Glittering opportunity

Kapolei’s Flora Benoit had some gold jewelry lying around the house that she never wore.

There were a single earring, a few twisted old chain sets, two watches and the same number of bracelets.

So a couple of weeks ago, Benoit plopped eight items into a small sandwich bag and brought them down to the Gold Guys outlet at Ward Centre after hearing a gold-buying commercial on television.

At best, she figured her jewelry would be worth $200 to $250. She figured wrong.

Benoit received a shock when she pocketed nearly $1,000.

"Those were things that didn’t mean anything to me anymore that I was getting rid of," she said Thursday after returning to The Gold Guys with a couple of friends. "I was just so surprised. I was totally flabbergasted."

Benoit isn’t alone in receiving jaw-dropping prices for her unwanted gold — as well as silver — items. It’s a scenario that is playing out all over the mainland as well as in Hawaii.

That’s because gold is trading at an all-time high of more than $1,316 an ounce, more than 50 percent higher than the $870 an ounce it was trading at just two years ago and up more than $300 from the $1,000 an ounce it was trading at 12 months ago.

Likewise, silver is trading at a 30-year high of more than $22 an ounce.

Ryan Knott, chief executive officer of Secured Gold Buyers, said people who come to his company’s events at the Ala Moana Hotel or visit the company’s store there typically have "no clue" how much their items are worth and are "completely floored" when they find out.

"People will come in and figure what they have might be worth $1,000 or $1,500, and when we hand them $3,000, $4,000 or $5,000 in cash, it’s pretty neat to be part of that."

Joe Beasy, co-owner of The Gold Guys, said the average transaction of between $700 and $800 at his lone Hawaii outlet is the highest of any of his 10 stores in the nation.

"In Minnesota (where The Gold Guys has three stores) the average customer does about $300 to $400 a transaction for, maybe, a couple of rings and china," Beasy said. "The reason why the average transaction in Hawaii is more than double that may have something to do with Polynesian and Far East customers being much more in tune with gold and with gold being more a part of their lives than in Western culture."

With the economy struggling to rebound, people are going through their jewelry boxes and dresser drawers looking for unwanted items of value. Besides the standard fare like rings, earrings, watches and bracelets, they’re bringing in gold and silver coins, silver tea sets and silverware sets, as well as commemorative gold jewelry awarded by companies and organizations.

"We also get what we call the ex-jewelry, which is when people get divorced or leave a boyfriend or girlfriend and can’t wait to get that melted," Beasy said.

Some people are even going to such extremes that they’re selling their gold teeth.

"I never imagined how many gold teeth we would get, but gold teeth are 16 karat and worth a lot, so we get dental gold all the time," Beasy said.

Gold is selling at a premium these days for a combination of reasons, including speculation, fear and hype, and because it is considered to be a hedge against inflation. With U.S. interest rates at a rock-bottom low, the U.S. dollar weak against other currencies and the Federal Reserve indicating it might take further action to boost the economy, the perception is that the U.S. government will cause inflation that would result in the dollar eroding further.

Barry Hyman, vice president of the management team for the Maui branch of FIM Group Ltd., said the current price of gold looks nearly as overdone as it did in 1980 when speculation drove the price from $103 to $850 over 3 1/2 years.

"That ended badly for investors who bought near the top," Hyman said. "Gold lost 67 percent of its value over the subsequent four years. The current gold rally is more than 11 years old, so on a time basis, relative to prior gold price cycles, getting in now seems late to the party. Relative to inflation, it also looks overvalued."

Still, the gold craze is continuing to climb higher on the weakness of the dollar. That has prompted a lot of hype and a lot of advertising by gold buyers.

Angela Ellenwood, spokeswoman for Hawaii’s Better Business Bureau, said there’s "nothing notable" regarding consumer complaints related to gold over the past 12 months. There have been just two about gold, silver and platinum dealers, and 42 regarding retail jewelers, she said. Ted Gonzales, owner of Pacific Diamond and Swiss Watch Exchange on Kapiolani Boulevard, said Hawaiian bracelets are "big business" because "everybody and their brother has one."

"Some of these ladies have quite a bit of money on their wrists," he said.

He said the average Hawaiian bracelet is 35 to 45 grams, depending on the millimeter, and that today a 35-gram bracelet that has 14-karat gold is worth $700 compared with $200 to $300 10 years ago.

Michael Han, owner and president of The Wedding Ring Shop on Kapiolani Boulevard, said pricing is determined based on the current market value, metal content and weight of a person’s jewelry. Once the jewelry is tested and weighed, a staff member assesses the total value. The seller walks out with the cash, and the jewelry is sent to a refinery company to be melted down.

Even though prices are at a premium now, some people like customer Jerry Passos at The Gold Guys have a decision to make.

"I was quoted $430 for my seven items, but I’m taking them back home with me because I need to think about it," she said. "I know I can’t replace the old bracelets, but I was curious how much I could get for it."