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Thread: Do NOT pawn your gold!!

  1. #1
    I am now starting to see advertisements from pawn shops suggesting that you pawn your gold or pawn your silver instead of selling it.

    The strategy behind this is that if you pawn your gold or pawn your silver you will still own it should prices rise so that you can sell it later for a higher price. Well, that's basically a good idea. But what happens if you need money now, and you pawn your gold or silver only to find out that prices decline sharply a month or three months from now?

    The other factor you have to consider is the cost of the loan you are getting. Pawn shops can charge very high interest rates -- and these rates are legal. Not all pawn shops do charge high interest rates, so you have to shop around. But the point is that if you pawn your gold or pawn your silver and prices remain flat for the next several months and then you decide to sell your gold or silver you will have lost money on the interest you paid the pawn shop.

    And there is another factor to consider when you pawn gold or silver or anything-- what if you don't have the money to pay back the loan and redeem the item you pawned? Then you could lose the item.

    So, if you are pawning gold or silver because you need the money, ask yourself if you will be able to repay the loan later or you might as well just sell it now?

    What are your thoughts about pawning an item when you need cash whether it's gold or silver or your favorite six-string?

  2. #2
    Because of the recent sharp drop in gold prices, it now may make more sense to pawn your gold instead of selling it. This is because gold buyers are paying very low prices fearing that prices will drop even more for the gold they have. And if you pawn your gold now instead of selling it, you might see higher prices for your gold later.

  3. #3
    Now that gold prices are starting to move up again, perhaps pawning it makes more sense than selling? You'll have to do the math: cost of the loan (interest rate) and the potential profit you'll have if the price of gold continues to rise.

    Actually, financing investments (margin accounts) is nothing new for big, Wall Street investors. The problem with this strategy for small investors and especially at pawn shops, is that pawn shop interest rates are generally very high.

    In an ideal world, you would find an interest rate that is lower than your return for holding your gold and not selling it as the price of the gold increases.

    But if the loan is costing you 20% and the price is not appreciating anywhere close to that, borrowing against it makes no sense.

  4. #4
    Originally Posted by Alan Mendelson View Post
    Because of the recent sharp drop in gold prices, it now may make more sense to pawn your gold instead of selling it. This is because gold buyers are paying very low prices fearing that prices will drop even more for the gold they have. And if you pawn your gold now instead of selling it, you might see higher prices for your gold later.
    ya that's quite true. Pawn shops are now attracting a larger audience..with so many benefits of pawning gold.
    Broker at Cash Pawn

  5. #5
    Hi ashleyjohn and thanks for joining us. You work for Cash Pawn? Please tell us about it and give us some information on market pricing and what consumers should expect when they go to a pawn shop? One question everyone has is about interest rates? Are they negotiable? Thanks.

  6. #6
    This might sound silly, but I've never understood what a pawn shop does. Do you sell them your things, or is it some kind of consignment shop? I imagine people go shopping there?

  7. #7
    Pawn shops serve all sorts of purposes. They offer loans without credit checks. They buy merchandise -- just like Pawn Stars on the History Channel.
    Pawn shops sell things they buy -- and when someone gets a loan on an item (say a car or jewelry) and does not keep up the payments or does not "redeem the loan" the pawn shop can sell that merchandise.

    Some pawn shops sell their merchandise online -- on eBay and such. Some sell it in their own stores. If you walk into a pawnshop you will see merchandise on display that is either available for sale, or its merchandise that may be "in pawn" and not available for sale yet.

    Usually merchandise that is "in pawn" is kept in secure safes or vaults because the pawn shop is obligated to protect those goods.

  8. #8
    Thank you. So are they looked at as good guys, or as those title loans places are seen--as poor folk predators?

  9. #9
    There are "good" pawn brokers and there are "rip off" pawn brokers.

    When I was a coin collector, I would frequently go into pawn shops looking for collectible coins that might have been pawned. I found some shops selling "common Morgan dollars" at reasonable prices, while some were jacking up the price double or even triple what they were worth "at retail."

    And years ago when I was on the news, I did a story comparing what pawn shops pay. I used my own gold chain and went to a half dozen shops and got their offer prices. There was a wide range of prices offered.

  10. #10
    Thanks for share the post.

  11. #11
    I do not agree with the statement of Alan Mendelson that cost of pawn your gold is nothing. You can borrow up to £10,000 on any single Pawnbroking contract. They have a minimum loan value in some stores, so please check with your local store. When you Pawn Your Jewellery they discuss your requirements with you. Pawnbroking contracts are for a period of 6 months and are regulated by the Consumer Credit Act 1974*. Interest on the loan accumulates or each month for part of a month that the contract runs. Interest is only payable at the time that the Pawnbroking contract is settled. They retail your goods until the contract is settled.
    Where applicable, whole item will be tested in store, so there will be no recourse to vendor.

  12. #12
    Peter Smith what country's rules are you quoting? In the USA pawnbroker rules are set by the states. I removed your link.

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