Merchants in downtown Los Angeles' Jewelry District gritted their teeth Wednesday as the price of gold soared $70.10 an ounce -- the highest-ever one-day gain in dollars -- and dashed even slim hopes that the struggling economy hadn't wiped out all customers.
A gold chain that cost $450 last year at Acapulco Jewelry now costs $1,000 -- and isn't likely to be sold soon, said owner Raymond Cohan.
"The economy's so bad customers can't even pay their mortgages. This is the last thing on their list to buy," said Cohan, as he tracked the fast-changing price of gold on his laptop.
Business has dropped 70% since the beginning of the year and is getting worse by the day, he said. And the district is turning into a ghost town.
Near his shop at 7th Street and Broadway, four booths inside Broadway Jewelry Mart have disappeared in two years, and eight stores the next block over on Hill Street have shut down.
"It's killing us," said one store's operator, who declined to give his name.
"There's many millions of dollars of merchandise sleeping in this plaza, but it's 2 p.m. and I haven't made a cent. I do my best to stay here, but I fear one day I might have to go."
Cohan clung to another possibility: "Hopefully all this uncertainty goes away after the [presidential] election."
Merchants already had been reeling from this year's run-up in gold prices, which hit a record of $1,033.90 an ounce in March. They had been buoyed by its fall since then. But Wednesday's sharp jump put the price at $846.60 an ounce.
The heyday of the precious metal is likely to continue until the economy evens out, said Brad Zigler, managing editor at Hard Assets Investor, a research website about gold and commodities investing.
"Gold is a typical hiding place for capital with no seemingly safe alternative," he said. "Volatility will probably be the name of the game for a while, and that's why people are looking at gold in the stormy financial atmosphere."
Merchants said customers were interested only in smaller pieces under $100, which typically carry slim profit margins. Some said they had had to tamp down the quality of their goods, cut down on inventory or switch to cheaper silver.
But silver prices also rose, by $1.158 Wednesday to $11.675 an ounce.
Analysts said short-term speculators made a handsome profit off the recent panic by buying back their positions on hard assets and capitalizing on the anxiety of long-term investors.
