The Great (Used) Gold Rush of 2009

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The Middle Class' Mail-In Jewelry Buyer

While pawn operators such as CashAmerica have revamped stores to make them feel more like jewelry shops than thrift stores, pawnshops don't necessarily cater to more affluent customers, especially women. In January, Lippincott, parent company of mail-in gold buyer GoldKit, launched a new brand called Red Swan, targeting middle-class women. "It's a big deal for women to walk into a pawnshop and sell their jewelry—you feel evaluated," says Amy Steel, president of RedSwan.com, which buys jewelry by mail.

Business is already running ahead of projections, and Steel is noticing "a surprising influx" of large precious stones from customers. "A year ago we saw 1-carat diamonds" at GoldKit, Steel says. "Now we are seeing 3- to 4-carats" at Red Swan.

Red Swan's customers send their treasures in an insured, prepaid mailing envelope and typically are paid within 48 hours. So far, Red Swan is drawing the most business from customers in California, Pennsylvania, Florida, New York, Texas, New Jersey, and North Carolina, which are major population centers as well as areas of the country that have been hit hard by the crash in the financial markets. "The economic crisis has hit everyone across the country, and people are looking for ways to find value from things they didn't think have value," Steel says.

The typical GoldKit customer gets less than $100 for the items they sell, and most of that gold is simply melted down. Some recent Red Swan treasures include a 16-karat emerald set in platinum with diamonds, which fetched $17,000; a men's platinum Rolex President watch with diamond bezel, valued at $75,000; and a fancy yellow 5-carat pear-shaped diamond ring, worth $20,000. "That's a lot of money to have wasting away in the back of an underwear drawer in a baggie," Steel says.

Increase in Requests to Sell Valuables

Dealers who cater to the ultra-wealthy, meanwhile, see an increase in clients trading in items they no longer want. "My customers are eating their jewelry habit by selling off lesser things," says Cheryl Rhodes Coleman, a private jewelry dealer in Palm Springs, Calif. She's also been asked to sell paintings, antiques, and other valuables, which she doesn't do. "These (requests) have come out of the blue at me," she says. Other dealers report that cash-strapped customers have started purchasing items on layaway.

But Coleman says it is hard to know if her clients, who have second homes in Palm Springs but mainly reside in the Midwest, are short on cash. One longtime client recently told Coleman she was paring down her jewelry inventory in an attempt to return to "a simpler lifestyle." "She brought me everything I know of that she had" with a current resale value of about $100,000, Coleman says.

In New York City, the epicenter of the financial crisis, an estate dealer tells potential customers in New York Times advertisements: "I need your diamonds." But so far, "people are under an erroneous assumption that the rich are rushing to sell their jewelry" to raise cash, says Andrew Fabrikant, the firm's president.

Fabrikant, of Fabrikant Fine Diamonds in Manhattan, says his clients include several victims of Bernard Madoff's Ponzi scheme. "I make a concerted effort to help if somebody was hurt by Madoff because I'm also one of his victims," Fabrikant says. A few other customers hit by the economic downturn have told Fabrikant they are selling jewelry to pay their mortgages, expenses, or bills, "but it's not lines and lines of people," he says.

Back in the late 1970s, when gold was selling at the inflation-adjusted equivalent of $2,500 per ounce, there were long lines in New York City's diamond district on West 47th Street. "It was like a deli counter," Fabrikant says.

Auction Houses Become More Selective

For people who do not need fast money, selling major gems at auction can yield the best results. However, it takes up to six months to monetize those assets. And the auction houses have become more discriminating when it comes to the items they will consign.

"The auction houses are not panicking, but they are being very selective with items they are taking," says antiques expert Haines.

But that doesn't mean the auction market is dead: On Dec. 10, the 17th century historic Wittelsbach diamond, a 35.56-carat blue gem, sold at Christie's London for £16.4 million ($24.3 million), a record price for a blue diamond.

Click here to see what you can expect to be paid for your gold, watches, and precious gems.

Young is a Personal Business editor for BusinessWeek .