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Pawn Shops Hit Hard by Drop in Gold Price

By   /   July 5, 2013  /   No Comments

Pawn shops alongside investors and big gold miners are feeling the sting of falling gold prices.  Stores that buy gold or accept it as collateral for short-term loans know they are taking a risk on movements in the gold price, and they factor that risk into the prices offered.  Large drops in the gold price, however, can really sting, especially for pawn shops that sell their gold for scrap to be melted down.  When jewelry is turned into a commodity metal it is even more susceptible to falling commodity prices.  Pawn shop operator EZCORP knows firsthand the effect the gold price can have on pawn shop business.  The company announced that it does not expect to reach its previously announced guidance for its third fiscal quarter ended June 30, 2013 and its current fiscal year ending September 30 due to the steep drop in gold prices and subsequent decline in gross margins on gold scrapping.

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