The Great (Used) Gold Rush of 2009

Economically battered Americans at all income levels are rooting through their drawers to sell off their gold and jewelry for extra cash

By Lauren Young

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Wendy Kushner, a middle school teacher in Edison, N.J., had never thought about selling the gold turtle and other charms she received when she was a teenager. But then she was invited to a cash-for-gold party in December, so Kushner did some digging and unearthed her old ornaments.

"I thought I'd clear $40," Kushner says. She was "shocked" when she found out two nearly forgotten trinkets were worth $180. Ka-ching. "When gold is $1,000 per ounce, it goes a lot further," she says.

Kushner had so much fun selling her old charms that she hosted her own cash-for-gold brunch in March, inviting 10 friends and family members to dine on bagels and salads. A local gold broker came to the event with a scale to weigh everyone's items, as well as a chemical kit to evaluate the gold. "It looked like years' worth of jewelry," Kushner says.

With gold prices soaring, even the savviest collectors can't resist the urge to make a quick buck. Reyne Haines, owner of The Finer Things, a Web site geared to high-end merchandise on the secondary market, and a host on the PBS hit Antiques Roadshow, recently sold a gold box with sapphires and two diamonds that she had purchased many years ago for $800 or $900 but never used. She got $7,500. "When I saw what gold was going for…it's hard not to justify selling it," Haines says.

The great gold rush of 2009 is on. In February, the spot price of gold peaked above $1,005 per ounce for the first time in a year. While gold prices have fallen off a bit and are now hovering at $870, gold still shines in comparison with other investments. "There's something primal about jewelry," says Karen Keane, chief executive of Skinner, the Boston auction house. "We know there is a relative rareness for gold and diamonds. People have been collecting them as an investment and hedge for centuries."

Gold Up Almost 50% Since 2006

Rahul Kadakia, head of jewelry at auction house Christie's, notes that gold and precious gems have a "long-term dependability" and serve as "a store of portable value." He adds: "This has been the case with gemstones and even precious metals for a very long time, especially in times of economic uncertainty where investment shifts towards a more concrete commodity that holds value."

Gold is up nearly 50% in the past three years, while the Standard & Poor's 500-stock index, despite the recent rebound, is down 37% for the same period. The typical retirement account is in the toilet, while the average home price has plummeted and unemployment continues to rise. No wonder Americans at all income levels are cashing in their gold as well as jewelry, watches, precious stones, coins, art, and other valuables and collectibles.

There are venues for monetizing your gems at every income level. Take pawnshops. Business is brisk at Fort Worth-based CashAmerica (CSH), the nation's largest pawnshop operator with more than 600 stores. It topped $1 billion in revenue for the first time in its 25-year history last year.

The most popular items in hock include wedding rings and "anything gold," says Anthony Twist, regional vice-president at CashAmerica. Twist says he has also seen a recent influx of higher-end merchandise, such as larger 3- and 4-carat diamonds worth upwards of $10,000. A standout is the platinum Rolex valued at $80,000 brought in recently by a customer needing some quick cash. "Many of my customers are typically small business owners who have hit a rough patch and are looking to make payroll" or pay off a creditor, Twist says. Up to 85% of his customers pay off their loans and get their items back, he says.