Gold Reflection Jewellers owner Steve Saikley says more people are selling gold but fewer are buying.
People who sell old wrist watches, dusty heirlooms and used jewellery to pawn shops in and around Centretown will see more cash in hand if their goods are made of gold.
Local jewellers and pawn shops are buying used gold at inflated prices as the cost of gold soars. Ernest Marbar, owner of Gold Lobby on Bank Street, says his prices match market trends.
“I go as high as double what I paid for gold a few years ago,” Marbar says.
“And I think the market upswing will go even higher.”
Steve Saikley, owner of Gold Reflection Jewellers on Dalhousie Street, says twice as many people are selling their used gold to his store compared to last year.
“People are trying to cash in on all the scrap gold they have,” Saikley says.
The price of gold has increased steadily in the past year, peaking at nearly $1,200 an ounce earlier this month.
That’s up from just below $800 per ounce last January.
Ian Lee, director of Carleton University’s Sprott School of Business, says gold is one of the few commodities that holds its value and is unlikely to go down in price.
“You can’t debase gold. An ounce of gold is an ounce of gold,” Lee says.
He says economic uncertainty and the declining U.S. dollar pushes many investors into more reliable stocks such as gold.
With the U.S. dollar down an average 20 per cent since 2002, Lee says it’s no surprise the price of gold is sky-rocketing.
“If you’re an investor, you want your money out of U.S. dollars,” Lee says.
“When the gold price is going up, you can think of it as a barometer of the confidence in the U.S. economy.”
And the results can be seen in gold retailers such as Larry’s Pawn Shop on Wellington Street West, where manager Jamie Taller says a small piece of 24-karat gold would fetch at least $30.
“I’ve always bought and sold gold at a higher retail price, but lately I’ve gone even higher,” Taller says.
But gold’s increasing value doesn’t necessarily mean businesses are making huge profits. Saikley says although more people are selling gold, fewer customers are buying jewellery and other retail gold items because the precious metal is too expensive.
“The majority of people don’t have much money, so can’t afford to buy big pieces of jewellery,” Saikley said.
With the price of gold still expected to rise, store managers say they worry more people will avoid purchasing gold items but continue to sell their unused pieces.
Bad news for store owners, but good news for anyone looking to make some extra money off that dusty bracelet in the back of a drawer, the watch that stopped running years ago, or the wedding band from a marriage that crashed along with the U.S. economy.
Lee says he has no doubt the price of gold will continue to increase as confidence in the U.S. economy continues to decline.