Lawton_Wall Street's numbers were back up on Tuesday, but that meant bad news for pawn shops. It's not because people are forced to pawn their belongings when times get tough - it's all about gold. Pawn shops say their business success is a direct reflection of how the Dow is doing - or as it has been recently, how badly it's doing.
When the Dow is suffering, the price of gold increases and folks flock to pawn shops to sell their gold trinkets, and when the market increase rose over 400 points on Tuesday, it was bad news for pawn shops as the value of gold fell. The value of gold fell about $30, and pawn shops say that's when people start to invest elsewhere.
Gold coins, chains, and rings are all pretty valuable, but pawn shop owner John Wolfenbarger says they might be collecting dust for a while. "People are selling their gold and buying stocks, because it's going up," he said. So, both he and Cynthia Beaver are on the wrong end of business for the moment. "We're seeing a lot more people coming in pawning or selling their gold," she said.
Beaver says that when the stock market was plummeting, gold sales were booming. "A lot of people buying gold for investment purposes, because their stocks weren't doing as good as they once were." She says there's a reason why people turn to gold rather than investing in other valuables during tough times. "They feel safer with gold, with something in their hands that they can take and sell and get money for," she said. "Stocks - a lot of them now - is just a piece of paper.
Beaver says that for now pawn shops are surviving the drought. "I've had a lot of people who come in, and I tell them it's down, they need to wait till it's back up a little bit," she said. Wolfenbarger says pawn shops eventually will find a pot of gold at the end of the rainbow. "When the stocks start going back down again, they'll be buying the gold back. It's just a vicious circle," he chuckled.
Pawn shops in Oklahoma are required to keep your hocked merchandise for 90 days unless they can be bought immediately. In those 90 days, the price of gold can fluctuate drastically. The amount you earn on your items could vary by as much as $100. They say that even when the value of gold rises to as much as $1,000 per ounce, it doesn't mean that it's multiplied by how many ounces of gold jewelry you own. The amount of money you earn depends on the purity of your gold.
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