Y2K survivalists push up demand for precious metals
April 16, 1999
(CNN) -- Fearing a year 2000 financial meltdown, consumers are stockpiling more than just food and water -- precious metals like gold and silver bullion are high in demand as well.
Items like gold Kruggerand coins from South Africa and custom-made silver barter units are being eagerly sought by many Y2K survivalists. Theory has it that these precious metal commodities will hold their value more than paper money and could be used to barter if necessary.
Worried about a possible breakdown in the U.S. financial system, consumer Ernie Wilhelm is stocking up on the silver barter units.
"If you can't get cash I think these would be accepted," Wilhelm says.
Coin dealer Harlan Berk says he's seen a huge sales increase for items like American Eagles, sovereigns and Kruggerands.
"We've seen a thousand percent increase in sales over the last eight months and we attribute that to Y2K fears," Berk says.
Demand for the silver barter unit is so strong, says creator Marlon Mathre, that he had to commission four mints just to supply enough units.
Mathre's silver barter units sell for $9. Other companies sell their own versions. Dealers charge premiums or commissions on each unit sold.
"People first were worried about Y2K and now some of the people are worried about a financial collapse because of the stock market," Berk says. "They want to own something that will definitely have value if stock or paper money collapse."
Silver and gold bullion have traditionally been a safe investment for those who fear higher inflation or the collapse of a nation's currency.
But many investment advisers say the chance of major Y2K disruptions to the economy is remote.
Marshall Front, money manger for Trees Front Association, advises his clients to avoid investing in precious metals, which have performed poorly over the past two decades as inflation has declined to record lows.
"Owning precious metals because you think the world is going to end? Forget it," Front says.
Despite the dismal returns, some people are pouring money into precious metals because they want a safe haven against economic turmoil.
Sales of the one-ounce silver American Eagle coin have nearly tripled in the first three months of this year, compared to the first three months of last year.
Sales are up 500 percent for gold American Eagles in all denominations over the same period. U.S. mint dealers credit Y2K fears for the increased sales.
Even if there are no year 2000 problems, Wilhelm says he doesn't regret stocking up on precious metals. "There could be crop failures or famine. There could be anything. And actually, to tell you the truth we're rather overdue."
Correspondent Patty Davis contributed to this report.
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