Lombard New York Times Article
Featured in New York Times Business Section – Author Michael Barbarro – Photo By Fabrizio Constantini
In a Modern Gold Rush, Can Memories Beat $913 an Ounce?
Gold rushes should be simple money-making schemes.
And on the surface, this one is. With prices hitting record levels, people are melting down rare coins. They are digging through drawers for family heirlooms to pawn. And they are giving gold parties, inviting friends to walk in with gold and walk out with cash.
“Gold is coming out of the walls,” said Joseph Grunberg, a pawnbroker and jewelry shop owner in the Diamond District of Manhattan.
He said his clientele is the rich and not-so — a stockbroker came into his store recently to sell his $30,000 gold watch, but he’s also seen people hoping that their old class ring might help pay the rent. “It’s a mega-mega business right now,” he added.
But there are hidden costs to cashing in. As thousands of Americans rush to sell off pieces of their past — an ounce of gold now commands about $913, as of Friday afternoon, up about $240 from a year ago — they are confronting treacherous emotional terrain.
Behind every 18-karat gold herringbone necklace and 12-karat toggle bracelet is the story of a bad breakup or a late great-aunt.
That has turned the seemingly uncomplicated process of cashing in on gold’s surging value into an emotionally fraught experience, bringing new meaning to the notion of a precious metal.
“People tear up as they tell us about the jewelry,” said Michael Mouret, president of Louisiana Gold & Coins in Baton Rouge, who, like many storekeepers, has become a therapist for conflicted gold sellers.
A tough economy across much of the country is pitting memories against much-needed money. Rita Wallace, 50, has collected coins for 30 years, a hobby she inherited from her grandfather. Selling the coins as scrap gold, destined for melting, was never her intention.
But after watching the price of gold soar this winter, Ms. Wallace, who is unemployed, decided to send off for melting her United States Mint coins commemorating the Statue of Liberty, the Constitution and the founding of the Jamestown colony in Virginia.
In the end, she was paid $5,000, far more than the coins’ value as collectibles, she said. “Is it really what I wanted to do?” said Ms. Wallace, who lives outside Columbus, Ohio. “No, not really. But it made the most sense financially.”
Gold’s steady climb in price has been driven by a swooning stock market, a weak dollar and fear of inflation, which have prodded people to turn to safer bets, like ever-reliable gold. Its value jumped from around $660 an ounce a year ago to more than $1,000 in March.
Prices have slipped back to about $900, but the numbers are still attractive enough to drive thousands of Americans to raid their jewelry boxes.
To mitigate the emotional toll, a handful of pawnshops and jewelers are playing host to gold parties, where a combination of alcohol, food and banter has transformed a cold financial transaction into something resembling happy hour.
At one such party a few nights ago, with a 28-year-old teacher in Shelby, Mich., as host, a group of women drank wine and snacked on vegetables as a jewelry expert calculated the weight and karat value of their gold, writing them checks based on that day’s gold price ($880 an ounce).
Raegen Findlay, a 29-year-old homemaker, arrived with several dozen pieces of jewelry, some hers, some belonging to her mother. As it was examined, Ms. Findlay panicked, picked up her cellphone and called her mother. Did she want to salvage the gems from a gold ring before it was sold off and melted down?
“Nah, she said to go ahead and sell it all,” Ms. Findlay said, relaying the conversation with her mother, who wanted the extra money for a coming vacation. The gold from Ms. Findlay’s mother was worth $365 — a figure that drew applause from the women in the room.
While wrenching for some, selling gold is cathartic for others. Over the last few months, a woman named Diane, who lives in Tennessee and asked that her last name not be used, has sold more than $1,000 worth of gold jewelry given to her by her former husband, including a 14-karat herringbone necklace (sold for $500).
“If I had not gotten a divorce, I probably would not have parted with it,” she said. “But I did not need that kind of karma lying around the house.”
Stanley Crane, a 66-year-old coin and jewelry collector, said the high price of gold was the equivalent of a get-out-of-jail-free card for those who are stuck with, say, an 18-karat wedding band saddled with emotional baggage from a breakup, or a chunky gold charm bracelet that has fallen out of fashion.
“It forgives a lot of bad stuff and makes up for a lot of mistakes,” he said.
Mistakes like damaged coins. For years, Mr. Crane, a retired trucking company employee in White Lake, Mich., has tried to unload dented and scratched coins that have languished in his collection for lack of a buyer.
When gold prices began to surge this winter, the weight of the flawed coins overshadowed any aesthetic flaws. He just traded an imperfect gold coin worth $936, at the time, for two smaller gold coins, potentially worth much more because they are in mint condition.
Not everyone’s story ends that happily, or profitably. Many are discovering, much to their embarrassment, that all that glitters in the back corner of their jewelry box is not gold — or at least not the valuable kind.
Several weeks ago, a 30-something woman walked into Lombard Mutual, the pawnbroker and jewelry shop in Manhattan, to find out how much a pair of gold drop earrings might fetch.
Behind the counter, the shop’s owner, Joseph Grunberg, performed a routine test and delivered his verdict: “Gold plated,” he said.
“I’m shocked,” responded the woman, who would identify herself only as Jessica because of what she said next. “It figures. My boss gave me those earrings right before she fired me.”
“She claimed,” Jessica added, with disgust, “that they were real gold.”