MILLENNIUM BONANZA Y2K scare has hundreds flocking to Dollar Towne

Published: Sunday, April 18, 1999        Page: 1F        Section: BUSINESS PAGE

Call it Y2K panic. Call it insanity. Call it a modern-day gold rush.

Phillip Herres calls it `plain crazy' that hundreds of people are pulling their money out of stocks and mutual funds to buy gold and silver from Dollar Towne, his Dayton-area distribution business.

`The people buying up the gold are the people who think the world is going to end when 2000 comes. Some are putting barrels of food in the ground, storing water and buying up every generator they can find,' Herres said.

`All this because of some damn computer bug, but I guess I shouldn't complain too much.'

The Y2K computer problem is a potential nightmare for the government and some private industries, but it's been a gold mine for Dollar Towne. In 1998, Dollar Towne generated $31.5 million in annual sales, ranking it 45th among Dayton's top privately owned companies.

But Herres and his son, Don, say their business revenue could climb at least 50 percent by the end of the year.

Don Herres said he attempted to discourage people from taking money out of banks and stocks when the gold-buying trend first picked up steam. But now, Dollar Towne just takes the orders from coin dealers and investors and accepts the good fortune.

`People are buying gold and silver because they want to invest in something tangible, something they can hold on to if the computer problem creates a panic,' Don Herres said.

`We are (generating) about $4 million a month in sales right now and the orders keep growing and growing for us.'

But today's rush for gold and silver is being discouraged by federal regulators and lawmakers. Some con artists have tried to persuade people to take their money out of banks to avoid computer glitches, then turn it over to be invested in gold, silver or other assets by them.

Don Herres said he is aware of several con artists who are trying to give people a bad deal on gold through Web sites or by phone.

Maintaining his credibility among coin dealers and financial institutions around the country hasn't been a problem for Phillip Herres, who started Dollar Towne in 1974.

Herres, 59, started collecting coins when he was a teen-ager and continued his hobby while serving in the U.S. Navy for three years and as an hourly factory worker for the NCR Corp. for 13 years.

Shortly after NCR shut down its manufacturing plants in Dayton, Herres started participating in coin shows and auctions around the country. He then started Dollar Towne out of a home office, where he continues to run the business with his son.

Herres says his big break came in 1980, when the notorious Hunt brothers attempted to corner the silver market in Chicago and eventually lost $3.2 billion. Herres was able to make sizeable profits when silver was selling for $50 an ounce, which compares to about $5 an ounce today.

Although he deals in gold and silver, Herres keeps a very limited supply on hand to protect himself from crime. He also asked that his business location not be disclosed.

Most of Dollar Towne's transactions are completed over the phone, and the gold or silver is picked up by the buyer at a local bank.

`I'm not too comfortable with having $100,000 or more in gold in my car and the customers aren't either,' Herres said.

Dollar Towne deals mainly with large financial institutions and coin dealers nationwide, but once in a while a local investor will make a large buy. Herres says he once sold a single investor $10 million in gold.

On most deals, Dollar Towne makes about $3 when it buys or sells an ounce of gold, which now sells for about $300 an ounce.

Dollar Towne also buys and sells rare autographs, which represents about 30 percent of its total business. But Herres has a tough time selling a lot of what he buys at memorabilia shows and auctions.

His personal collection includes such rare items as Babe Ruth's 1927 tax return, original movie contracts signed by stars like Shirley Temple and flight documents used by Amelia Earhart in 1937.

`It's not all just about making money,' Herres said. `But it's amazing to see what some people consider valuable and how they invest their money.'

DAYTON TOP 100 1999
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