(Reuters) – With the price of gold soaring, Mark Rich saw a chance to transform his family’s struggling jewelry business into a moneymaking venture. Two years later, Captain Cash for Gold is mining success.
“Things were looking very bleak,” said Rich, a co-owner of the 40-year-old Lakewood, New Jersey business, of the slowdown in wholesale jewelry sales. “The focus of the average consumer was more on making money and cashing out than on spending. We did an about-face.”
Captain Cash for Gold (www.captaincashforgold.com) launched in 2009 to buy unwanted gold and resell it at a profit to refiners and others looking to buy. It’s one of many small ventures benefiting from the progressive surge in gold prices at a time when economic uncertainty has left equities markets reeling and long-time investment havens such as real estate decimated.
“We’ve done thousands of transactions,” said Rich, who declined to provide specific sales, but added business is up “several hundred percent” since inception. Along with its humorous name, Captain Cash for Gold aims to distinguish itself from the sea of rival buyers by offering secure transactions with FedEx.
Gold, up nearly 40 percent in the last 12 months and hovering around $1,800 per ounce on commodities markets, remains a sure bet for many consumers, whether they’re looking to raise quick cash to pay the mortgage or to park dollars in a relatively secure investment
“People call in and say, ‘I’ve been watching the economy, watching the debates and I’ve concluded we’re in a lot of trouble. I want to diversify my assets,'” said Tom Pilitowski, a Port Charlotte, Florida-based dealer of rare coins.
“A lot of people who call in are serious,” he said, noting there is much interest in gold coins valued between $20,000 and $50,000. “It’s not unusual for somebody to call and suddenly you’ve done six figures in a matter of weeks.”
In Alaska, Oxford Assaying & Refining Corp (www.oxfordmetals.com), a multi-million-dollar precious metals broker and refiner that has historically purchased most of its gold and silver from smaller players in the mining industry, has logged significant volume increases in the past two years, said co-owner Toni Goodrich.
Besides more business from expanding mines, Oxford has seen strong growth in the investment gold it buys and sells with the general public, she said, adding that portion of the business will grow to 40 percent this year, up from 30 percent in years past.
“It’s not just based on people who want to protect their assets from the economic downturn,” said Goodrich, who has had to beef up security at her locations in Anchorage and Fairbanks. “It’s also based on people who have lost their jobs.”
PAWNING FOR GOLD
Gold’s steady rise has also had a pronounced effect on the pawnshop industry, long known for dark and dingy stores associated with the seamier side of society. Pawnshops, in large part due to increased business from upscale customers, have been remaking themselves as safe and attractive stores.
Money Mizer Pawns & Jewelers (www.moneymizerfranchises.com), a small chain based in Columbus, Georgia, recently began franchising its locations, which feature bright, open layouts and friendly, uniformed staff.
“We’re getting tons of interest,” said owner Robbie Whitten, noting that laid-off professionals in industries such as banking and real estate have expressed interest. “When the economy is good, our business is good. When the economy is bad, business is booming.”
Whitten has watched Money Mizer’s customer base become progressively more white-collar, as many of those same unemployed executives move to convert their Rolexes into much-needed cash. Even some small business owners, he said, are using personal bling to meet payroll.
“There’s a big sector out there that’s employed but making a lot less money than they used to,” he said.
Of course, along with any gold rush comes a share of unsavory characters looking to make a quick buck. Emmett Murphy, a spokesman for the National Pawnbrokers Association, a trade group, said fly-by-night gold-buying operations that set up temporary headquarters in hotels, have been sidestepping state and federal regulations.
“These rogue gold buyers are circumventing all of the laws,” Murphy said. They come in, clean up, and leave town.”
All the more reason longstanding gold-focused businesses are attempting to build repeat clientele based on customer service and trust, said Captain Cash’s owner.
“Cash for gold doesn’t have the greatest reputation,” confessed Rich. “We have a very high percentage of referrals and people who send in more than once. People are very happy and they’re coming back.”Source: Reuters (Editing by Jon Cook)