NEW YORK (Reuters) - In economic hard times, investors traditionally buy gold, but more people hit by the recession are now selling the precious metal, jewelry, and even gold teeth, to raise cash.
People are scouring through attics and jewelry boxes for gold, silver, diamonds and anything else of value to help pay the mortgage, the gas bills, or to buy gifts to put under the tree, gold industry observers said on Thursday.
“When the price of gold upturns, a lot of people start rummaging through their closets looking for gold to sell,” said Eric Harris, co-owner of Niletti Creations, which sells jewelry in New York’s “Diamond district,” on West 47th Street.
“They use the money for whatever they need. It could be for necessities, it could be for vacation, it could be for Christmas presents.”
Harris said his scrap gold business was about 50 percent higher this year over 2007. Gold bought back from consumers is usually melted down by refiners and used to make gold bars.
With the recession starting to bite and gold hovering around $850 per ounce, more and more people are turning to the family jewels as a source of quick money.
The Internet is full of sites buying wedding rings and heirloom diamonds, while cable TV ads offer the highest prices for necklaces and bracelets which the seller can just pop in an envelope and deposit in the mailbox.
One site, Empire Gold Buyers (empiregoldbuyers.com), offers secure Federal Express shipping and advertises it will pay 98.5 percent of the current market price. For a 24-carat gold item weighing 25-50 ounces, it currently will pay $845 per ounce. For dental gold, the price is lower — $568.
David Becker, chief executive of Idonowidont.com — a website for jilted lovers or the divorced to sell unwanted jewelry and wedding items — said there was a huge spike in traffic and listings in September and October.
“In the absence of anything else I can only ascribe it to the economy and wanting to make Christmas brighter.”
THREE D’s — DEATH, DIVORCE, DEBT
“If someone has something in a drawer that can bring in a few thousand dollars, it can make the difference between making the mortgage payment or not,” he said.
The alternative is selling in a consignment store, which could take ages to sell, or hocking items at pawn shops for a loan worth sometimes only 25-30 percent of the real value.
“There are three D’s for why people sell — death, divorce or debt,” said Becker.
“Plenty of people have rings from a first marriage or something from Aunt Edna. Sentimental attachment might make it harder to sell, but if you can walk away with $3,000-$5,000, it makes a difference.”
Dr Joyce Brothers, a nationally syndicated psychologist, said it was easier nowadays to part with family jewelry. “You used to have gold and heirlooms passed down over generations and they had stories attached and were meaningful.
“But nowadays, with more divorces, you don’t have those long family lines, so why not get out from under bills by selling some old coins. Things don’t have the same meaning as Uncle Jack’s watch used to,” she said.
Jim Steel, a precious metals analyst at HSBC in New York, said gold recycling tends to be more related to prices than economic conditions. “But I would not discount the distress element of unemployment and things like that.
“But there was always a stigma attached to going into the pawn shop. My grandmother would never have hocked my grandfather’s wedding ring,” he said.
According to World Gold Council figures, more gold is being recycled this year as the global economy turned south.
An estimated 244 tonnes of gold were recycled in the third quarter of this year at an average price of $871 per ounce. That was up from 215 tonnes at $680 in the same quarter of 2007, but down from the peak of 321 tonnes at $925 in the first quarter of this year.
“There is an element of uncertainty, with growing fear of longer-term inflationary consequences, which has translated into higher gold prices,” said Steel.
“Scrap is a balancing agent. If the (gold) price is over $900 there is an increase in scrap; under $700 it dries up.”
Additional reporting by Frank Tang in New York, editing by Matthew Lewis