September 2, 2024
Consumers continue to cash in on higher gold prices - House of Kahn Estate Jewelers
by Neils Christensen
Kitco News
(Kitco News) - While the U.S. economy continues to exceed economists’ expectations, consumers on Main Street face ongoing struggles.
In further anecdotal evidence of difficult economic conditions, Tobina Kahn, President of the House of Kahn Estate Jewelers, said that with gold trading at record highs above $2,500 an ounce, she continues to see a steady stream of people coming in to sell their broken and unwanted jewelry.
“Inflation may be down, but prices are still going up, and that means people continue to need money because their paychecks aren’t going very far,” she said in an interview with Kitco News.
Kahn’s comments come as the U.S. economy exceeded expectations, growing 3.0% in the second quarter. At the same time, the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, showed a muted annual rise of 2.5% on Friday.
“Inflation is coming down, but the cost of living keeps increasing,” said Kahn.
Kahn said that one trend she is seeing in the marketplace is older consumers coming in and selling their unwanted jewelry to pay for their healthcare costs. She added that gold jewelry as an investment is doing what it’s supposed to do as prices remain elevated near record highs.
“These people are getting a lot of money for their broken gold that they wouldn’t necessarily have thought about if the price wasn't as high as it is,” she said.
Kahn added that people looking to supplement their income by selling their broken and unwanted gold shouldn’t try to time the market. She explained that at current prices, waiting to sell at the highs could lead to frustration over missed opportunities.
“I think gold prices will go higher because inflation is nowhere near under control, but if you are looking to sell your gold, you shouldn’t wait,” she said. “I would expect that most consumers could easily find $1,000 of cash in their jewelry box right now.”
At the same time, Kahn said that some consumers she has talked to are reluctant to sell as optimism grows that prices could hit $3,000 an ounce. Kahn said that $3,000 an ounce is a realistic target for gold, and it could take only a few months to get there.
“I think gold prices will continue to go higher because I don’t see the economy getting a lot better, but I do think we are going to see higher volatility in the near term,” she said. “Gold prices could easily drop lower right when you need that extra money.”
Kahn’s anecdotal evidence is roughly in line with the broader market view, as consumers globally cash in on higher gold prices. In its quarterly gold demand trends report, the World Gold Council noted that gold recycling hit its highest level since 2012 in the first half of this year.
Recycled gold increased by 683.9 tonnes in the first half of this year, the WGC said in its July report.
“The largest contributor to growth in recycling supply was Europe, which, after relatively unexciting volumes over the past few quarters, saw a significant response in Q2. The trigger appears to be price-related, with euro-denominated gold exceeding EUR 70/g at the start of April,” the analysts said.
At the same time, in North America, Canada actually leads the market as gold prices pushed above C$3,000 in the second quarter.
“With the U.S. economy continuing to outperform most countries, there were fewer triggers for a material increase in recycling volumes,” the WGC said.
http://www.kitco.com/news/article/2024-09-02/consumers-continue-cash-higher-gold-prices-house-kahn-estate-jewelers
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