Gold rush: Price surge prompts Oklahomans to start new businesses
Gold prices rose steadily from 2008 to 2011, prompting an increase in the number of gold dealers in Oklahoma.
In search of a new career, precious metals dealer Sandra Ward opened Gold and Silver Exchange in a strip mall near NW 17 and Portland Avenue in November after seeing how well a friend was doing in the cash-for-gold business.
To me, this is kind of like the modern version of gold mining, only you don't have to dig in the ground.”
Gold and Silver Exchange
“I saw they were making pretty good money and thought I would give it try,” she said.
Ward's business is situated in a sparse storefront about the size of a walk-in closet. It is one of more than 160 licensed precious metals dealers in Oklahoma. A neon sign in the window proclaims “I buy gold.”
Ward isn't the only new cash-for-gold business setting up shop.
The number of precious metals dealers in the state has grown over the past several years because of the rising price of gold since the last recession.
The Oklahoma Department of Consumer Credit, which regulates precious metals dealers in Oklahoma, has also seen a corresponding increase in the volume of complaints it receives about such businesses. The agency has drafted new legislation to increase its regulatory oversight of the dealers.
Ward has noticed several other cash-for-gold businesses opening in her neighborhood.
“It seems like to me like they're kind of popping up everywhere — there's probably three others within half a mile,” Ward said. “To me, this is kind of like the modern version of gold mining, only you don't have to dig in the ground.”
Price surge reflects demand
After stagnating since the early 1980s, gold prices have risen steadily since 2008, hitting a high of about $1,900 an ounce in late 2011. In recent weeks, gold prices have hovered around $1,650 an ounce to $1,750 an ounce.
Because the Federal Reserve has taken actions to keep interest rates artificially low since the onset of the financial crisis in 2007, more people have looked to gold as place to invest with higher rates of return, said Justin Lewis, vice president for Oklahoma City-based commodities brokerage firm KIS Futures Inc.
A weaker U.S. dollar also means that investors can buy more U.S. gold with foreign currency, giving rise to higher international demand, he said.
“The reason why there are so many of those cash-for-gold places on every street corner is that the price of gold is basically three-and-a-half times what it was seven years ago,” Lewis said. “As gold gets higher, people will be more likely to sell that ring they've been holding onto.”
Nikki Uselton, who opened the Edmond gold and silver dealer Southwest Bullion & Coin with husband Mike Uselton about seven months ago, said business has been good for the couple because of higher prices.
“It's absolutely the higher price of gold,” Uselton said. “If you have a missing earring or a broken gold chain, it's going to cost so much more to fix it, so we get those broken pieces and make some money off of it.”
The increasing price of gold has led to rapid expansion for Oklahoma City-based precious metals dealer APMEX.
The business was started in 1999 as a storefront coin and precious metals dealer in Edmond, and has since grown to become the state's largest precious metals dealer. The business moved to the stately Federal Reserve Bank building downtown in 2010.
In 2012, the company formed a partnership with eBay to become the online auction site's exclusive gold bullion dealer. The company sells silver, gold and coins at its eBay store, earning a 3 to 5 percent commission on each sale.
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