People cashing in, as precious metal prices soar

As investors send prices soaring for not only gold, but now also silver, consumers have been unearthing ancient stashes of silverware, teapots and jewellery from long-discarded beaus, and trading them in at pawn shops or selling them on eBay for cash.

“We’re seeing an increase of people coming in from all walks of life because they hear the news — gold and silver prices are at record highs, so they’re basically grabbing what they have in their home and coming in to pawn, or sell, the items,” said san Diego-based cashCo Pawn owner Yigal Adato.

The sharp increase in prices of gold and silver has had an effect across the spectrum of retailers dealing with precious metals. Plain old silver enjoys new cachet among jewelers moving away from gold. And jewelry designers are opting for cheaper alternatives than metals — like emeralds, in one case.

Marriage time

Even the business of marriage enters in. Bands of gold are getting closer in price to the diamonds that sit on them. And Indian weddings, with traditional displays of celebratory gold, may be less gilded this summer. Gold has been surging for years, and recently it almost hit $1,570 for a troy ounce (a nominal high, not adjusted for inflation). Silver, measured by futures for July delivery, is almost as high as it has been since 1980, at more than $48 an ounce, though that comparison, too, is not adjusted for inflation. So far this year, the price of silver has risen more than 50 per cent.

Pawn shops are benefiting. Three publicly traded pawn shop companies, Cash America,
EZCorp and FirstCash Financial, recently reported sharp increases in net income compared with a year earlier.

Worried about inflation, and wanting the stability of precious metals, investors are buying them in coins, and via vehicles like the iShares Silver Trust, an exchange-traded fund backed by silver.

“Investors who feel they may have missed the boat with gold have jumped into silver because it has a better price point,” said Barclays Capital precious metals analyst Suki Cooper. Yet even if investors think $48 an ounce is reasonable, jewelers say the price has turned once-plebian silver into something extravagant.

“I felt you’d never see the day when silver would start to jack up like this,” said jewellery designer Alexis Bittar, whose designs are sold at stores like Saks Fifth Avenue and Nordstrom. “It’s always been considered not like a base metal, but fairly close to it.” He added, “But next to gold, it’s the next precious metal in line, and it makes sterling seem more luxurious.”

Bittar, whose jewellery typically sells for a few hundred dollars, said he was making shifts to keep prices flat. Brass, for instance, substitutes as a base for silver on items that will be coated with gold, and he is reducing the amount of metal used in some designs.
J C Penney, which is also trying to keep prices flat on most items, began using alternative metals when gold prices started rising, and now sells items made with sterling silver, cobalt and Platinaire, a mix of silver and platinum, said Penney spokesperson Rebecca Winter. Also, she said, the retailer realised that customers did not mind paying higher prices for trendy pieces.

In February, Penney introduced Alexandra Gemstones, a line meant to capitalise on the popularity of colorful accessories while avoiding silver and gold. Jewellery company Stauer president Michael Bisceglia is also emphasizing gemstones - even rubies, he said, can be had at low prices. As for Indian weddings, some changes are under consideration. Indian weddings typically involve a lot of gold jewelry, said Anu Duggal, a founder and the executive vice president for new business development for Exclusively.In, a site that sells Indian fashion and jewelry and just introduced a weddings section.

“It is very common for not only the bride and groom, but also the family members to purchase new outfits and jewelry for these events,” Duggal said in an e-mail. She added, “Gold itself is the most common gift given during weddings, and it is customary for the bride to wear pure gold as part of the formal wedding ceremony.”

But as the cost of gold has shot up, brides are altering the tradition, shifting to semi-precious and gold-plated jewelry, Duggal said. “This is becoming more and more acceptable,” she said. At CashCo Pawn, the metals rush has brought in lots of silver inventory, like coins, teapots and flatware. “People receive Tiffany silver items,” Adato said, “and the girlfriend brings it in to sell — they say: ‘You know what? I broke up with this guy. I don’t want to see this anymore.’”

Alpharetta, Georgia-based Cherokee Coins owner Joe Ellis said he had never seen higher demand for gold and silver bars. Customers want coins like the United States silver eagle, generic silver bars, circulated silver dollars, and dimes and quarters from before 1965, when they were made with 90 per cent silver.

Cherokee accepts pawned items, but, Ellis said, that business had slowed. During the recession, he accepted a steady stream of items like broken bracelet chains and silverware, but now, he said, his customers seemed to have little left in their attics and basements. “Quite frankly, I think people just have so much they can sell,” he said.