With gold trading at record highs, cash-strapped Americans are heading to pawnshops to sell their jewelry.
“People are using gold as an ATM they never had,” King Gold & Pawn and Empire Gold Buyers owner Gene Furman tells Bloomberg. He says gold-selling traffic at his 5th Avenue location in New York City has more than tripled as gold has surged 17% off its 2024 low in February to now trade near $2,400 an ounce.
While some just want to take advantage of the price surge, others are compelled by price inflation that's put them in a financial bind. "Prices are high, and I need cash,” 30-year-old IT specialist Branden Sabino tells Bloomberg, citing the burden of higher prices for food, rent and car insurance. A 55-year-old woman said she needed the money to pay for gas.
Most are selling jewelry, including many offloading inherited items with sentimental value that's now apparently eclipsed by all-time highs in gold. House of Kahn Estate Jewelers' Tobina Kahn says younger Americans' fashion sensibilities are also a factor:
"Young people are not wearing grandma’s jewels. Most of the young people, they want an Apple watch. They don’t want a pocket watch. Sentimental is now out the door.”
Of course, there are of plenty of gold-buyers in America too. Costco, which began selling one-ounce bars in October, is selling $100 to $200 million worth every month, according to a Wells Fargo estimate.
CNBC's analysis suggests the retailer is pricing the bars at 2% above the spot price. If you're an "executive member," you get a 2% reward, and those who use their Citigroup credit cards will receive 2% on top.
The pawnshop gold-sellers may wish they'd waited longer before parting with their rings and necklaces. Bank of America commodities strategist Michael Widmer is calling for gold to hit $3,000 by 2025 -- a roughly 25% advance from current levels. UBS foresees gold at "more than $4,000" within two to three years.
BNP Paribas Fortis chief strategist Phillipe Gijsels and chief economist Koen De Leus tell Financial Times they see gold surging onward, reaching $4,000 "in the not-so-distant future...this isn't just an interest rate thing. People are hedging against a new world."
Some of those people are the ones running central banks: In March, China padded its reserves with the precious metal for a 17th consecutive month, bringing its declared holdings to 72.74 million troy ounces.
Lest you run off to the pawn shop yourself, consider that gold seemingly has powerful, twin-tailwinds: A US government whose debt has now gone parabolic, while a weaponized dollar explodes in its face.
