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The ABBs of Precious Metals: Always Be Buying

written by Paul Holewa

Retail jewelers tend to promote their gold buying services when the economy is down or gold prices are up. Steve Hartz, founder of Florida-based SHR Precious Metals, Inc., advises jewelry store owners to break this Great Recession mindset and “always advertise and promote buying precious metals.”

Steve emphasizes that buying precious metals from the public, chiefly old or unwanted gold, offers a value-added service from a familiar retailer for existing customers and an opportunity to create a relationship with potential customers. Gold buying can also provide retail jewelers with lucrative remount or restyling events as well as increasing a customer’s buying power by offering certain percentages above melt or spot prices when old gold is sold to purchase new jewelry.

Another benefit to precious metal buying is enhancing a jewelry store’s estate offerings. A jeweler can add jewelry purchased from the secondary market to enhance their own estate jewelry inventory.

Some jewelry storeowners even use dated inventory or estate jewelry in other lucrative ways including donations to local charities, bartering with contractors for services rendered, or inventory swaps with out-of-market retail jewelers that are part of a buying network. Such money-making opportunities can only be realized when a jewelry retailer makes precious metal purchasing a regular service their customers know about and have a good refiner relationship.

With family ties to Sterling Jewelers, Steve landed a part-time job as a teenager at a mall store in 1982. He worked in jewelry retail throughout high school and college. After graduating from the University of Michigan in 1990, Steve was offered a full-time position with Sterling. Ten years later, he went from jewelry sales to wholesale/manufacturing sales with jewelry maker Oro Alexander.

Things were going well for Steve in the early years of the new millennium. Then the housing market began to falter in 2006, the year he founded his refining company. With retail jewelers struggling to pay bills Steve identified a need to inject cash flow into jewelry stores at a time when luxury purchases fell sharply.

“That’s when I launched Steve Hartz Refining, SHR” says Steve. “Retail jewelers needed cash on the spot for their old gold. No surprises. And, no disappointments with refiners.”

In the early months and years Steve travelled extensively to retail jewelry stores with his concierge refining business He was offering cash on the spot for unwanted and old gold storeowners were purchasing from customers that were experiencing their own financial hardships.  

Retail jewelers needed to offer gold buying services similar to pawn shops. With an exclusive focus on jewelry, customer relationships and appreciating the sentimental reasons for purchasing new jewelry, retail jewelers had many advantages of doing gold buying better and smarter.

Gold buying events emerged as a creative and profitable way to generate excitement about selling unwanted gold jewelry. One of SHR’s early successes with gold buying events was with fellow Floridian Holly Wesche, owner of Melbourne-based Wesche Jewelers.

“Holly tried the gold buying event in 2009,” says Steve. “After the first such event, she regretted not jumping on the gold-buying bandwagon sooner. By mid-2009 and into 2010, Holly and her staff were holding monthly themed parties for her gold buying events. Her team wore SHR’s brightly colored ‘got gold?’ t-shirts for the staff. These events got the attention of industry trade magazines, which was a big win for us.”

Recovery from the Great Recession was slow. By 2011, Steve’s notoriety earned him speaking gigs at regional and major trade shows. His presentation, “Refining Myths: Secrets to Maximizing Your Store’s Refining Settlements,” was as essential to a store’s success as garnering tips and tricks to increasing better bridal sales and targeting Millennials.

Steve identified and leveraged the gold buying trend early on. Timing was definitely on his side and he not only created a new business model in the industry, but buying gold (along with bead sales and bridal sales) helped save many retail jewelers from closing their doors.

As many people know, however, history repeats itself – even when we least expect it. Gold buying is once again a bullish proposition for retail jewelers with the COVID crisis hurting many retail businesses of all shapes, sizes and types creating historical unemployment figures.

“The current state [of the refining market], based on 2020 and the first quarter of 2021, shows a bull market for refiners,” says Steve. “ The COVID pandemic that began in March 2020 drove customers to sell more of their old gold and jewelers to refine more; SHR’s refining volume quadrupled in 2020, from what was already a great business year in 2019.”

This year’s gold market will be challenging, however, with volatility the operative word for gold buying in 2021. “The year opened up with gold dropping from the $1,900s that it hit near the end of 2020, to the $1,800s in January and then $1,700s in February,” says Steve. “Jewelers should be mindful of the volatile market when they are buying gold as it is not uncommon for gold to drop $100 or more an ounce a week after they bought the scrap.”  

Advice for retail jewelers for this year is to continue with gold buying and promote it as a regular service. It brings in customers that may not be in the market for jewelry at the gold buying time but will remember your store when they’re ready to buy again. Relationship building with potential and existing customers is always a plus.

Hosting popular remount and restyling gold-buying events take the stigma out of selling old and makes selling unwanted gold enjoyable. And, giving customers percentages (5-, 10- even upwards of 15-percent) above per once melt prices for gold when buying new jewelry is an incentive retailers can leverage every day.

Additionally, Steve encourages jewelry storeowners to rethink the actual gold testing process itself. “Retailers should consider getting away from diluted acids and use SHR’s KEE Gold Testers,” says Steve. “KEE will catch what your acid misses. Plus with KEE, there’s no acid, no gel, and no mess. It allows the jeweler to work much more efficiently and smarter when buying gold.”

Closing advice to retail jewelers includes: “Retail jewelers must adhere to the second-hand dealers licensing as well as state and county regulations with regards to documenting holding the ‘scrapped’ jewelry for so many weeks. They will need to account for the fluctuation in gold pricing as it is not uncommon for gold to plummet two weeks after a jeweler purchased it for scrap.”