(Bloomberg) — Investors and metals traders disagree about what exactly is behind gold’s recent rally. At King Gold & Pawn in Brooklyn, customers don’t care. They just want to sell.
Most read by Bloomberg
For some, sky-high values simply mean it’s a good time to make money; It’s hard to ignore record prices, which climbed above $2,400 an ounce last week. For others, it’s a more desperate attempt to get money for bills and rent. Whatever the need, one thing is clear: jewelers and pawn shops are seeing a flood of sellers.
“People are using gold as an ATM that they never had,” said Gene Furman, owner of King Gold & Pawn and Empire Gold Buyers. At Furman’s 5th Avenue store, the number of people selling and pawning gold jewelry has been more than three times higher than normal since prices began rising in late February.
Among them is Branden Sabino, a 30-year-old IT specialist who sold a gold necklace and ring last week.
“Prices are high and I need cash,” he said, adding that he has no savings given the rising costs of rent, food and car insurance.
The speed and magnitude of gold’s rise is astonishing – gold prices have risen 17% since the 2024 low in mid-February.
Investors typically seek safety in gold for fear of political, economic and financial crises. Escalating tensions in the Middle East, a war in Ukraine and an upcoming election in the USA are now once again underlining its traditional role as a refuge. At the same time, some investors are betting that inflation could remain higher in the long term, underpinning the rise in gold prices.
While experts argue about the causes – economic, political or technical – for Mirsa Vijil, the equation is much simpler: “Gold is high.”
At King Gold, the 55-year-old pawned a bracelet for gas bills. It was her first time using such a service, but she says she will do it again if the need arises.
Most gold is held by countries—the U.S. alone has more than 8,000 tons—but the world is full of private reserves. For many, the idea of gold brings to mind the 400-ounce bars seen in films like “Goldfinger” and the British heist comedy “The Italian Job.” However, dealers sell units as small as 1 gram (about 0.032 troy ounces). Then there are jewelry or coins that were purchased as gifts, collected by families over the years and passed down through generations.
Changing fashion trends and financial needs mean that there are often fewer reasons to pass on old pieces to relatives. And the current prices are a tempting offer.
“Young people don’t wear grandma’s jewelry. Most young people want an Apple Watch. They don’t want a pocket watch,” said Tobina Kahn, president of House of Kahn Estate Jewelers. “Sentimental is out now.”
On Friday, gold prices for immediate delivery in London rose to a new record of $2,431.52 an ounce, after hitting a series of highs over the past month. It later fell again to around $2,341.
Currently, much of the demand comes from Asia and emerging markets, gold watchers say.
China-led central banks have been exploiting gold on an unprecedented scale since 2022 to diversify away from the dollar reserve system.
Regular consumers in the Asian country are also buying, snapping up coins, bars, jewelry – even beans – as well as exchange-traded funds that track gold and gold mining stocks to hedge against turmoil in the country’s real estate sector.
It’s a reversal of a historical pattern that has dominated global trade for decades, with Asian buyers tending to sell at times of high prices.
In Western economies, “there is no urgency to buy gold” given relative economic strength, particularly in the U.S., said Adrian Ash, director of research at online gold investment service BullionVault. “Gaza, Ukraine, these are simply disasters. But they are simply not clear and present for Western investors at the moment.”
In recent weeks, BullionVault’s trading platform has seen more than twice as many sales as the year before. “People are very happy to accept this award,” Ash said.
The lack of urgency to own gold is also reflected in the US Mint’s weak sales – it posted its worst March since 2019 for its American Eagle gold coin sales.
Of course, long-term issues like rising U.S. debt and the health of the banking system, as well as concerns about inflation, mean some investors want to own the metal regardless of price.
Jason Collins, director at Gerrards Precious Metals in London’s historic Hatton Garden jewelry district, said some of his customers are still buying gold because they have doubts about the banks.
“If something bad suddenly happened in Britain” and “the whole banking system collapsed,” your gold in your pocket wouldn’t collapse,” he said.
So where next for gold? Tobina Kahn warns all holders who are waiting in the hope that the price could reach $3,000. Her opinion is: Don’t wait.
“It’s very busy and we’re getting more calls than ever about customers wanting to bring their jewelry,” she said. “I tell customers to engage them now because we are at unprecedented levels.”
Read more:
The gold market is looking for answers behind the sudden rise in gold bullion
– With support from Tom Hall.
Most read by Bloomberg Businessweek
©2024 Bloomberg LP