A Modern Day Gold Rush

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Increased interest in prospecting can mean better business for companies that sell mining systems and equipment, such as Keene Engineering, a mining and prospecting equipment retailer in Chatsworth, Calif. "There are about 50 percent more people walking in and asking about basic information and looking to buy tools," says salesman Mark Svidor, who has been prospecting since 1979.

Coming to Stores Near You

For those not inclined toward prospecting, at least two companies are trying to make gold buying as complex as using a vending machine.

The Hon Corp., a Korean jewelry group and manufacturer with branches in New York and Hong Kong, unveiled its first Gold Rush vending machine in June 2009 in Seoul. Hon now has 20 machines in stores throughout Korea. The gold-bar cards are the size of credit cards and range from 0.5 gram to 10 grams. A customer can get a card right out of the machine or have it sent to a specific address. "We wanted to change the role of gold, not only [as an] investment but as a gift," says David Lee, general manager of Hon. The company next hopes to install its machines in U.S. casinos, supermarkets, and other stores, he says. A German company, Ex Oriente Lux, brought its first "Gold to go" vending machine to Abu Dhabi in May and is in talks with customers in Europe, Canada, Asia, and the U.S. about installing the machines in upscale hotels, airports, and casinos.

Customers looking to turn gold into cash have new options, too. Over beers two years ago, Virginia entrepreneurs Tim Oldfield and Price Shapiro devised a plan to make cashing in old jewelry quicker and more convenient than mailing it to a cash-for-gold broker or going to a pawnshop. They opened their first Goldrush kiosk in 2008 in a Virginia Beach (Va.) shopping center. The company now has 300 kiosks in the U.S. and 200 in Australia, with plans to expand to Asia and Europe, says Maurice Levine, Goldrush's global director. "Gold prices are on the rise, and people have a lot of unwanted gold sitting in their jewelry boxes." People uncomfortable mailing their jewelry and receiving cash later can show up at a kiosk, and within minutes, a Goldrush employee weighs and assesses the gold. The customer walks away with cash, and Levine says that "immediacy of the transaction" will fuel further aggressive growth.

Widespread Nervousness

Stephen Goldsmith, a gold trader at Jules Karp Coins & Bullion, a coin and bullion trader in New York, says the firm has witnessed growing interest and trading volume as the gold price has jumped. "Most of the people who are coming to us to sell are people who need the money," Goldsmith says. "Most of the people who are coming to buy think gold is a good investment. They're nervous about the situation in Europe. They're nervous about things all over the world. I see much more widespread buying by people of all walks of life."

Whether the customer's investment is bullion, gold-bar card, or a nugget straight from the earth, once an investor has his hands on it, storing it becomes an issue. Large banks such as JPMorgan Chase (JPM), Citibank (C), and Wells Fargo (WFC) offer safe deposit boxes and vaults, but not insurance, so many investors choose to keep their gold at home. That often means a safe. Dean Safe, in Arleta, Calif., had its best year in its 35-year history in 2009, sales manager Jacque Dean says, because of the tough economic times. And business has increased for such safe makers as Brown Safe Manufacturers, says Lynel Berryhill, vice-president of the San Marcos (Calif.) company. Brown Safe's sales have risen about 30 percent in the past year, partially due to more investment in precious metals, she says. People are interested in the more high-end safes, says Berryhill, realizing that if they buy a shoddy safe, valuables are "just organized for the burglar."

And when it comes to protecting your gold stash, don't think you need a hole in your backyard—insuring gold is pretty cheap, says Simon Codrington, international director at Hugh Wood, a global insurance outfit that specializes in art collections. Premiums vary according to the holder's risk, but if an investor holds $20,000 of gold in a bank vault, the premium is only about $50 annually. The New York company sees everything from "modest thousands to amazing millions" of precious gold, Codrington says. Hugh Wood's business has grown over the past year, partly due to increased interest in insuring precious metals. "There's been both an increase in the values [being insured] and an increase in participants," he says.

Two years ago, with gold topping $860 an ounce, Franklin, the Ohio technician, bought a mining claim on eBay (EBAY) giving him the right to mine on federal land in Idaho. As retirement approaches, Franklin hopes to turn his hobby into a full-time job, expecting that the more time he spends prospecting, the more lucrative it could be. "If more people had gold fever, they'd be surprised by how well they could do," he says.

Prentice is a intern for Bloomberg News.

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