Gold Rush

There’s a gold rush going on, but instead of panning in streambeds, prospectors have their eyes on the dregs of your jewelry box. Established jewelers and laid-off day traders alike are advertising on billboards, in storefront windows, on Craigslist: they want to buy your scrap gold, which is holding steady near its all-time high of almost $1,000 an ounce. But profitable as it may be, buyers are finding that other people’s gold must be handled with caution. “It’s better really for us if gold goes down,” says Debra Stark, store manager of Sparta Coin & Jewelry, Inc. “We would rather be selling and making jewelry than buying it. If it keeps going up, we don’t want to buy mountings and settings.” Stark went to school for jewelry and has a way of examining jewels over her spectacles that calls to mind a monocle with dangling chain. On a rainy weekday afternoon, she disappeared into a back room to dig up a latex mold used to make rings, and a vintage leather and wood vice for holding jewels while working on them. Recently, however, she’s been working more often with a scale, acids and the slate stone used to test gold’s weight and karat. Stark shakes out a plastic baggy onto the counter, and out falls a 10-karat heavy gold chain and bracelet for which she paid out $179 just minutes earlier. “Nobody’s selling wonderful pins they love, they’re selling old chains from the 80s, heavy gold that’s not in style anymore. They’re selling the gold charm bracelet grandmother had, but they’re taking the charms they like off.” Every two weeks, Stark sends the gold to a middleman in New York City, who takes it to the refiner. Because they’re a small shop, they don’t take in enough gold to deal directly with the refiner. In this way, gold is recycled much as water moves from ocean to cloud to rain to ocean. “My gold ring could have gold from Egypt in it, 1000 years old,” says Stark. “It’s always worth somebody’s while to get the gold out, sell it to somebody and get paid for it.” With gold and unemployment hitting simultaneous record highs, everyone from consignment shop owners to housewives are getting in on the business. Anyone with a license - which means their scale was inspected by the county division of the New Jersey Office of Weights and Measures - can host a Tupperware-style home or in-store gold buying party, where neighbors bring their scrap gold to be weighed, paid for, and re-sold at a profit, and the hostess pockets around 10 percent of the profits. Gas stations have started buying jewelry. “Who’s next, the butcher?” scoffed Steve Bitslisli, owner of Golden Castle Jewelers in Sparta. Drew, a 42-year-old struggling musician, and Joe, a 37-year-old out-of-work day trader with a young family, started a mobile gold buying business serving northern New Jersey seven months ago. They asked that their last names not be used for security reasons. Joe daydreams about eventually driving a Brinks truck with “Mobile Gold Guys” on the side, playing ice cream truck music and going to fairs. But for now, the Mobile Gold guys are driving around with either lots of cash or lots of gold and no protection. It is “proper protocol,” said Joe, to let the local police know you’re coming to town to do a buy. But that’s not so much for security purposes as so that if the cops get a report of stolen jewelry, they know where to look. If it turns out a piece was stolen, the police can confiscate it, and the jeweler comes out on the losing end. Earl Schick, the owner of Andover Jewelry Exchange, bought 225 pieces of used jewelry in 2008, two or three of which turned out to have been stolen. This year, one of 93 transactions so far may have been stolen. But in all of those cases, the police arrived after the gold had been sent to the refiner. Currently, jewelers are required to hold the jewelry for 48 hours, but the police “rarely get here that fast,” says Schick. Schick keeps “gorgeous” records (or so the police have told him), but, he says between drags of his cigarette, “a lot of jewelers don’t want to cooperate [with the police] because they stand to lose money.” A new bill was proposed last year in the New Jersey State Assembly that would require jewelers to keep jewelry for 14 days before sending it to the refiner; maintain a permanent record of anyone they bought jewelry from; take photographs of the jewelry and maintain the images for a year; and deliver a weekly record to the local police department of all used jewelry purchased that week. Any jeweler in violation of the bill would have been fined $10,000 for the first offense and $20,000 for the second and each subsequent offense. The bill was proposed because, according to its authors, “With the price of gold recently reaching record highs, there has been an increase in the sale of used or secondhand gold jewelry. Unfortunately, some of this jewelry is acquired through deceptive practices, including theft. Many times when the jewelry is stolen, it is sold to jewelry stores and then resold without any permanent record of the initial purchase or the subsequent sale.” The bill is still active in the Assembly and Senate, but has not been voted into law. Schick doesn’t like it. “They’re looking to punish the wrong people,” he says, watching the traffic go by on Main Street. We are sitting on plastic chairs outside his store, which sells a mishmash of goods, including paperback romance novels and medical books. “It’s not [the jeweler’s] fault the person stole it. The jeweler becomes a victim the same as the person they stole it from.” “You can sense it, kind of,” when someone’s trying to sell you stolen gold, says Leonard Girardo, the owner of J. Thomas Jewelry and Gifts in Sparta. “I ask, is this yours?” and watch their reaction. Now 44, Girardo has been in the business since age 16. “I’ve been at it a long time.” It’s all enough to keep some jewelers out of the gold buying business altogether. One jeweler, who keeps a very low profile and asked not be named, has worked at places in Manhattan’s Diamond District where they weighed you on the way in and on the way out. Although he doesn’t buy gold, he shows me a hinged shoebox one-sixth full of what looks like sparkly black soot. It’s “bench sweeps” - dust with gold specks - from gold pieces he’s worked on, and it will fetch about three grand from the refiner. “I don’t like the image it brings me,” says Peg Coats, owner of John Coats Jewelers in Newton and granddaughter of the man who opened the store 90 years ago. “I’m not a pawn shop, you know?” The store is located near an alcohol rehab center and a county probation office. Coats will buy gold if a customer she knows comes in and asks, but doesn’t advertise for it. “Maybe I’m old-school,” she said, “but I don’t really push it. I just don’t think it’s going to stay that way, and I don’t want people to think that’s all we do. I’m looking at the big picture.” “We’ve been through this before,” she said. “It happened in the mid-80s, and gold went down again. It’ll bounce back. If it doesn’t, I’m going to go sell oranges down in Florida.”