Old Gold Sales Rocket In Europe And US
Gold buyers have seen a rapid rise in the number of people rushing to sell their little-used jewellery in Europe and the US amid concerns the surging price rally driven by the coronavirus since the start of the year may begin to lose steam.
Old gold sales jump when prices rise, but “we’ve never seen a surge like this”, said Tobina Kahn, the president of a jewellers in Chicago, where jewellery assessment bookings last week alone were up 12% over the average, according to Bloomberg.
The extraordinarily quick rise of the metal, which had gained 8.4% this year by Thursday February 27, spurred sellers’ interest. But with so many unanswered questions concerning the spread of the virus and its impact on the global economy, “no one is saying, ‘I want to wait because I think gold will go up even more,’” Ms Kahn said. “They realise this is time sensitive.”
It’s a flight-to-safety rally, she said, that is “based on fear”.
On Friday, concerns about a slide were put into sharp focus. After spot gold reached £1,307.51 an ounce in New York on February 24, it slipped as low as £1,209.51 as investors sold the metal to cover losses in other asset classes. Gold in the UK was at £1,261/oz on Monday morning.
However, rather than indicating an end to the rush, the slowdown may in fact boost it. The heaviest days for scrap jewellery usually occur when high prices start to slide, according to Ash Kundra, co-owner of a London Hatton Garden jewellers. “Everyone is hedging their bets,” he said.
Generally, scrap gold accounts for about 30% of total global supply. While the output from mining was flat in 2019, the amount of scrap gold in play probably rose by as much as 2.5%, according to Rohit Savant, an analyst at the research firm CPM Group. This year, though, there’s been a “significant” increase, particularly as bullion priced in euros neared a record, said the European refiner Heraeus Holding.
“People have started to clean out their safes,” said one buyer, adding that the majority of objects coming into his shop are from jewellery traders rather than walk-in consumers. “They find a packet that’s been sitting there for 5 years, 10 years” and scrap it to take advantage of the higher prices.
Meanwhile, the value of high-quality watches like those made by Rolex, as well as some of the most expensive gold jewellery, comes from both the rising price of gold, which is what sends sellers to the marketplace in the first place, and the status it confers to the buyer. These items are resold rather than melted down.
“It’s still gold, so the baseline of the value is still just the gold value,” said Gene Furman, chief executive of New York-based Empire Gold Buyers. “But add that it’s Cartier or Tiffany, and it shoots it through the roof.”
People who have been sitting at home “thinking ‘time for me to sell, time for me to sell’” are “coming out of the trenches right now,” he added.