / 93.9fm / am 820

When the economic crisis hit, Adam Gold decided to buy a gun, stockpile a year's supply of food and invest in gold. So far, at least one of those investments has paid off.

Despite the persistent drumbeat of disappointing economic news, gold prices have continued to climb to near record highs, topping $1,200 an ounce. Considered a safe haven investment, gold has risen 70 percent during the same period during which the Dow Jones Industrial Average has fallen 25 percent from its peak in 2007.

"I expect gold to double. At least to double," says Gold, a Brooklyn filmmaker, who's at the East Village bar Arlo and Esme, mingling at a meet up event with fellow supporters of Texas congressman Ron Paul. Paul is a big fan of gold and believes ever since the U.S. went off the gold standard in the 1970s, the government has been able to print money "out of thin air," eroding the value of the dollar.

Adam Gold invests in the yellow metal through a broker, who holds it on the filmmaker’s behalf in vaults around the country. "I'm not yet to the point, although I may well get there, where I actually physically hold the gold in a safe in my apartment," Gold says.

Cris Rodriguez, on the other hand, does keep his gold nearby, at an undisclosed location. The 29-year-old NYU graduate, who works in music production, says every three months he scrapes together enough money to buy coins directly from gold dealers in Manhattan. "I don't have a tremendous amount of money to invest but I'd rather start off as a base owning the physical gold," Rodriguez says.

A growing number of investors -- big and small -- fear that with the Federal Reserve continuing to pump enormous sums of money into the economy, rampant inflation could follow. Investors like gold because because it’s a commodity that is tangible. It’s limited in supply. Unlike silver and cooper, it doesn’t have an industrial use, so gold is not in demand for other purposes. And if currencies were ever to collapse, gold would likely be a new source of currency.

Billionaire hedge fund manager John Paulson, who bet on the collapse of the housing market, and won, now puts his money on gold. Filings with the U.S. Securities and Exchange Commission show that Paulson's single largest holding, at the end of the second quarter, was a gold fund called SPDR Gold Trust (GLD), making up 17 percent of his $22 billion portfolio. 

"With the recession, with the concerns about the sustainability about U.S. fiscal policy, it’s very understandable that a lot of the really big players, the really rich players are looking to gold for diversification," says Kenneth Rogoff, an economics professor at Harvard and former chief economist at the International Monetary Fund. Rogoff says gold purchases by big investors like Paulson, and countries like China, are helping drive prices to record highs.

Small investors buying gold are also worried about putting their money into falling markets, says Isaac Kahan, president of Bullion Trading LLC. Kahan, a gold dealer in Midtown Manhattan, says jewelers used to be his main clientele, but today, investors like Rodriguez take up the bulk of his time.

“They’re worried about stock fluctuation. They're worried about the economy in general," Kahan says. 

Kahan adds that when he started dealing gold about 20 years ago, it was trading in the $300s. The gold price stayed relatively steady for more than a decade, but it started to rapidly climb in 2004. "I never thought it was going to get this high," Kahan says.