There is no more scrap gold

Weiss

An overstatement, surely. But there is little doubt that the Cash4Gold phenomenon has worked its way around the US and even the world (Dubai and India both reported massive melting of "scrap" recently). Every jewelry store, pawn shop, coin shop and motel circuit coin buyer has beaten the "highest prices paid guaranteed" horse to death.

Was there enough scrap gold moving out of the jewelry box into the crucible to depress the price of gold? How will the gold market move now that it appears the lowest hanging fruit has been picked?

clouisejewelers

I did a large gold party last night. It was a fashion show/cancer fundraiser sponsored by friends of mine. It is an annual event and tehy asked me last year to be a jewelry vendor and gold purchaser. There are over 400 guests present and 20 vendors. Last year I did a brisk business and raised a lot of money for the foundation. This year I bought $0 in gold. Not a single gram. All the ladies stopped by my table to browse my jewelry and they all said "Oh, I went to a gold party already and sold all my gold." I think I am done doing these events, because volume is way down or nonexistent.

What happens when there is no more scrap? If demand stays close to what it has been you could see premiums rise again as supply dries up.

secondrepublic

The fact that gold has been sucked up from these sources suggests a shortage in supply.

dbcoin

Very interesting observations. Some have theorized that China is behind the whole cash for gold thing. I think if gold were to hit a new high near $1500, you would see more gold come out of the woodwork for sale. Everyone who has wanted to sell at these prices, has.

topstuf

I can't find the email from a week or so ago, but I have a loan out to a colleague I know from when we had the shop open that he uses to handle the VOLUME of ...scrap... he has been taking in.

He is buying an average 12K per week and had a week last month that topped 37K

cars

There is no more??

clouisejewelers

<< <i>There is no more?? >>



There's always more, but much of it is gone. People have sold off their 1980's Mr. T chains and the "old boyfriend" gifts, but are keeping their wedding rings. If gold gets high enough or people get poor enough I guess they will sell their wedding bands but the low hanging fruit is gone.

fc

maybe the people who have the gold chains, rings, and etc... are a
different demographic now days. for some reason when i walk through
the mall it is not white people wearing a lot of gold but asian, indian,
and black.

perhaps the gold buyers are targeting the wrong crowd now days?

but that is probably stereotypical.

i am reading that scrap gold is coming in by the truck loads in other
countries.. like india. it then heads to the middle east.

gold is a global commodity and just because it dries up in one area
does not mean it is flush in others.

also, i would consider small gold rounds and other small bars to be scrap
gold in my book. plenty of that around in strong hands right now who
recently purchased it. in time that will come up for sale. when? i have
no idea.

MoneyLA

I have a lot of gold jewelry, some of it women's jewelry that I inherited from an Aunt who passed about twenty years ago. Big heavy bracelets, chains, pendants, etc. But I wouldnt sell it... not at these prices. And I think there are a lot of others like me who wouldnt sell their gold that just sits in safe deposit boxes.

I think the gold that has been sold so far comes from folks who really need the money.

I have a friend with a gold buying store in Beverly Hills and business sucks. As I told him... Beverly Hills residents aren't selling scrap gold... they dont have any scraps.

For those of you watching the resale market... it will take prices well north of 1,000 for this new inventory to be made available. prices of 1200 or 1500 would definitely make folks sell. Heck I'd get rid of Aunt Evas gold watch and bracelet and that "deer pin" at 1500 an ounce.

roadrunner

The last quarter's number I saw for scrap gold processed was >500 tons. It looked like we could easily do 1300 tons, if not 1500-2000 depending on how much staying power "cash for gold" has. This huge amount basically fills in the gaps for falling miner production since 2003, waning central bank gold sales, and other sources. Considering jewelry, scrap, coins, etc. probably makes up 75% of all the gold known, it's hard to say when or how it comes market. India supposedly owns the majority of that amount which is rather incredible. The ETF's have accumulated something on the order of 400-500 tons in the last several months and the question is where is it coming from? One possibility is scrap. Another choice is "paper derivatives." If that much gold really left the market, one would think the pog would have been affected more.

Rob Kirby looks at the gold carry trade - central/bullion bank leasing

roadrunner

secondrepublic

The amount of gold the average person has in jewelry is probably pretty small. Those rings and heavy bracelets are usually only 14 karat gold, which is only 58.5% pure. I helped my dad sell some "scrap" when gold first hit $1,000. When you weigh all the stuff and do the math, it really doesn't work out to as much you would think.

Definitely, at the higher price points more people will sell their gold. The sentimental attachment to Great Aunt Jane's wedding ring or necklace will give way if the price is high enough.