miami herald gold buy

Record prices ignite a gold rush.

Cash strapped South Florida consumers looking to unload their golden treasures should shop around for the best return.

By Elaine Walker:

In more than 53 years of business, Louis Morningstar has never seen anything like the hundreds of people who have lined up during recent weeks in his downtown Hollywood jewelry-and-pawn shop to sell their gold or use it to get loans.

With Gold hitting an all time record of more than $1900 an ounce a week ago, raiding the jewelry box has become a way for people to generate extra cash in these tough economic times.

“Most people are astonished with that they walk out with,” Morningstar said. “they never dreamed that what’ sitting at the bottom of their jewelry box could be worth a thousand dollars or more.” The same picture is being replayed around South Florida as the gold-selling business at jewelry stores, kiosks, coin stores and pawn shops stretching from Coral Gables to Aventura and Fort Lauderdale. Add in online sales and home parties, and you’ve got a boom.

With gold prices so high, almost anyone willing to part with a few trinkets can walk out with a few hundred dollars; with only a small handful of gold it’s easy to hit the $1,000 mark. “With the economy no so good, people are taking advantage of it,” said John Albright, owner of Gables Coin & Stamp Shop. “Most of them need the money to pay bills. They’ve been shopping around for the best price.”

Janet Shields is one of those customers. She arrived at Morningstar’s shop Friday morning with a bag of gold jewelry, hoping it would generate enough money to pay her utility and grocer bills. The Hollywood single mom has seen her work as a massage therapist dry up in recent years because of the recession. She’s already maxed out her credit cards, so now she’s selling whatever she can to get by. Last week, she got $400 selling the gold coins her aunt left her.

“It’s a very sad day,” said Shields, as she waited to see how much she would get for the necklaces, bracelets, and charms, including the boy and girl charms for each of her children. “I don’t have any choice. I’m thankful I have something to sell.” But when Morningstar offered her only $950, Shields wasn’t happy. She had received an offer last week at another jewelry store of $1,400.

The problem is that gold prices slumped for several days last week, dropping to a low of $1705 and erasing most of the gains posted, during August. But Friday gold prices had rebounded to close at more than $1,825. Shields held her ground Friday at Morningstar’s and eventually walked out the $1,100 in cash for her baubles. She wasn’t taking any more chances.

“I guess you’ve got to bargain with them,” She said. “But I’m really kicking myself for waiting. I better take it because gold could go down again.” Until this week, the price of gold had been climbing steadily for the past seven weeks, the longest rally since April 2007. Gold is in the 11 th year of a bull market, the longest winning streak since least 1920 in London. Investors typically turn to gold in times of economic uncertainty, seeking to diversify away from equities and currencies.

Since the financial crisis in 2008, central banks around the world have bought gold as a hedge against their foreign currency holdings. Earlier this month, South Korea announced it had bought gold for the first time in more than 10 years. The biggest gold exchange-traded fund, SPDR Gold Trust (GLD), briefly this week surpassed the SPDR S&P500 index ETF (SPY) in market capitalization.

At Gables Coin & Stamp, some days they’ll sell a dozen gold coins and supplies have to be reordered multiple times a week. “There is the belief that gold is a wonderful store of value,” said Richard Gotter, managing director of Florida for Wescott Financial Advisory Group. “Gold makes people feel comfortable during economic uncertainty. The price is going up because investors are flocking to gold as a safe haven.”

It’s why gold ascent often relates with a recession. In October 2007, gold sold for about $740 an ounce. It briefly broke $1,000 in March 2008. But it wasn’t until the fall of 2009 when gold prices rose solidly above the $1,000 mark, then hit $1,200 a year later. In recent months, that climb has only accelerated amid concerns over the U.S. debt limit, financial crisis in Europe, a possible dip recession and a faltering stock market. Gold prices are up nearly 40 percent in the last 12 months.

“Everybody wants to sell at the very highest point, but nobody has a crystal ball to be able to know when that is,” said Jeff Malvin, owner of Beverly’s Jewelers, which as threes stores in Fort Lauderdale and Pembroke Pines. As gold prices have risen, so has the competition for buying gold. Services like Cash4Gold and Money4Gold, both based in Broward County, are part of the online craze that encourages consumers to mail in their gold. In almost every shopping center you’ll find someone offering to buy gold. They’re also competing against independent consultants that offer private consultations or in-home parties.

There’s no standard price on how much shoppers will get for the jewelry. Some places will pay as much as 90 percent of the market value of gold, reduced based on how much below 24-karat the piece is. But others pay as little as 65 percent of the market value.

At King Jewelers in Aventura, most of the gold they buy is melted down at the store and used to create new pieces of jewelry. By comparison, most businesses buying gold jewelry in South Florida send it to a refinery and only act as a middle men. “We have a competitive advantage because we eliminate the refiner,” said Jonathan King, chief financial officer of the family-owned King Jewelers, which is why he estimates the store pays about 15 percent more.

Rachel Altchek, owner of A Golden Ticket, started her business two years ago and goes directly to clients around the tri-county area for private consultations or parties. She gives the host 10 percent of what she pays out at the party; often the events become fundraisers for schools or local charities.

“I can pay a lot more because I don’t have a store front and any overhead,” said Altcheck, who works out of her Coconut Grove house. Meredith Gussin has been to several of Altcheck’s parties, selling chains, earrings, a class ring, sorority pin and Bat Mitzvah presents for a total of about $1,200.

“You have to all this jewelry you never use that you don’t even realize what you’re sitting on,” said Gussin, who lives in Pinecrest. The good news for jewelers is that some customers, like Gussin are using those profits to reinvest in new jewelry. That’s a plus for a market that has seen a fall off in gold jewelry sales. The only business remains strong is bridal jewelry, where the cost of the engagement ring is still more about the diamond.

Rising gold prices have sent price-conscious consumers to other metals. Some brides and grooms are buying wedding bands made from alternative metals like tungsten or titanium. Silver fashion jewelry has gained popularity, with designer collections featuring gold and diamond accents.

“You can get a heavy silver piece for $300 or $400, which makes a nice gift,” said Raju Khiatani owner of Barclay’s Jewelers in downtown Miami’s Seybold building. “That same piece in gold might cost $3,000 or $4,000.”