As gold prices skyrocket, area residents are searching through closets, drawers and jewelry boxes to find rings, chains or other items worth selling.
For many, the question becomes: Is that old watch from Uncle Bernie or hand-me-down ring from Aunt Dottie worth keeping? Or should I sell it and pocket the cash to pay off a credit card?
For the first time the price of gold last week spiked above $1,800 an ounce. The result has been a steady flow of items brought to area retailers and jewelers, who buy gold from cash-strapped residents and resell it or send it to refiners who melt it as scrap.
Retailers are also seeing a second stream of people: gold buyers who are betting the precious metal’s price will continue rising.
Those are investors who would rather put their money into gold than trust the value of U.S. currency, said Dave Varabioff, a Spokane gold buyer, seller and refiner.
“I can sell people a gold nugget for as low as $10, on up to whatever amount they want,” said Varabioff, who operates the gold-selling website Goldbay.com.
But buyers have been outnumbered by gold sellers, and Varabioff and other dealers say it’s all about having enough cash to buy food and cover mortgage payments.
They saw a similar boom in selling in 2009, when gold first hit the symbolic $1,000-per-ounce mark.
The 2011 volume is not that high, but it’s clearly higher this year than last, area gold dealers say.
“People said a few years ago, ‘Wow, there can’t be much more jewelry or scrap in the market,’ ” said Mark Lax, owner of the Pawn1 group of stores in Spokane and Idaho.
“That’s clearly not true. There are always lots of people who haven’t had to sell items yet, or just aren’t aware of what they have in their homes.
“Personally, I think the supply (of personal gold items) is endless,” Lax said.
Gold trading a growing sideline
The surge in gold selling is spurred by three factors, said Dan Austin, owner of Spokane-based Austin’s Fine Jewelry. People are hurting financially, he said. They’re acutely aware gold is selling at record levels. And, many more area dealers and buyers have jumped into buying gold and are marketing themselves.
Austin said his business still relies primarily on selling bridal jewelry, but gold trading has become a strong secondary operation.
“We are buying more ounces of gold by maybe 30 percent than a few years ago,” he said.
Lax and Austin agree that the gold rush also increases chances of customers getting ripped off by less reputable dealers.
Austin said his gold-buying approach is based on fairness and sympathy.
When someone brings in items – anything from old dental crowns to rings to broken bits of chain – he knows the situation is emotional and difficult for the seller.
“They’re uncomfortable. Many people don’t know the value of what they have. They don’t always know what to expect when they come in,” he said. “The jewelry store is not their natural turf.”
Austin said he tries to take on a role similar to a physician: “People at that moment really want to be treated with respect and dignity.”
This spring, Rathdrum resident Elva Howard brought a ring to Austin to consider selling. It was a gold diamond ring from her late husband, with a 7-carat diamond. Now 87 and sharing a house with her 67-year-old daughter, Howard said she wanted to sell the ring to produce a financial safety net should their water pump fail or some other emergency occur. But she also felt the rise in the price of gold made the ring a risk to keep around.
“The way things are, I’m scared to wear it anymore,” she said.
Austin realized the ring was too valuable to sell in Spokane and arranged for it to be sent to a major jewelry show in Las Vegas. A broker bought it for around $29,000; Austin took a $2,000 cut and gave Howard a check for $27,000.
A few weeks later Austin had a visit from Spokane Valley resident Colleen Larson, who’s 38, married and the mother of two children.
Faced with unpaid medical bills for a family member and her own severe hip problems, Larson decided to sell her gold wedding ring. She decided not to tell her husband about the visit, she said.
Austin paid $980 for the ring. Larson showed Austin two other, less expensive rings, which fetched another $60.
She told her husband, who was furious, Larson said.
“Mostly, he was upset because he thought I got too little for the ring,” she said. He called around and checked with other buyers to compare prices. “When he found out I got the right price, he felt better,” Larson said.
She said she has another gold ring passed down by a relative. She plans to re-size it and use it as her wedding ring.
Price has brought out ‘gold pirates’
Austin said what he pays, and the manner he treats people, no doubt reflect his longtime aspiration to have become a personal counselor.
“Mary Kay Ash, the founder of Mary Kay Inc. cosmetics, said something I believe strongly. ‘Treat everyone as though they have a broken heart. They probably do,’ ” he said.
Lax, of Pawn1, said he warns friends and others to be careful where they sell gold. “There are bad people out there, I’m sure of it,” Lax said, adding that the price of gold brings out “gold pirates” in the market.
It happens at the buyer level, where a dealer or shop owner will offer well below market value.
It happens on Craigslist or at garage sales, where people advertise items as gold that turn out to be junk.
Isaac O’Bannan, manager of Coins Plus, a North Spokane coin shop and gold seller, said he’s seen the same “gold” chain come back three times to the store.
Each time, a different owner came in convinced the chain was valuable because it had a tiny mark reading “18 karats.”
“I could instantly tell it was brass, since it was tarnished, and 18 karat gold will not tarnish,” he said.
O’Bannan took a file and removed the 18-karat mark. “It was just like counterfeit money, so it really should have been taken out of circulation.”
Said Lax: “It’s America, good or bad. In good times we have people pulling Ponzi schemes. In bad, we have people scheming to buy gold on the cheap.”
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter