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Cash4Gold plans expansion into Europe

Bloomberg News

July 22, 2009

Cash4Gold, which extracts 6,000 ounces of gold from scrap every week in the United States, plans to open branches across Europe over the next several quarters, seeking to benefit from a jump in sales of old jewelry.

The Pompano Beach-based company, which started a U.K. service this week, said it will extend that to Germany, Spain, Italy, France and the Netherlands by the end of the first quarter 2010, Chief Executive Officer Jeff Aronson said Tuesday in an interview in London. Russia, Australia and Poland may be added by the third quarter of that year.

Bullion scrap supplies probably exceeded 500 metric tons in the first quarter, about the same as global mine production, researcher GFMS Ltd. said in April. Consumers are seeking to raise cash as unemployment expands, gold prices advance and the world economy endures its worst slump since World War II.

“It’s a time people are looking for extra money,” Aronson said. About 60 percent of U.S. customers, who send jewelry through the mail for evaluation before receiving a check or bank deposit, earn less than $40,000 a year, he said.

The company is also processing about 800 pounds of silver, 300 ounces of palladium and 100 ounces of platinum a week. Cash4Gold, which refines the metals before selling them on to mints or large jewelry manufacturers, is getting as many as 20,000 applications a week, Aronson said.

Gold prices have advanced for eight consecutive years in London, reaching a record $1,032.70 an ounce in March last year. Gold for immediate delivery traded at $948.17 as of 8:07 a.m. in London Wednesday.

The company, which aired a 30-second advertisement during the Super Bowl in February, pays 20 percent to 85 percent of the wholesale gold price for customers’ jewelry, depending on the size of the sale and quality, Aronson said.