High prices, bad economy create gold rush for pawnshops

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Archives - April 2009
Wednesday, April 01, 2009

STATEWIDE Near record-high gold prices are drawing growing numbers of cash-strapped Oregonians to the state’s pawn shops with items ranging from the sentimental — pocket watches — to the odd — gold nuggets and dental crowns.

Pawnbrokers across the state are reporting increases in the number of customers looking to sell or get a loan on their gold, silver and platinum, with some stores reporting increases in gold-related business of more than 25%.  

“Everybody in the industry is seeing increases,” says Josh Oller, vice president of Silver Lining Jewelry & Loan in Portland. “We are seeing many more people selling their gold outright, instead of getting loans.”

Faltering international financial markets and a weak dollar have fueled gold’s dramatic $600 jump in value over the last five years, with the commodity reaching over $1,000 an ounce in February. Although the market has corrected slightly during the last month, gold still remains extraordinarily valuable at $900 an ounce.    

For customers — whose gold is valued based on the purity, or karat, and spot gold prices — the stronger the market, the more valuable their pieces. However, pawnbrokers also benefit from high gold prices when it comes time to resell an item or melt it down.  

While much of the gold purchased by pawnshops will be turned around and sold to customers, some of the less valuable or broken pieces, or “scrap” gold, is accumulated and sent to a refiner to be melted, says Oller. Depending on how much pure gold the melt produces, pawnbrokers receive a payment for the gold which is usually then reinvested back into the pawnshop to fund additional loans and purchases.  

Pawnbrokers are seeing increased competition from websites such as Like.com and Brokengold.com, which offer similar gold appraisal and purchasing services. But despite increased competition, Oller says that customers generally turn to pawnshops and jewelers first because they can shop around to sell at the highest price and can get cash immediately.              

NICOLE STORMBERG

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