Cash for Gold Bubble Bursts Despite Soaring Prices
Gold prices are at an unprecedented high and continue to increase, but many in the Cash for Gold businesses are finding that the once extremely lucrative venture is beginning to die down.
Recent reports are leading people to believe that with the influx in gold prices, has been an influx in Americans trading in their old heirlooms and scrap gold for cash.
Good Morning America detailed in a Wednesday report about the "new American gold rush." With gold selling at a whopping $1,800 an ounce, many are receiving big checks for gold they no longer want or need.
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GMA producer, Janice MacDonald, took some scrap gold to Atlanta Gold and Silver and earned $1917.17 for her loot.
"You are not allowed to kiss the people giving you the money," said a worker at the establishment.
But several other Cash for Gold businesses as well as jewelers that also buy gold are saying, what was a gold rush between 2008 and 2010 is now coming to an end.
Handing out fliers in New York's diamond district, Mariabi Peenya says the jewelry store where he works is struggling to find people to sell their gold.
"It's nothing like it was in 2008," says Peenya as he flagged passing New Yorkers, promising his price was best. "Either people are waiting till the price hits $2,000, or they are running out."
In response to the 2008 financial crisis, Cash for Gold establishments began popping up all over the U.S. While selling old gold is commonplace in many other nations such as Mexico, Turkey, and India, American culture never seemed to have a need for it until the recession hit.
Websites like Cash4Gold.com made selling gold especially popular and business reached an all time high after airing a commercial during the 2009 Super Bowl featuring rapper MC Hammer.
But many jewelry vendors are seeing that their gold revenue has diminished up to a third of what it was last year, as sellers are waiting for gold prices to skyrocket even more, or simply no longer have the gold to sell.
"The easier-to-let-go stuff has been let go, so it gets progressively more difficult given the move in the price to stimulate the same growth in scrap," said Philip Klapwijk, executive chairman of respected metals analytics firm GFMS Ltd.
Even countries where the gold selling business is a long, enduring tradition have seen their crowds thin out exponentially. Paulino Luna, who lives in Mexico City, Mexico and has been buying gold bullion for 25 years says that scraps and heirlooms just aren't there anymore.
"People don't have their parents' or grandparents' gold anymore, they've sold it," said Luna. "We are not seeing the same amount of volume that we saw before, every day there is less, of both gold and silver."
