A golden opportunity?

The line outside Rick Davis Gold and Diamonds started forming early this week.

Customers with broken chains, gold dental work and bands from bygone marriages lined up to sell their scraps and take advantage of the high price of gold. On Thursday, as the market closed, gold was trading for $910 an ounce.

The price of gold peaked at a little more than $1,000 an ounce on Monday, followed by falling prices later in the week.

“We’ve had anywhere from 60 to 100 people in line for the past four days,” Mr. Davis said. “They’ve got gold teeth, gold wedding bands, old broaches, old jewelry — stuff they’re not wearing.”

Even though the market slid about 10 percent since Monday, Thursday’s price of gold is a marked increase from the $662 high in March of last year, according to the World Gold Council.

Mr. Davis estimated a man’s high school class ring would be worth about $95 to $120. Most gold buyers — pawn shops and jewelers — pay 80 percent to 90 percent of the market value, so that ring could fetch $85 to $108, he said.

“It’s all based on weight,” Mr. Davis said. “You’ve got to deduct for the stone and do the math. It’s whatever gold is trading at the time we buy it.”

Just about anything with gold content could be valuable, local jewelers said.

“I've never seen anything like this. Everyday, all day. We’re doing tons of gold and actually a good bit of silver,” said Jeremy Kennedy, manager of Kennedy Jewelry. “We’re seeing a lot of scrap gold, or just jewelry that people don’t wear anymore. People don’t wear jewelry like they used to, and they are coming in because they know the prices are high and cashing in.”

Economists say gold is earning a higher price because the value of the dollar is on the decline, and with fears of recession investors are putting money in gold and other commodities to protect their finances.

“Gold is traditionally seen as a safe haven, particularly when there are questions about the value of the dollar,” said Dr. Bruce Hutchinson, an economics professor at the University of Tennessee at Chattanooga. “People elsewhere in the world once saw the dollar as a safe haven, but now there is concern about inflation. So, now gold becomes an attractive alternative. That demand is driving up the price.”

This price increase is similar to one in the 1980s, though if it were adjusted for inflation the 1980s peak would be higher. Mr. Kennedy remembers his father talking about it, but Mr. Davis suffered when that boom went bust. That history has both jewelers worried that a sharp decline might occur.

“There’s always the thought” that the market could fall out, Mr. Davis said. “In the ’80s it was a manipulated high, and this (boom) is just because the economy is so bad. What we are hitting now is uncharted waters.”

Mr. Davis said there is some protection for gold buyers. He can collect gold, contact his buyer and lock into a price. He has up to three weeks to ship his metal. If there was a dramatic change in the market, he could stop accepting gold, he said.

Dr. Hutchinson remembers a friend mortgaging his house to buy gold during the ’80s boom. When the price of gold plummeted, the friend nearly lost his home, he said.

“It’s like anything else. When you start investing, you need to have some caution,” Dr. Hutchinson said. “Be wise, and don’t just jump on a bandwagon.”

So investing now, while prices are near this recent high, might be a decision to make after consulting a professional, Dr. Hutchinson said. Likewise, selling gold scraps might be unwise if the price goes even higher, though this week’s trading seems to suggest it has peaked.

“We’re looking at a $40 loss today. If it loses another $40 and another and another and then $100 we’re looking at being near $600,” the price gold traded at last March, Mr. Davis said.

Dr. Hutchinson said it is a two-edged sword.

“If gold prices go back down, it would appear that you have made a wise choice by selling now,” he said. “But what if gold keeps going up?”