Gold Fever Strikes Mom and Pop Prospectors in US West

CNBC

 

When John Brewer's construction business soured along with the economy, he sought to replace lost income by prospecting for gold from the river valleys of central Idaho to the wilds of Alaska.

Armed with the tools of the trade -- a metal detector, gold pan and sluice box, a series of screens that sort gold from alluvial material like sand and gravel -- the Montana man represents the new face of a pursuit that once paved the way for settlement of the Western frontier.

The poor economy and a record price of gold have renewed interest in prospecting in Western states where public lands are rich with deposits and small-scale operators are all but free from government regulation.

What Brewer has in common with 19th century prospectors is a drive for gold equaled in intensity only by the instinct to keep quiet about its location and volume.

"Asking a miner where they found it and what they found is like asking an angler about his secret fishing hole," said Brewer. "We're not going to tell anybody. As soon as you tell anybody, there will be a crowd—and that would be counterproductive."

Some gold mining sites economically feasible for the first time in years, prompting mid- and large-scale operators to apply to mine on national forests and on acreage overseen by the U.S. Bureau of Land Management in the Rocky Mountains.

"When gold goes over $1,000 an ounce, everybody becomes a miner," said Russ Bjorklund, minerals manager with Salmon-Challis National Forest in Idaho.

He is among federal land managers reporting a marked resurgence in gold mining, from amateurs armed with pans to corporations working hardrock mines.

Susan Elliott, geologist with Humboldt-Toiyabe National Forest in Nevada, said the rush is on in a state that is the fourth largest producer of gold in the world.

Elliott linked a 75 percent increase in mining activity on the 6.3 million-acre forest to the rise in gold prices in recent years.

"We've got all types: individuals out there with pick and shovel and companies with heavy equipment," she said.

Jon Cummings, who promotes gold-mining adventures at his Idaho resort, says finding what prospectors call "color" in the pan ignites a passion.

"You start finding a little gold in the pan—that's when gold fever kicks in. It's like a drug and you're ready to work all night," he said.

International gold-mining giant Barrick Gold in February gained approval from the federal Bureau of Land Management to expand its Bald Mountain mine in northeastern Nevada.

Bald Mountain represents one of the company's 25 operating mines, eight of which are in the western United States.

Large-scale operators like Barrick must clear a number of hurdles in advance of gold mining, often a years-long process.

But Ray TeSoro, minerals specialist for the U.S. Forest Service region that includes Montana, also described an influx of "mom and pop operations."

Those small-time prospectors, like Brewer, mostly engage in low-impact, stream-side mining like gold panning and sluicing, techniques which rely on gravity to separate heavy gold from sediment.

In the mountains of central Idaho, gold fever is behind trespassing incidents.

Beverly Cockrell, a rancher near Salmon, Idaho, has confronted strangers with "sticky fingers" on her creek-side land, including one who reportedly raided a sluice box.

"We're having to run people off," Cockrell said.

And some economists take a dim view of the gold rush.

"You've got this pretty metal—what does it do?" said James Hamilton, economics professor at University of California, San Diego. "It doesn't create dividends, it doesn't create more productivity; it's a hedge against certain kinds of risks."

But it will take more than discouraging words to dampen the enthusiasm of gold hunters like Brewer, who declined to say what profit he turns from prospecting.

"It doesn't replace a full-time job with benefits, but you work hard enough at it, you might get lucky," he said.

Gold Heads for Weekly Gain on Speculation Dollar Rally to Stall

Business Week

Gold, little changed in New York, headed for a second straight weekly gain on speculation that the dollar’s rally will stall, boosting the appeal of the precious metal as an alternative investment.

The dollar rose as much as 0.6 percent against the euro before paring gains. The Federal Reserve yesterday raised the discount rate it charges banks for direct loans for the first time in more than three years, a signal that the U.S. economy is recovering from the longest recession since World War II.

“Gold looks strong,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “People are realizing this isn’t a tightening. Raising the discount rate isn’t going to have an effect on the American household. It all goes back to the credibility of fiat currencies. People will continue to buy gold on dips.”

Gold futures for April delivery slipped $1.30, or 0.1 percent, to $1,117.40 an ounce at 11:51 a.m. on the New York Mercantile Exchange’s Comex unit. A close at that price would leave the metal up 2.5 percent this week.

Gold Prices Near One-Month High

The Wall Street Journal

Gold futures closed higher Monday on a continuation of start-of-year investment buying, a soft U.S. dollar and strong import data from China that generally reflected well on commodity demand and cash for gold prices.

Gold for January delivery rose $12.50, or 1.1%, to $,1150.70 a troy ounce on the the New York Mercantile Exchange, while February gold climbed $12.50 to $1,151.40 an ounce.

"There are two major reasons and they are related, with one causing the other," said Craig Ross, vice president of ApexFutures.com.

Gold hit its peak overnight after a report showed that Chinese exports climbed nearly 18%, while imports were up 56%.

The imports showed that the country remains on a "commodities shopping spree," helping improve risk appetite, said Jon Nadler, senior analyst with Kitco Metals.

Furthermore, the Chinese data helped send the dollar sharply lower, Mr. Ross said. Investors often trade cash for gold jewelry as a hedge against dollar weakness, plus a weaker greenback makes all dollar-denominated commodities cheaper in other currencies and thus can help demand.

Carlos Sanchez, associate director of research with CPM Group, said that gold continues to find strong investor interest at the state of the new year amid ongoing concerns about economic conditions and financial-market concerns. This especially is the case, since gold is down from the record highs hit in early December, prompting some to use the pullback as a buying opportunity, he said. The metal fell during much of December largely on selling to square positions ahead of year-end.

Also, demand for physical gold in India has reportedly picked up due to both the pullback in the dollar-denominated price of gold over the last month and an appreciation of the Indian rupee, both of which make gold more affordable for Indians, Mr. Sanchez said.

The strong Chinese import figures were especially supportive for precious metals with more industrial applications, including silver, platinum and palladium, as well as cash for gold coins, Mr. Sanchez said.

Comex silver for January delivery added 22.50 cents per ounce, or 1.22%, to $18.683.

April platinum rose $21.90 to $1,592.50 an ounce, while March palladium gained $6.80 to $431.95.

"Platinum and palladium have been getting an extra boost from the ETFs launched in the U.S. market," Mr. Sanchez said.

ETFS Physical Platinum Shares and ETFS Physical Palladium Shares began trading Friday on the New York Stock Exchange Arca platform and were the first exchange-traded funds for the platinum group metals in the U.S.

Gold Once More Above $1,100

The Wall Street Journal

LONDON--Spot gold climbed back above $1,100 a troy ounce on the last trading day of the year Thursday, getting help from a weaker dollar and rising crude oil prices.

Gold will finish the year on a steadier footing after its steep tumble earlier in December, having bounced 5% since bottoming at a seven-week low Dec. 22. Its recovery will bring gold to a gain of 26% for all of 2009.

Spot gold was trading at $1,103.95 an ounce, up 1% on the day. Gold's recent recovery since tumbling over 12% in the first weeks of December has been accompanied by a modest rebound in the euro against the dollar, and a steep rally in crude oil prices.

Its recovery will bring gold to a gain of 26% for all of 2009.

"I think the story of instability in the Middle East has pushed the price of oil higher, which translates to higher gold prices," said Afshin Nabavi, head of trading and physical sales at Swiss bullion trader MKS Finance.

While gold has regained a steadier footing, its direction at the start of 2010 will largely depend on whether or not the dollar will further strengthen.

But for the last trading day of the year, volumes will likely remain thin and volatility low.

"It's the last day of the year, I don't think a lot of people want to get fresh involvement," said Nabavi. At such a high price, now may actually be the time to trade gold for cash, rather than seeking gold as an investment.

In other precious metals, spot silver was 1.5% higher at $17.037 an ounce, spot platinum rose 0.6% to $1,460 an ounce and spot palladium was up 3% at $402 an ounce.

Palladium will end the year with the most upwards momentum. The metal has gained 15% since bottoming at a five-week low Dec. 22, the same day gold hit its bottom.

Deja Vu 70's Style: Gold Prices Surge

Wall Street Journal

As gold prices continue their bull run despite a pullback at the end of last week, market participants wonder if they are going to see a repeat of the 1970s.

During that decade, the price of gold soared by a factor of 24 times, peaking at $850 per troy ounce in 1980, then crashed, losing 65% of its value in two years.

Gold rose to a record $1,226.30 an ounce Thursday, putting the price at about four times its average level at the start of this decade. Gold fell sharply Friday, closing at $1,168.80 on the Comex division of the New York Mercantile Exchange.

Some of the factors that have determined gold prices were present in the late 1970s. But others, such as a sharp slowdown in selling of gold by central banks and the risks to global economic recovery, weren't. These new factors could make high prices more sustainable and limit falls when they come, analysts said.

In percentage terms, the current rally can't compare with the 1970s. The degree of that rise was due partly to the end of the Bretton Woods fixed exchange system in 1971, which unlinked the dollar from its peg to gold, freeing the metal from a fixed price of $35 an ounce. A selloff of gold came when interest rates rose and monetary policy tightened in the early 1980s. After the price of gold dropped by two-thirds, it languished around $300 an ounce until the next bull run began in 2000.

In uncertain times, gold is seen as a hedge against currency weakness and inflation. Currently near-zero interest rates, a weakening dollar, growing government budget deficits and inflation fears have pushed investors into gold.

Jeffrey Frankel, a Harvard University economics professor, says lax monetary policy and low interest rates are common to both the 1970s and the past nine years.

Those two factors, then and now, resulted in U.S. dollar weakness. But when interest rates rise and governments rein in spending, the current rally may end in much the same way as the 1970s spike. "I imagine tighter policies will do the same this time around—it will be the death knell of the rally," says HSBC analyst James Steel. The time to exchange gold for cash may be coming sooner rather than later.

Few analysts say gold will see the same kind of trough-to-peak percentage increase as the bull run culminating in 1980, which would take gold to near $7,000 an ounce. Predictions fall between $1,300 and $2,000 an ounce for where gold will peak in this cycle.

Nevertheless, the two periods have key differences that give cause for more optimism over the sustainability of the current rally.

Gold's rise in the 1970s was very event-driven, says Andy Smith, a metal strategist at Bache Commodities. The invasion of Afghanistan by the Soviet Union played a large role, along with inflation and the weak dollar, he says.

While currently inflation barely exists, loose monetary policy, intended to kick-start stalled economies, could fuel inflation down the road, a worry that provides a lot of impetus to gold's rise.

"Unlike the 1970s...there aren't the strongly inflationary, supply-side 'shocks' from oil prices which were a hallmark of that decade," says Linda Yueh, an economist at Oxford University. "Instead, most of the inflationary concerns are due to the stimulative policies and bailouts of banks."

Many investors think governments may not be able to avoid inflation and, in the face of growing deficits, want gold to hedge that risk, according to Michael Lewis, a commodity analyst at Deutsche.

Another factor driving prices is the greater ease with which people can invest in gold today. In 2003, the first physical gold-backed exchange traded fund was launched. Holdings in the major gold exchange-traded funds stand at 1,738 tons as of Oct. 30, according to World Gold Council data. That's larger than most individual central bank gold reserves.

But it is the behavior of central banks that has attracted traders' and analysts' attention. While over the late 1970s-early 1980s boom-bust period central bank holdings of gold remained relatively stable, at around 35,000 metric tons globally, programs to sell gold beginning in the 1990s resulted in total holdings falling below 30,000 tons in 2007.

This year analysts predict central banks will be net buyers of gold for the first time in more than 20 years.

Gold Investors From 1980 Still Catching Up

Business Week

Gold's best year in three decades has yet to match the returns of an interest-bearing checking account for anyone who bought the most malleable of metals during the last peak in January, 1980.

Investors who paid $850 an ounce back then earned 44% as gold reached a record $1,226.56 on Dec. 3 in London. The Standard & Poor's 500 stock index produced a 22-fold return with dividends reinvested, Treasuries rose 11-fold and cash in the average U.S. checking account rose at least 92%. On an inflation-adjusted basis, gold investors are still 79% away from getting their money back.

"You give up a lot of return for the privilege of sleeping well at night," said James Paulsen, who oversees about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. "If the world falls into an abyss, gold could be a store of value. There is some merit in that, but you can end up holding too much gold waiting for the world to end. From my experience, the world has not ended yet."

While gold's nine-year bull market is attracting hedge-fund managers John Paulson, Paul Tudor Jones and David Einhorn, strategists and fund managers at Barclays, HSBC Holdings (HBCYF), SCM Advisors, and Brinker Capital say buy-and-hold investors shouldn't always own bullion. The accumulation of gold is part of a record $60 billion Barclays estimates will flow into commodities this year.

Hoarding Bullion

The SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has amassed more metal than Switzerland's central bank, spurred by a plunging dollar and concern that the at least $12 trillion of government spending to lift economies out of the worst global recession since World War II will spur inflation. The collapse of U.S. real estate in 2007 froze credit markets and left the world's biggest financial companies with $1.72 trillion of losses and writedowns, data compiled by Bloomberg show.

The U.S. Mint suspended production last month of some American Eagle coins made from precious metals because of depleted inventories. The U.K.'s Royal Mint more than quadrupled production of gold coins in the third quarter. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.

Those sales contributed to a 30% rally in gold this year, beating the 25% gain in the S&P 500, with dividends reinvested, and a 2.4% drop in Treasuries. Investors bought gold as the U.S. economy, the world's biggest, shrank 3.8% in the 12 months ended in June, the worst performance in seven decades. Gross domestic product expanded at a 2.8% annual rate in the third quarter.

Longest Winning Streak

A weakening dollar also contributed to bullion's longest winning streak since at least 1948. The U.S. Dollar Index, a measure against six counterparts, dropped in six of the last eight years, including a 6.6% decline in 2009, bolstering demand for a hedge. Cash for scrap gold fell 1.6% to $1,143 an ounce by 11:08 a.m. in London. Before today, the metal had risen 32% this year, the most since 1979.

Buy-and-hold investors may not have done so well. One dollar put into a U.S. checking account in 1983 would be worth at least $1.92 today, based on annual average interest rates from Bankrate.com. The Federal Reserve target rate from 1980 to 1982 was 8.5% to 20%. Banks were paying 5% on the accounts in January 1981, according to a report in the New York Times.

Dividends Reinvested

The S&P 500 returned 2,182% from the beginning of 1980 through the end of the third quarter this year, according to data compiled by Bloomberg. The calculation assumes dividends reinvested on a gross basis. Treasuries returned 1,089% through the beginning of this month, according to Merrill Lynch's Treasury Master Index.

"Gold is a useless asset to hold long term," said Charles Morris, who manages more than $2 billion at HSBC Global Asset Management's Absolute Return fund in London. "I'm not a gold bug who believes that you want to own this thing in your portfolio at all times. We should own it when the going is good, and the going right now is great."

Those who bought gold when it reached a two-decade low of $251.95 in August 1999 have seen a 387% return, more than four times the 82% gain in Treasuries. An investment in the S&P 500 lost 0.4% through the end of last month. Interest on checking accounts shrank to 0.14% this year from 0.89% in 1999.

Since the S&P 500 peaked in October 2007, investors in the index lost 25%, holders of Treasuries made 16% and gold buyers are up 64%.

'Very Conservative Investments'

"There are people that just stayed in very conservative investments in cash and government bonds," said Larry Hatheway, global head of asset allocation at UBS (UBS) in London, who recommends investors hold about 1% of their assets in bullion. "Surely they would have been a lot better off being in gold."

Buying bullion at $35 when U.S. President Richard Nixon abandoned the gold standard in 1971 would have given a 35-fold return, about the same performance as the S&P 500.

Gold will average $1,070 next year, according to the median in a Bloomberg survey of 19 analysts. The metal may jump to $2,000 in the next five years, said HSBC's Morris. Ian Henderson, manager of $5 billion at JPMorgan Chase & Co. (JPM), said he's adding to his gold-related holdings because of "the momentum behind it." Jim Rogers, the investor who predicted the start of the commodities rally in 1999, has said bullion will surge to at least $2,000 over the next decade.

Touradji Capital

"Our sense is that this bubble is more at the beginning stages than on the brink of collapse," said Thomas Wilson, head of the institutional and private client group at Brinker Capital in Berwyn, Pennsylvania, which manages about $8.5 billion.

Touradji Capital Management the New York hedge fund founded by Paul Touradji, bought 2.23 million shares of Barrick Gold Corp., the world's biggest producer, during the third quarter, according to a Nov. 13 filing with regulators. The stake, Touradji's biggest equity holding, is worth $95 million.

Paulson & Co., the hedge-fund firm run by billionaire Paulson, will start a gold fund on Jan. 1 investing in mining companies and bullion-related derivatives, according to a person familiar with the plan. Einhorn, who runs New York-based Greenlight Capital Inc., told a presentation in New York in October that he's buying gold to bet against the dollar.

Paul Tudor Jones, in an Oct. 15 letter to clients of his Tudor Investment Corp., said gold is "just an asset that, like everything else in life, has its time and place. And now is that time."

Net Gold Buyers

Central banks will become net buyers of gold this year for the first time since 1988, according to New York-based researcher CPM Group. India, China, Russia, Sri Lanka and Mauritius have all added to their reserves.

Gold should be held when governments cease to function and currencies are worthless, or when inflation is surging, said Brian Nick, a New York-based investment strategist at Barclays Wealth, which manages $221 billion and an expert on how to sell gold. He doesn't recommend increasing gold holdings, which are a "very small" part of commodity allocations.

Inflation has yet to accelerate. U.S. consumer prices will rise 2% next year, the smallest expansion since 2002, according to the median estimate of 63 economists surveyed by Bloomberg. Prices will shrink 0.4% this year.

'Knee-Jerk Reaction'

"People have this knee-jerk reaction and say that you want gold as a hedge against inflation," said Maxwell Bublitz, who helps oversee $3.5 billion as the chief strategist at San Francisco-based SCM Advisors and recommends investors hold no more than 5% of their assets in the metal. "But the history of gold in regard to inflation shows that it's not a great hedge."

Investors seeking to protect themselves against inflation should buy commodities, which are cheaper than gold, said Wells Capital's Paulsen. Copper, after more than doubling this year, is still 28% away from the record $8,940 a metric ton reached in July 2008.

"Theoretically, it does have a spot in portfolios, a small one," Bublitz said. "You're probably going to get entry points that are a lot better than where gold is now." This may be a much better time to sell gold than buy.

Gold Flirts With $1,100

Wall Street Journal

Gold prices neared $1,100 in after-hours trading after the Federal Reserve's post-meeting statement suggested that U.S. interest rates won't be going up soon which keeps potential longer-term inflation a worry among traders.

The statement came out after the end of pit trading on the Comex division of the New York Mercantile Exchange, where the settlement price is set.

In pit trading, the nearby but lightly traded November futures firmed $2.40, or 0.2%, to settle at $1,086.70, a record settlement for a front-month contract. December gold rose $2.40 to $1,087.30 an ounce, a record settlement for the most-active month contract.

Then, about an hour after the Fed statement, in electronic trading after hours, gold for December delivery traded as high as $1,098.50 an ounce.

"The fact that everything remains the status quo is a positive environment for gold," said Dave Meger, director of metals trading at Vision Financial Markets.

There had been some worries that the Fed might change its rhetoric enough to be seen as signaling a hint of possibly tightening interest rates down the road.

"Any type of tilt to that effect could have supported the dollar and hence dented the gold price," Mr. Meger said. "Obviously that didn't happen. So any expectations to that effect are no longer a concern and that obviously gives a green light to the gold market to continue forward."

The Fed said conditions "are likely to warrant exceptionally low levels of the federal-funds rate for an extended period."

Continued low interest-rates mean further pressure on the dollar, especially since some nations have started raising rates, said Joe Foster, portfolio manager with Van Eck International Investors Gold Fund.

"Anything that is negative for the dollar is good for gold," he said. "Then there are the inflationary implications. The longer they maintain these historically easy monetary policies, the more that stokes potential for inflation somewhere down the road."

Gold had gained before the Fed statement on a second day of buying in the wake of news that the Reserve Bank of India has bought 200 metric tons of the metal from the International Monetary Fund who obviously know how to sell gold.

The news of the Indian purchases from the International Monetary Fund supported the market since it was seen as both reflecting strong central-bank demand and alleviating worries that the IMF's planned sale of 403.3 metric tons would hurt the market.

Central banks collectively had been net sellers of gold for more than a decade, said Fred Jheon, managing director of U.S. product development for ETF Securities.

AS SEEN ON TV
Cash for Gold
Should you mail in Grandma's old brooch?
By Candice Lee Jones, Reporter
From Kiplinger's Personal Finance magazine, July 2009

http://www.kiplinger.com/magazine/archives/2009/07/cash_for_gold.html

If you have heaps of gold chains stuffed deep into your dresser drawers, those commercials offering to take unused jewelry off your hands in exchange for "cold hard cash" may sound mighty tempting. Cash 4 Gold even ran a Super Bowl ad featuring Ed McMahon.

If you take the risk to sell gold jewelry by mailing it in an envelope, can you actually expect to get anything back?

Yes, but assuming that your bling makes it through the mail intact, even reputable companies will pay you based only on the weight of the gold; they do not pay for gemstones. Jewelry that's still wearable and in good shape can fetch a higher price elsewhere than it would being sold for scrap. You can check the market value of gold at www.goldprice.org. A better option might be to sell gold coins.

If you decide to sell online, go to www.top-10-cash-for-gold.com, which ranks online gold buyers. The site's top pick: ExpressGoldCash.com.

Howard Rubin, of the National Association of Jewelry Appraisers, says local jewelers, protective of their reputations, are likely to give you a square deal and may pay more cash for gold if you trade in the gold toward a new piece.

Precious Metals Exchange Corp. Announces VolumeContactTM Test Results -- In-House Marketing Division Can Generate up to 8,000 New Requests Weekly

Test Results Validate .82% Average Marketing Response Rate for Customers Requesting Priority Gold Kits

ADDISON, TX--(Marketwire - April 29, 2009) - Precious Metals Exchange Corp. (PINKSHEETS: PRMX) announced today that initial test marketing through its in-house marketing division, VolumeContact™, demonstrated response rates of .82% average from customers requesting Priority Gold Kits seeking to sell old gold and other precious metal items.

Garrett Vogel, President and Director of PRMX, stated, "Initial testing through VolumeContact™ shows a response rate of just less than 1%, and preliminary results suggest these response rates should be consistently achievable. The results will be significant in determining potential growth and revenue projections and establishing a realistic basis for projecting future requests for the Priority Gold Kits. These were only tests and resulted in requests for Priority Gold Kits, not actual precious metals received. The amount of metals returned with the kits is a critical volumetric driver. As tested, our projected cost of acquisition per customer could have been as low as $2.58 per request; in volume, projected costs could be as low as $1.00 per customer. Even in limited tests, VolumeContact™ represents the most cost effective method we are aware of for acquiring new customers in the online precious metal refining industry."

The Company's initial test results were determined by broadcasting audio commercials to potential consumers, with prompts to request a Priority Gold Kit for gold exchange. Test # 1 prompted 58 requests out of 6,773 potential consumers and resulted in a .85% call to action response rate. Test # 2 prompted 133 requests out of 16,452 contacted consumers and a .79% call to action response rate. Test # 2 was completed with just over 10 minutes of broadcasting. These tests were conducted in preparation for the national launch of www.CashOutMyGold.com.

Mr. Vogel continued, "Industry statistics peg the average pure gold content received in a gold kit at approximately .25 Troy Ounces, valued at about $225.00 at today's prices. Our ability to target one million or more live prospects per week wishing to sell gold jewelry could average our company 32,000 Priority Gold Kits per month through this method of marketing alone. If we converted all of those, that's approximately 8000 ounces of pure gold, generating gross monthly revenues of over $7.2 million. Obviously, we're not going to have a 100% conversion rate, but we expect to do better than our competitors based on our high pay-outs, and will hire staff as needed to handle the volume of customers we generate. Our electronic marketing equipment has high limits; we can make over 3 million calls per day and could conceivably contact up to 500,000 potential customers per day looking for gold buyers. Simply put, the power of numbers in direct marketing simply cannot be denied."

Precious Metals Exchange Corp. operates in the precious metals refining and recycling sector of the precious metals industry. The Company provides a convenient, secure and efficient method for customers to sell items containing precious metals. Targeted direct marketing is used to identify potential customers, and a highly automated fulfillment process to ensure their satisfaction through high payouts and quick service. The Company recycles customers' broken or unwanted jewelry and other items for gold, platinum and silver content, avoiding the risks and environmental costs of mining. For more corporate information, please visit www.preciousmetalsexchangecorp.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") including the fourth quarter revenue and future growth. Additionally, words such as "seek," intend," "believe," "plan," "estimate," "expect," "anticipate" and other similar expressions are forward-looking statements within the meaning of the Act. Some or all of the events or results anticipated by these forward-looking statements may not occur. Factors that could cause or contribute to such differences include the future U.S. and global economies and the impact of competition. Precious Metals Exchange Corp. does not undertake any duty nor does it intend to update the results of these forward-looking statements.

For further information on Precious Metals Exchange Corp., please view www.pmecusa.com.

Pawnshops Grab The Gold Ring

Credit Woes, High Prices Drive Consumers to Find New Home for Old Rolex

The U.K.'s alternative-credit industry has struck gold -- literally.

Business is booming at the country's pawnbrokers as the effect of the credit crunch forces a small but increasing number of consumers to sell their gold. And with gold trading close to record prices, the number of outright sellers of the precious metal has risen, mirroring similar trends in the U.S.

"Banks have been stricter over the last several years and have tightened lending criteria, which has created more demand for alternative forms such as pawnbroking," said Des Milligan, chief executive of the U.K. National Pawnbrokers Association. "This has been completely exacerbated by the credit crunch."

Gold has risen some $200 a troy ounce from a year ago, when the credit crunch first erupted into the British psyche. It is hovering near $840 an ounce on the world spot market. At one point in March, it hit a peak of $1,032.50 an ounce.

The precious metal always has been a popular item for mens wedding rings and at pawnbrokers. Even a piece of broken jewelry that might have little value to its owner can be pledged to the pawnbroker, who pays the item's owner a fee over a set time period. The pawnbroker collects interest on the pledge if the consumer redeems the item.

Unredeemed items at the end of the contract term are generally sent to public auction for sale, or, if that isn't successful, the pawnbroker buys them back and sells them itself. More than 97% of U.K. pawnbroker pledges are gold and diamonds.

H&T Group, which is one of two publicly traded pawnbrokers in Britain along with Albemarle & Bond Holdings, has been in business since the late 19th century. H&T's first-half profit was up 38% to £3.1 million ($5.7 million) from a year earlier. The company said this has been driven by a simple message on the marketing side: "We buy gold."

Laurent Genthialon, H&T's director of finance, said the introduction of simpler buyback contracts has boosted its business. In addition, the advent of Web sites such as eBay has made it more acceptable for people to sell secondhand items, he said.

Pawnbrokers also are roping in a new type of customer -- small-business owners who are having trouble obtaining credit from retail banks and instead opt for pawnbroker payouts to secure financing.

"Expensive gold jewelry or Rolex watches are now being used to redeem at pawnbrokers, with business people able to borrow large amounts on the back of this, perhaps £30,000 to £40,000," said Mr. Milligan. But unlike the goods pawned by consumers, these items are almost always redeemed eventually, he said.

By: Andrea Hotter
Wall Street Journal; August 28, 2008