Gold can be an economic indicator 

Pawnbroker sees trading on increase

Jay S., general manager of TC’s Pawn Co. on Lakewood
Road in Waterbury, weighs gold necklaces. The price of gold has hit record levels and now more people are selling it to the pawnshop.

Jay S. knows gold. As general manager of TC’s Pawn Co. in Waterbury, he checks the gold market all day. He watched in amazement as the price hit a brief record Jan. 15, spiking to just over $914 an ounce. Gold closed at $912.30 an ounce on Friday.
“I think it’s phenomenal,” S. said. “It’s good for everyone. We benefit, and if the average person is dealing with a fair and honest business buying the gold, they are benefiting as well.” Gold isn’t just for jewelry or buying stairways to heaven. Gold covers the inside of focused lasers used in heart sur­gery. Car airbags, computers and telecommunications equipment rely on electronic contacts coated with the high­ly conductive element, and satellites deflect solar radia­tion with golden surfaces. Dentists use gold for fillings because it is malleable and re­sistant to corrosion.
But beyond gold’s intrinsic value and practical applica­tions, its price can provide clues as to how people feel about their finances and the global economy.
“It’s an indicator of a nerv­ous economy,” said Bill O’Neill, the managing director of LOGIC Advisors, a market research and introducing bro­kerage firm in Upper Saddle River, N.J. “To a very large extent, it can be a psychologi­cal commodity. The view of the world.”
The price of gold rose about 32 percent last year and about 200 percent over the last 10 years.
But it has fluctuated over the last century, peaking in 1980, when $900 an ounce would be worth about $2,300 today.
O’Neill says explanations for the most recent spike in­volve more than the forces of supply and demand. He point­ed toward the slide in value of the U.S. dollar, the rising price of oil, talk of a recession and instability in areas like the Middle East.
“Gold is viewed as an alter­native asset,” O’Neill said. “A flight-to-safety vehicle. If you don’t want to be in equities or in fixed income, historically gold has filled that role.”
O’Neill said that in Con­necticut, where many hedge funds are located, people aren’t as comfortable invest­ing in equities.
“They have money to invest, and a lot of that is flowing into commodities,” he said.
S. sees a more immediate impact of the surge in gold prices. Over the last six to eight months, he’s noticed an increase in people selling gold to his shop, which he links to higher mortgage rates and the rising price of gas and heating oil. He says they aren’t the type of customers people might expect would visit a pawn broker.
“Someone with an upper lev­el income and a $3,000-a-month mortgage,” S. said. “With rates going up, you see them in here now. Selling gold or jewel­ry they don’t wear anymore to pay their mortgage.”
Jay S. sees this trend as an unfortunate part of a dipping economy in which his business plays its part.
“We provide a service to people unable to get credit or small loans,” he said. “We can help people save their homes or pay their gas money to get to work.”
Even as individuals sell, new gold continues to enter the market. Though nobody knows how much gold remains to be mined, the U.S. Geological Survey reported that domestic gold production increased by 2 percent from 2005 to 2006, ty­ing the United States with Aus­tralia as the second leading gold-producing nations behind South Africa.
George Milling-Stanley, the gold market analysis manager for the World Gold Council, said miners worldwide have dug up about 160,000 metric tons of gold throughout history. “If you were to melt it down into one great big cube, it would fit quite comfortably under the first landing of the Eiffel Tower,” Milling-Stanley said. “About 22 yards on a side. It’s a little cube.”
At Friday’s closing price, that little cube would be worth almost $4.7 trillion. Market analyst O’Neill said he expects the price of gold to tip over $1,000 per ounce this year.
Something to consider on a trip to the pawnshop.

Copyright (c) 2008 Republican-American 01/26/2008

CT Magazine: Here Today, Pawn Tomorrow

“We’re a family business,” says Jay Sargent, partner and general manager of TC’s Pawn Co. in Waterbury. As I walk around his 5,600-square-foot retail space on Lakewood Road, it’s certainly not what I’d expect of a pawnshop. It’s a bright, well-organized store, with shiny glass jewelry cases and orderly rows of DVDs and CDs. Laptops and iPods line shelves, guitars hang in a neat row, and there’s nary a gun or “adult”-themed product to be seen—TC’s handles weapons sales online and doesn’t traffic in risqué materials at all. “We’re not like the stereotypical pawnshop that you see in old movies,” laughs Sargent. “It’s not a dark and smoky back room, with some old guy chewing on a cigar behind the counter. You can see we’re very mainstream. Usually mom is looking at jewelry, the kids are checking out the video games and dad is browsing through the power tools.”

Stereotypes die hard, but Sargent, who is  also president of the Connecticut Association of Pawnbrokers, is running his Better Business Bureau-accredited enterprise with every intent to dispel the preconceived notions associated with his industry. Sellers are required to present a government-issued form of ID, and each item that TC’s buys is electronically catalogued with a picture and full description. Weekly reports are sent to the Waterbury police to be checked against lists of recently stolen goods; pawned items are also held for 30  to 60 days before being put out for sale in the store or offered to prospective online buyers, while items that are acquired outright for secondhand sale are held for 10 days.

As at most pawnshops, when something is pawned, TC’s first evaluates the item for its secondhand value and lends the seller the amount in cash up front; if the seller returns for the item within the allotted time frame, he or she can get the item back for the cash lent plus interest and a processing fee. (About 85 percent return, but if they don’t, there’s no blemish on their credit report.) Rates and time frames vary between shops; Sargent has been working with legislators to establish standard statewide licensing and regulations for pawnshop operations. Currently, each municipality has its own rules.

TC’s also has been part of the Waterbury business scene for 25 years, and is heavily involved in the community, supporting  the Children’s Miracle Network Organization, the Police Activity League and many other charities.

Further helping to bust pawnshop myths is the wave of recent TV reality shows like “Hardcore Pawn” and “Pawn Stars,” which Sargent dismisses with a laugh. “Those shows are mostly staged,” he says. “You don’t get Civil War cannons or other rare collectibles in a pawnshop every day. And you certainly don’t call in an expert for each one. You have to be the expert and know what an item’s worth. Even if you don’t know, you can still go to the Internet and look it up.”

Currently, Sargent says that 30 to 40 percent of his business comes from buying and selling gold, and TC’s offers a lot of jewelry, especially diamonds and silver—display cases are stocked with pieces from Tiffany, Rolex and Cartier, and there’s even a goldsmith on the premises. In a sign of the times, there’s also an abundance of tools and heavy-construction equipment available here, everything from ladders to jackhammers—anything a general contractor would need.

Although collectibles do find their way to TC’s—they’ve handled specialty items from baseball cards and antique Spencer repeating rifles to Cessna airplanes and Cobalt power boats—the majority of the more unusual pieces are sold through online auctions like eBay, which offer a bigger market. TC’s is a licensed gun dealer, but that business is also done online or through other dealers. Actually, Sargent estimates that about 15 percent of his business now comes from Internet sales, and the building on the adjacent property, which was recently acquired, is now devoted primarily to handling Web-related transactions.

With the recent economic downturn, business has been steady at TC’s as more people need to raise quick cash however they can or find bargains. It has allowed Sargent to keep a staff of 14 full-timers and three part-timers, many of whom have been with the company for over five years. TC’s also has a second retail sales building, featuring car audio accessories (new and used) as well as larger items like snowblowers and construction-related equipment. In the back lot where autos are kept—yes, TC’s is licensed to sell used cars, too—a Ford Mustang convertible sits between a classic Dodge Dart and a Land Rover, which is next to a dump truck and behind a sailboat.

“Our clientele ranges from the unemployed to working-class families to doctors and lawyers,” says Sargent, who also describes many of his customers as “unbankable” or struggling with credit issues. “In the past two years, we’ve been able to help 20 or 30 people pay their mortgages. We’ve also had people come in, find a diamond ring they could afford, drop to one knee and propose right here in the store.

“I’ve heard more stories than you could fill your magazine with,” says Sargent. “It’s a unique business—no other like it in the world.”

For more information, call (203) 753-7591 or visit