It takes a golden touch to buy, sell used jewelry
Posted on Sunday, August 17, 2008
Heather Barlo is taking her Friday lunch break at a West Markham Street pawnshop.
The 52-year-old loan assistant at First Security Bank on Cantrell Road is sitting in one of the Braswell & Son cubicles selling a few pieces of broken jewelry.
“I’m trying to pay off my credit card bill,” she said.
Douglas Braswell, owner of Braswell & Son, said he’s seen more and more people hawking their jewelry — 40 to 60 people a day compared with five or six a year earlier.
Barlo said the trip was her second visit to Braswell & Son that week: “[People ] are really struggling; a lot of my friends are single mothers raising kids,” she said, adding that she’s probably gotten about $ 600 out of her gold jewelry.
She is among those pinched by rising prices in general and a slowdown in the economy and who are willing to part with their gold rings, bracelets and watches.
Gold is traded on a division of the New York Mercantile Exchange, where the market price is set for the precious metal. The exchange is regulated by an independent arm of the U. S. government, the Commodities Futures Trading Commission. Independent refiners, scrap gold dealers and other buyers individually use the futures price as the benchmark price of scrap gold.
In 1974, restrictions on individuals buying, selling or purchasing gold were removed, according to the Federal Deposit Insurance Corp. Web site.
In Arkansas, the State Police oversees gold buyers, such as jewelry store owners, that send jewelry to a refiner to be melted down. Arkansas Code 17-23-204 establishes ways to trace transactions of bullion from purchase of initial items to meltdown to purchase of the refined gold.
Additionally, pawnshops are registered by cities and must report their purchases, said Tim Collier, the president of the Arkansas Pawnbrokers Association.
Investors often turn to gold as a hedge against an unstable economy — seeking shelter in the precious metal which is historically more stable than stocks and currency. The gold items sold by people such as Barlo account for a huge portion of the precious stuff in the market, according to Duvall O’Steen of the World Gold Council. In the first quarter of the year, roughly a third of all the gold on the world market was recycled, O’Steen said. The New York-based organization represents gold mining companies around the world.
The price of gold shot up to $ 1, 018. 50 per troy ounce on March 18, and though it has steadily dropped, reaching $ 814. 50 on Thursday, it is still well above the $ 699. 40 market price of July 5, 2007, according to Bloomberg.
Brian Wallis, a general manager of Dallas-based Dillon Gage Refining, said that “When there is any panic at all, or oil looks like it’s going to get expensive again, gold goes up.”
Conversely, when oil prices fall, so do gold prices. The cost of hauling goods such as groceries is closely tied to fuel costs, so when oil prices and then fuel costs are lower, the economy appears stronger and gold loses part of it’s safe-harbor luster, said Mark Funk, an associate professor of economics at the University of Arkansas at Little Rock.
After reaching $ 147. 27 a barrel on the New York Mercantile Exchange on July 11, oil dropped to $ 115. 01 on Thursday.
“The extreme thought is that inflation gets really bad like in Zimbabwe and currency absolutely loses meaning, you have to get something to get through life and you have to go to market, gold will always be accepted by people who want to make those trades,” Funk said.
Trading gold on a regulated exchange is one thing, selling gold at the corner pawnshop is another.
Most people can’t distinguish between 24-karat, or pure gold, 18-karat, which is 75 percent pure, 14-karat, which is 58. 3 percent gold, or 10-karat, which is 41. 7 percent pure, said Laura Stanley, the vice president of Stanley Jewelers at 3422 John F. Kennedy Blvd.
Most scrap gold buyers will pay 10 percent to 20 percent less than the current market value, according to goldprice. org, to account for market price changes, shipping and other costs that eat into their profit.
Wallis said some buyers will offer as little as 30 percent of the market value. However, refiners often will pay 95 percent of the gold’s market value; they do large volume and operate on small profit margins, he said.
Barlo said she compared prices in advertisements in the newspaper for several days before selling her gold items, and on a recent Friday, she said Braswell & Sons “was giving the best price.” Said Collier: “There are a million different ways to skin a cat; a pawnshop that doesn’t actively solicit gold sales probably isn’t going to pay as much.”
Braswell said some scrap gold buyers are preying on the ignorance of consumers.
And O’Steen of the World Gold Council said that while “a consumer can’t walk into a retail jewelry store and get retail value,” in some instances a jeweler could be buying the piece of jewelry to resell. “It’s not [always ] just the gold gram weight, it’s the design.”
In addition to checking ads and comparison shopping, gold sellers can check the market value of an ounce of gold on Web sites such as kitco. com or bul lionvault. com.
Someone seeking to sell a 1. 72-ounce, 14-karat gold bracelet on a day when gold was trading for $ 800 should ensure that the buyer measures the gold in pennyweights, a common measure of gold jewelry. There are about 20 pennyweights in a troy ounce. Since a 14-karat ring is about 58 percent pure gold, the seller has about 1 ounce of gold to sell — 20 pennyweights times $ 40 is $ 800.
Don’t expect the buyer to offer full market value. He has to make a profit.
An employee at Big Daddy’s Pawn Shop at 2523 W. 12 th St. said gold is bought there for a third of what it’s worth on the gold futures market.
“There has to be room to make money or you wouldn’t be in business,” said the employee.
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