Wednesday, March 12, 2008

Consumers in a rush to cash in as gold price nears $1,000 U.S.

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Consumers in a rush to cash in as gold price nears $1,000 U.S.
PAUL BEATY/AP PHOTO
Richard Rozhko, owner of Howard Jewellery in Chicago, shows some gold items customers have sold to him. Pawnshops and jewellers say some Americans are selling gold trinkets to cope with tough times.
From medals to chains, almost any trinket is now fair game for sale
March 12, 2008
Associated Press

CHICAGO–A new kind of gold rush is unfolding at jewellery store and pawnshop counters – featuring not prospectors, but consumers.

White-collar workers, retirees and many others have been digging through jewellery boxes and safety deposit boxes to cash in as gold prices flirt with $1,000 (U.S.) an ounce. Coins, old wedding rings, necklaces given by ex-boyfriends, hand-me-down gold pieces – everything is fair game these days.

Shop owners across the United States are marvelling 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 jewellery.

"Everybody's trying to sell," said Richard Rozhko, owner of a jewellery 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 jewellery 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.''

Folks are catching gold fever in Toronto too.

"People are selling gold because they believe it's at an all-time high," Alec Van Rijk, a long-time jewellery dealer on Eglinton Ave. just east of Yonge St., told the Toronto Star's Lisa Wright.

Yesterday he bought a 23-ounce gold bar from a customer for $21,100.

"I think the minute it hits $1,000 an ounce it will light a spark for more (prospective customers) to come out of the woodwork," he says, although he doesn't get the sense that things are as crazy as they were back during gold's last bull run.

"People were lining up to sell their gold back in 1979. I think people today are thinking it's going to go up further," Van Rijk added.

Maurice Aron, another buyer out of Maurice Ltd. on Cumberland St., said he's seeing an increase in business not only from people wanting to sell but also to buy his jewellery, thinking it's going to double in the near future to $2,000 an ounce.

"We're buying a lot of coins and medallions, chains and broken rings, which we send to the melters. But we're also selling a lot too," Aron noted.

"People are also holding on to their gold because they realize it's a hedge against inflation, and it's a good investment," he added.

Gold futures for April delivery rose $4.20, or 0.4 per cent, to $976 an ounce on the Comex division of the New York Mercantile Exchange. On March 5, the price reached $995.20, the highest ever for a most-active contract.

Meanwhile Royal Pawn Shop, a 75-year-old business within earshot of the rattle of passing El trains in Chicago's South Loop, has display cases sporting fancy gold rings, bracelets and watches along with racks holding hundreds of pawned fur coats. It also has more office workers as customers these days – mostly sellers, not buyers, bringing in gold chains and rings.

"It's stuff that's lying around the house, so they figure: Why not make money from it?" said co-owner Wayne Cohen. "The price of gold is so ridiculously high that they'd be stupid not to get rid of it.''

Others are selling to help cope with tough times in an economic slowdown.

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