Browsing Category

Thrifting & Antiquing

Thoughts of a Grizzled Gold Scrapping Veteran

Thoughts of a Grizzled Gold Scrapping Veteran

A long time ago, I used to scrap gold as a hobby.  That's right.  Before the cash for gold craze went viral, I was on the scene, tirelessly scouting flea markets and antique stores for scrap gold.  Given the extensive experience I acquired, you would think that I have a tip or two about gold scrapping.  And I do.

First, if you are currently contemplating scrapping gold or other precious metals as a hobby or a business, don't do it.  The space is absolutely overrun with competition today.  There is a cash for gold kiosk or a pawn shop sitting on every other street corner these days.  And they have been busy separating desperate people from their gold jewelry for more than a decade at this point.  In many less fortunate neighborhoods there probably isn't that much gold left to scrap anyway.

But it didn't use to be that way.  Back when I was prospecting, in the late 1990s and early 2000s, nobody scrapped precious metals.  Why not?  Because gold and silver were only $300 and $5 a troy ounce, respectively!  Everyone was too busy driving their massively oversized SUVs to their ridiculously huge McMansions, while being fabulously wealthy, to worry about scrapping gold.

Perhaps an anecdotal story will best exemplify the conspicuous waste during this time.  My mother's friend threw away a complete 12 place setting sterling silver service she had inherited just because she felt it was outdated.  She thought it was ugly and didn't want it anymore, so into the trash it went.  Can you believe that?  A perfectly good 50, 75 or 100 troy ounce set of sterling flatware thrown into the trash heap!  Stories like this are fascinating as social commentary while also exemplifying the horrible wastefulness of the era.

But for an amateur gold scrapper like me, the late 1990s were a literal golden age.  I remember gleefully picking through boxes full of junk jewelry in antique stores at that time.  Each piece of jewelry might cost you anywhere from a quarter to a few dollars.  But sterling silver was common and karat gold could frequently be found.

I think the deals were so great because nobody could be bothered to scrounge around for the few dollars available from gold scrapping.  Antique dealers were doing well selling collectibles to Baby Boomers for outrageously high prices.  They didn't need to squeeze the last dollar out of a few pieces of junk jewelry.

It takes some time to identify karat gold and individually price it.  For most dealers, $300 an ounce gold just didn't justify the effort.  If a dealer was shooting for maximum turnover, it was simply easier to throw the jewelry in a communal bin and slap a nominal, one-size-fits-all price on it.  Despite the low precious metal prices - or perhaps because of them - it was an ideal environment for gold scrapping and I took full advantage of it.

One time, I even scored a 14 gram (0.386 troy ounce) pair of solid 14 karat gold cufflinks at a flea market for a mere $2.  Gold was trading around $350 at the time, so the scrap value was about $92.  That translated into an instantaneous 4,500% return on my initial investment!

Of course such phenomenally great deals were rare, even in the good old days.  And the days didn't stay good forever.  As the price of gold and silver inexorably rose, the supply of cheap, overlooked junk gold jewelry gradually dried up.

As it became progressively harder and harder to find gold jewelry to scrap, I gradually abandoned my lucrative hobby.  Even though the price of gold increased substantially during the early to mid 2000s, the amount of scrap gold I found dropped so drastically that it didn't make any financial sense to pursue gold scrapping.

The magic in gold scrapping was gone.  In many ways, I feel that 2006 was the death knell for the part-time precious metal scrapper.  In that year, the price of gold shot above $600 a troy ounce and has more or less stayed above that level ever since.  The increased recognition of gold's scrap value quickly led to an explosion of scrap for gold companies and a simultaneous emptying of antique store display cases.  If you find a piece of karat gold jewelry in an antique store today, it will undoubtedly be priced two or three times above scrap value, even if it is damaged or otherwise junk.

Antiquing and the Gray Man Concept

Antiquing and the Gray Man Concept

Art and antiques investors must sometimes deal with smaller art galleries, coin shops or antique dealers that will only accept cash as payment.  This often necessitates carrying large sums of cash on one's person to consummate a business deal.  Likewise, after a high value investment grade antique is purchased, it isn't uncommon to have to carry the item some distance in a busy or urban area, either to your car or to public transportation.

These conditions create security risks.  However, these dangers can be partially mitigated by engaging in "Gray Man" behavior.  The Gray Man concept revolves around blending into the crowd as much as possible, yet still being aware of your surroundings.  The Gray Man does nothing to draw attention to himself.  He dresses like everyone else.  He walks like everyone else.  He acts like everyone else.

The Gray Man does not make himself a target by showing off his wealth.  He doesn't wear a Rolex and drive a BMW, or otherwise flaunt his good taste and material success.  These things may appeal to our egos and help our social standing, but they can also make us potential targets for opportunistic criminals.

Gray Man behavior is invaluable in the world of art and antiques where it isn't uncommon to deal with large sums of cash and high value items.  Being The Gray Man will help you remain inconspicuous, even if you are carrying several thousand dollars or a high end piece of antique diamond jewelry.  In fact, I have a personal story to support this assertion.

One time many years ago, I was shopping for bullion at my favorite Boston-based coin store, J.J. Teaparty, when a young man walked in who wanted to sell a gold bracelet.  This guy was a little rough around the edges and didn't fit in with the shop's normal clientele.  The store proprietor, Miles, took one look at the guy and told him to get out.

I had been standing off to the side in the small shop, watching the entire scene unfold.  I inferred from Miles' behavior that the gold bracelet the man wanted to sell was probably stolen goods.  This wasn't immediately obvious to me, but I knew Miles was a trustworthy business man.  If he wanted nothing to do with someone, then there was undoubtedly a good reason for it.

In any case, the man with the gold bracelet stormed out of the store in a sour mood, having been unable to convert his possibly ill-gotten treasure into cash.  I quickly conducted by own business, buying two 100 troy ounce silver bars, and then departed the store.

Once I was out on the street, I was dismayed to find that the bracelet man had waited for me, just out of sight, outside the coin shop.  He quickly approached me, offering to sell me the gold bracelet that he had been unable to sell at J.J. Teaparty.  I politely told him I wasn't interested, but the rough-looking man didn't want to take no for an answer.

This was even more harrowing at the time because I was carrying almost 14 pounds of silver bullion in my messenger bag worth about $1,000.  After I tersely declined his offer to buy the possibly hot property, he began loudly denigrating me right in the middle of the street.  He nonsensically shrieked that I thought I was better than him.

The situation was growing dangerous.  But this is where the Gray Man concept proved itself useful.  Even as the man approached and engaged me, I continued walking briskly from the low-traffic side street where J.J. Teaparty was located to the nearby and more active Downtown Crossing area.

I also avoided eye contact and never raised my voice when refusing his attempts to sell me the bracelet.  I kept one hand firmly underneath the messenger bag at my side, so as not to make its excessive weight obvious.  But my body language was one of firm disinterest.  I never stopped or turned towards the man, nor gave any other indication that I would engage him.

These tactics worked.  After haranguing me for a tense minute or so, he gave up and walked away.  I am certain that it was my Gray Man behavior, in part, that prevented the situation from escalating further.

Although my experience was atypical, The Gray Man concept is a good idea when buying any kind of high value, tangible goods in person.  While it is my sincere hope that you will never need it, The Gray Man concept may prove invaluable to your personal security.  The man who blends into the crowd is the man who avoids trouble.

Pop Culture and the Decline of Thrifting

Pop Culture and the Decline of Thrifting

When I still lived in Boston I was an avid thrift shop enthusiast.  Thrift shops exist in a strange space halfway between antique store and garage sale.  And I loved every moment of shopping in them.  While it was rare to find a truly valuable treasure in the vast aisles of secondhand merchandise, mid-century modern kitchenware, furniture and other household goods from the 1950s and 1960s were always available in abundance.

There was one specific Salvation Army thrift store located on the outskirts of Boston that I often visited. Due to unique circumstances, it carried the best secondhand items of any thrift store in the area.  It was close enough to the wealthy neighborhoods to receive their cast-offs - stately brass candlesticks, vintage Pyrex glassware, retro porcelain dishware and lots of secondhand designer clothing.  The prices are ultimately what made the experience, though.  Who can resist funky fresh vintage mid-century modern items at $0.50 to $3 each?  It was a thrifting paradise.

Then the Great Financial Crisis of 2008-2009 hit and the thrifting world was turned upside down.  In the wake of the recession my preferred thrift shop - a previously reliable source of great vintage pieces - gradually became a barren wasteland.  All of the older items disappeared in less than 12 months.  Suddenly the store was overrun with low quality pieces from the 1980s and 1990s.  This meant there was a lot more plastic and particleboard and a lot less brass, glass and porcelain.  After a few years of going back to the shop every few months vainly hoping for a reversion to normalcy, I finally gave up.  The good vintage stuff was gone and it was never coming back.  This unfortunate trend was a universal phenomenon too, repeated in every other thrift shop I visited after the Great Financial Crisis.

It took me a long time, but I finally came up with a theory to explain the decline of thrifting.  The primary factor was the financial crisis.  People who used to donate massive amounts of "old" household "junk" now didn't have the disposable funds to renovate or redecorate their houses any longer.  In addition, those who continued to make donations to thrift shops now examined everything with an eagle eye to ensure they didn't accidentally part with anything valuable.  They weren't going to give away anything of even modest value.

I also think demographics played a secondary role in the decline of thrifting.  The elderly move to nursing homes and die at statistically predictable ages.  Because their estates are also partially or fully liquidated during these events, any vintage or antique items they owned are auctioned, sold or donated at the same time.  These estate items are of a predictable age as well, generally no more than 60 years old.  Around 2010, this demographic truth finally started to catch up with thrift shops as the supply of 1950s and early 1960s vintage items from estate sources began thinning out dramatically.  For those who are interested, my article entitled "The Demographics of Antiques" delves into this topic in greater depth.

The Great Financial Crisis prompted an entirely new clientele to explore thrift shops, too.  Shoppers who before had never before strayed from the staid halls of Banana Republic, J. Crew or the Gap now boldly ventured out in search of a bargain.  It's tough to beat prices of $2 or $3 for a pair of trendy jeans or a nice blouse.  This phenomenon goes hand in hand with the rise of Hipsters, who wouldn't be caught dead shopping anywhere but thrift stores.

It is no coincidence that the song "Thrift Shop" by Macklemore and Ryan Lewis (featuring Wanz) was released in 2012.  This chart topping, hip-hop anthem features caustic social commentary on the cookie cutter look of ridiculously expensive designer clothing while glorifying the thrifting experience as a great way to acquire clothing that is inexpensive, stylish and unique.  The song's video is a pop cultural phenomenon, as demonstrated by the fact that it is currently approaching one billion views on YouTube.  I think it's safe to say that thrifting is no longer the little-known, underground activity it used to be.  No wonder it's impossible to find good vintage items in thrift stores today!

Why Good Antique Stores Go Bad

Why Good Antique Stores Go Bad

In the mid 1990s a small town I lived near was experiencing a full-fledged economic revival.  As part of this renaissance, the former Murphy's Five and Dime building downtown had been leased to an antique cooperative.  And what an antique store it was!  It had everything from Victorian to mid-century American pieces and all at very reasonable, if not ridiculously low, prices.

I would buy little plastic zip-lock sandwich bags stuffed full of junk jewelry for a quarter.  Yes, you read that right - only 25 cents.  Only the "junk" jewelry wasn't always junk.  These grab bags were peppered with sterling silver items - rings, necklaces and bracelets among others.  There was even the occasional solid karat gold piece.

So I did what any good antique truffle pig would do.  I kept going back for more.  Over the next several years I probably visited that antique store dozens of times.  Each time I put down a $10, $20, or very rarely a $50 bill in front of the cashier and in return walked away with a small (or sometimes large) pile of treasures.  But then, very gradually, the deals stopped being quite as good.  I had to dig progressively deeper into the dusty corners and dark niches to find my next treasure.

And then, one sad day, the deals were gone.  A couple years later the antique store closed.  I had thought that we had a good thing going.  What happened?  Why do good antique stores go bad?

The short answer is that I, and people like me, mined the store out.  Like a horde of locusts descending on a lush field of ripe grain, we stripped it clean.  I purchased every 25 cent junk jewelry bag the antique store had.  First I chose the ones with the best looking contents, gradually working my way down the stack until there were none left.  And the antique dealers simply couldn't replace their inventory at anywhere near the same prices.

I suspect that most of those unbelievably cheap antiques came from local estate sales.  There was a large elderly population in town at the time and I think a lot of the executors administering these estates just didn't want to be bothered.  They let the antique dealers clean out the estates' houses for a pittance, just so they could move on quickly with their lives.  This allowed the dealers to turn around and sell junk jewelry bags for a quarter.

But it could only last as long as the cheap estate sales kept coming.  Once those tapered off, there was no more 25 cent inventory to be found.  There is a powerful lesson to be drawn from this experience.  The antique and art market is a living, breathing thing.  Those items that only cost a few dollars today may become completely unavailable tomorrow, except at exorbitant prices.  And yes, sometimes good antique stores go bad.