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The Effect of Lower Gold Prices on Pawnbrokers

By   /   July 29, 2013  /   No Comments

For many people who can’t get loans from the bank anymore, their local pawn shop is the answer.  They are a lot easier to get – no credit checks, no applications, all that’s needed something of value.  One of the most popular assets pawned is gold.  Gold in the pawn shop world is similar to houses in the banking world; a valuable asset to be borrowed against.  When the price of gold was high business was booming for pawnbrokers.  Customers were taking out large loans, but now the price of gold has fallen drastically.  Many pawnbrokers are in a bind having made loans while the price was still high.  Some banks went out of business during the housing decline, but pawnbrokers aren’t facing that large of a risk.  Pawnbrokers lend conservatively because they want customers to repay their loan and take out new loans.  So, while the falling gold price hurts, pawn shops will continue to thrive.

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