The ones that get customers, maybe. I know at least two that can't get anything to buy because the people that needed to sell what they had already did so when the economy first tanked.
I would think their profit margins are still pretty much the same; however, with gold prices trending downward, I would also believe the volume is somewhat depressed. Therefore the bottom line is probably less.
I can provide a little insight into this. I own a pawn shop and we also buy gold. From day one of the "we buy gold" phase I warned people against selling their gold. Obviously I never turned them away if they wanted to sell it but my argument was always get a loan rather than sell it. I want long term returning customers that are going to pay me interest for years rather than walk in and out and I am only going to make a couple hundred bucks an oz. I honesty can not wait for most of these places to go out of business and I can get just a little closer to my old margins. 10 years ago if your gold was worth $300.00 I was paying $100.00 and that is just the way the business was. These days if you gold is worth $300.00 I am giving you in the $200-225.00 range. There is still plenty of gold out there. Just in my little town I currently loan out more than $250,000 a month for it and that number grows every year. To give you an idea on profits....I pay more than $150.000 a year in taxes.
You must not have that much competition. On Long Island, all of the We Buy Gold places are going out. People are getting smarter and shop around. Stores around here pay 80%+ for gold.
Oh there is plenty of competition in the area. I can count 7 places within a 1 mile radius. Perhaps the laws are different/enforced on long island, and this was at one time a big problem until we started getting some enforcement of the laws. A few years ago people paying 90-95%, by law every transaction needs ID, a thumbprint, records given to the local police and a 30 day hold. When there was no enforcement places were buying and melting the same day. Now most are semi legit with a storefront. Imagine paying 90% 30 days ago and selling it today, you are going to lose money. For this reason I actually like it when gold takes big hits as I typically hold and sell on the peaks. Do the math, I am paying people at 75% with the option to get their items back.
Oh, I didn't realize you were paying 75% on pawn. That makes sense. The holding times on long island are 21 days or 14 days depending on the county. It is kind of ridiculous. It hurts both the buyer and seller.
It hurts both the buyer and seller...yes but I can tell you that people are much more likely to sell the gold if they have stolen it. If something is pawned to me, items turned up stolen once and sometimes twice a year, we are talking less then 1%, and nine times out of ten it is a child stealing from their parents, with the idea they will get it back before anybody notices. I have items turn up stolen much more frequently when someone comes in and they want to sell the items. So the hold period is a good thing and I would actually like to see it go to 60 days.
