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Have We Reached The End Of Gold Buying Off The Street? | October 02, 2013 (0 comments)
Merrick, NY--Most jewelers have always bought gold from their customers, but since the price of gold started rocketing about the same time the economy started tanking, the steady stream turned into a stampede, and suddenly the family jeweler was competing with pop-up outlets proclaiming (or even named) things like "We Buy Gold!" and "Cash For Gold!"
Traditionally, jewelers referred to the gold they bought from customers as 'scrap' or 'old gold' even though it may have been estate jewelry or an otherwise fully wearable piece. Today, the acronym OTS (off the street) has quickly replaced the term in most jeweler's vocabularies, simply due to the sheer volume of OTS goods being sold back to jewelers across the nation. Luckily, jewelers benefited from the gold-selling trend, even with the hordes of new competitiors.
But now that the price of gold is going down and the economy is improving, the OTS trend seems to be softening. Or is it? Does the current gold price matter in these circumstances? The Centurion Newsletter spoke with four jewelers who are well known in their markets for buying from their customers.
Jeweler David Friedman of Sarah Leonard Fine Jewelry, in the Westwood section of Los Angeles, CA, says no. His customers keep selling because they need the money. "My customers need to pay bills and put food on the table," says Friedman. "It has nothing to do with the price of gold." He has not seen a drop in OTS goods coming in for purchase.
Friedman advertises that his store buys estate jewelry; that constant message keeps the customers coming in to sell. He also doesn't see the end of buying gold off the street. "I don't think it'll ever near its end. People who don't need money today are sitting on jewelry they inherited, that they received from an old boy/girl friend or jewelry they bought. They may not need money today, but they may in the future."
Friedman remembers his mother buying gold over the years, a few customers a week (the store opened in 1946). Friedman averages five to 10 appointments on a given day to purchase gold, although on the day The Centurion spoke with him he had only four appointments booked. "I think the selling to jewelers is strong today because it's so much in the public eye. Everyone advertises that they buy gold, it's on the TV, the radio, the Internet. I don't see it declining because of the awareness. As long as people need money, there will always be a market to buy old jewelry and for them to sell old jewelry."
Friedman also sees OTS goods as a way to keep profits moving. "I've bought the equivalent of a case full of Art Nouveau pieces. Those type goods are where a jeweler today can make a profit margin that keeps them in business."
Jenny Caro of Jewelry By Design, Woodbridge, VA (Washington DC area) has seen a drop in OTS buying. Caro says it's around 40% in her area and believes that it is linked to the gold price.
"We will buy whatever gold someone will sell us," says Caro. "Since the price of gold has dropped, there is less being offered." She does sees an end to the gold buying trend. "I believe it's run its course and the jewelry boxes at home are pretty empty. We are down about 40%, but will still do over 1 million this year in buying gold off the street."
Caro also sells a lot of her OTS goods in her store, sometimes in lieu of buying new. "We don't buy much new gold fashion jewelry since we have a big pre-owned department. We are still selling quite a bit of pre-owned jewelry, but are concerned as gold buying drops we will not have the merchandise to replace what is sold."
Laura Stanley of Stanley Jewelers Gemologist, North Little Rock, Arkansas, has also seen a drop in OTS buying. "The price of gold has affected how much we pay, but not our willingness to pay." Stanley says her buying volume from customers has dropped off by about 40%.
A sign outside Stanley Jewelers lets customers know the jeweler still wants their old gold.
"Fewer people are coming in. I assume that people know that the gold prices are down. Fewer people today have gold to sell, since we've already bought it." On the end of the gold buying trend, Stanley is not really convinced either way. "It's impossible to predict, but I think we may be on the downward slide."
Gary Long of Gary J. Long Jewelers, Stockton, CA, has also seen a drop, but a larger one. He estimates he's been seriously buying from customers for six or seven years.
"We're down about 60%," says Long. "The newness has worn off since it began and everyone got on the bandwagon." But while the gold buying business is down, it has not vanished. "It's still consistent, but nowhere near what it was." He does advertise that he buys gold, but business is still decreasing. He pointed out that his area is much less populated and that may account for part of the drop in buying.
As with any part of the jewelry business, there are changes from one part of the country to another, and from jeweler to jeweler. Only time will tell if the gold buying trend is really decreasing.