They came bearing gold

With the price of gold soaring, struggling consumers are cashing in valuables

Recession Tales

April 03, 2009|By Scott Calvert | Scott Calvert,

Kristen Zeman needed to pay a $195 veterinary bill for her beloved horse, Mister Deeds.

Norman Flora, an out-of-work contractor, had major credit card debt weighing on him.

And Jim was behind on his mortgage. He also owed money to friends, which is why he would not give his last name.

All three converged Thursday at Smyth Jewelers in Timonium, bearing gold or silver items to trade for something even more precious right now: cash.

With gold soaring above $900 an ounce and the economy still sinking, precious metals dealers say this is a good time to transform gold to green by rummaging through forgotten possessions.

"It's an opportunity for people to turn around and get cash on things that are broken, don't fit, are out of style or they don't wear," said Smyth's Ruthann Carroll.

Nearly all of that precious metal is then resold to refineries, where it is melted and recycled into dental crowns, electronic components and jewelry.

Smyth has lots of company. In Maryland, the number of licenses for buying or selling secondhand precious metals has jumped 50 percent in two years, according to the Department of Labor, Licensing and Regulation.

Dealers hold shows at hotels and appear at house parties. Meanwhile, shopkeepers like Michael Merrill, a dealer since 1974, are seeing more cash-strapped customers.

"We have people selling lots of gold coins to pay a child's college tuition," said Merrill, whose shop is across York Road from Smyth. "Or their transmission goes up and there's a $1,000 bill they didn't expect."

For Zeman, a 38-year-old stay-at-home mother, it was a vet bill for her horse's allergy medicine. The Phoenix resident said her family is not in financial straits. But money is tighter. So, it was bye-bye to the jewelry she had stashed since she and a guy named Nick went steady in the 1980s.

When Smyth opened at 10 a.m., Zeman was one of a dozen customers waiting. The draw was a bonus buyback promotion. Through Saturday, Smyth is paying a 50 percent premium on gold, silver and platinum. For example, a 14-karat gold ring - that is, one with a 58.5 percent gold content - will fetch $352.80 an ounce instead of $235.20, still giving the store a profit. For silver, Smyth is paying $7.88 an ounce, up from $5.26.

As it is, the global price of gold is about double that of four years ago. In a recession, investors often seek gold as a safe haven.

Sales consultant Greg McMahon analyzed Zeman's plastic bag of bracelets, charms and earrings. He also noted in passing that people have brought in some unusual items, including gold used by dentists in teeth.

McMahon started with the magnet test: If it sticks, it is not gold. Then he peered through a magnifying lens to spot the markings that specify the karats. Because one charm had no markings, he scratched it on a stone, then applied an acid solution to the scratch. When that failed to erase the scratch, he knew the charm was 10-karat gold.

Finally he weighed the loot and told Zeman she would net $474, more than enough for the vet bill. "Are you kidding?" she said. "That's awesome."

Jim, who is 57 and a struggling carpenter from Carroll County, cashed in silver flatware and other items that had belonged to his late mother. He walked out with $378.

Flora, 67, brought old watches, rings and other pieces. The Parkville contractor does home improvements, but with no work he and his wife have been scraping by on Social Security and their children's support.

The watches turned out to be stainless steel, the lighter just gold-plated. But his four gold rings yielded $420 - 10 times more than a Parkville jeweler offered. (As Harry Loleas, the state's deputy commissioner of occupational and professional licensing, cautions, "It's sort of a buyer-beware situation.")

Flora felt a twinge of regret at parting with gifts from his wife. Still, with a rueful chuckle, he said, "This will pay one bill."

Flea market opens on site of economy victim C-Mart.

PG 18

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