Silver and gold bullion are in high demand among consumers wary of Y2K problems

April 13, 1999
Web posted at: 9:08 p.m. EDT (2008 GMT)

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From Correspondent Patty Davis

CHICAGO (CNN) -- Anxiety over the approaching millennium is apparently behind a surge in consumer demand for gold and silver bullion.

Ernie Wilhelm is one of those who are preparing for the worst in the year 2000. Fearing a breakdown in the U.S. financial system on January 1, 2000, Wilhelm has been stocking up on silver coins minted as barter units.

"If you can't get cash (or) you don't have cash, I think these would be accepted," Wilhelm says.

Demand for the silver barter unit is so strong, creator Marlon Mathre of the Y2K Silver Company says, he has had to commission four mints just to keep up.

Wilhelm is also stocking up on supplies in the event the millennium bug disrupts the food supply

"We're not saying it's going to take the place of the $100 bill or the $10 bill, but a lot of people are buying it as a hedge in case something major happens," Mathre says.

Barter coins aren't the only hedge against bets that Y2K computer glitches will cause problems for banks and the economy.

Coin dealer Harlan Berk has also seen a huge increase in sales of bullion coins such as American Eagles, sovereigns and Krugerrands.

"We've seen a thousand percent increase in sales over the last eight months, and we attribute that to Y2K fears," Berk says.

But many investment advisers say the chance of major Y2K disruptions are remote.

"Owning precious metals because you think the world is going to end -- forget it," says Marshall Front, money manager for Trees Front Associates.

Front is advising clients to avoid precious metals in any event, and the numbers seem to back him up.

Silver and gold have performed poorly as an investment over the past two decades as inflation declined to record low levels.

Even if there are no Y2K problems, Wilhelm says he doesn't regret stocking up.

"There could be crop failures or famine," said Wilhelm. "And actually to tell you the truth, we're rather overdue."