FRIDAY, MARCH 14, 2008
Jewelry Selloff Spurred by $1,000-an-Ounce Gold
People are rushing to pawn shops to sell jewelry after gold topped $1,000 an ounce.
AP reports:
White-collar workers, retirees and many others have been digging through jewelry boxes and safety deposit boxes to cash in as gold prices flirt with $1,000 an ounce. Coins, old wedding rings, necklaces given by ex-boyfriends, hand-me-down gold pieces -- everything is fair game when it brings this kind of profit.
Shop owners across the country are marveling about the phenomenon they say began in the latter part of 2007 and accelerated through the winter, reflecting torrid gold demand like none had ever seen. There are even gold parties, where people gather to sell their jewelry.
"Everybody's trying to sell," said Richard Rozhko, owner of a jewelry store on the northern edge of Chicago. "People are trying to cash out because they don't believe that gold's going to go higher than $1,000 or $1,200" an ounce.
Rachel Weingarten, a New Yorker with a self-described obsession with "shiny trinkets," didn't need to sell but couldn't resist the chance when she saw prices soar like an overinflated tech stock.
"When I saw the prices going through the roof, I saw it as an amazing opportunity to rid myself of jewelry that no longer suits my taste or status," said Weingarten, a marketing consultant. "It's also been a lot of fun to get cash for stuff that is broken or just really ugly or just takes up room in my drawers."
The Grand Rapids Press says some jewelry shops are simply selling used gold pieces for scrap rather than repairing and selling them to customers:
With gold prices skyrocketing, Wepman Brokers owner Tonja Wepman has found it's no longer worth repairing and cleaning gold jewelry for resale.
She can make the money faster -- about $20 a gram or $567 an ounce-- through scrap. ...
While high gold prices may increase the cost of jewelry, some electronics and dental items, the average consumer might not notice, said Laurence Blose, a Grand Valley State University associate finance professor who researches the gold industry and prices.
In response to high prices, mining companies will look to increase production and jewelers might use lower grades of gold or other materials.
"When prices get very high, there is all this pressure," Blose said. "There is sort of a regression to the mean."
Posted at 12:15:00 AM
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