"Times are hard," said Virginia Rodriguez, a hospital technician and mother of two, explaining why she has used earrings, rings and a gold cross and chain bequeathed by her grandfather in exchange for loans of nearly $1,000.
The jewelry has been pledged as collateral to Provident Loan Society of New York, which operates from an austere limestone structure on Manhattan's Park Avenue South. Created amid the Panic of 1893 by tycoons such as J.P. Morgan and Cornelius Vanderbilt, business has surged during the most recent climb in gold prices.
On Wednesday, gold settled at $1,823.50 per troy ounce. Prices are up 28% so far this year, at a time when other coveted commodities such as crude oil and copper have fallen in 2011 and the Dow Jones Industrial Average has dropped 2.8%.
For hedge funds and hordes of individual investors, gold's climb is a chance to profit from the declining U.S. dollar and fears about the European financial crisis.
Developer Donald Trump said this week that he would accept a security deposit in gold at his new tower in Manhattan's Financial District.
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But some people like Ms. Rodriguez regard gold as less of a safe haven than a last resort, shedding heirlooms and treasured keepsakes in order to pay basic bills. Ms. Rodriguez has used the loans she's taken out from Provident in recent years, which carry a 13% interest rate over six months, to pay for rent, cable television and a cell phone, all examples of "what you need every single day," Ms. Rodriguez said.
From 2005 to 2010, U.S. sales of used gold jewelry and other scrap jumped 137% to 143 metric tons, according to consulting firm GFMS Ltd.
Since then, the U.S. economy's growing troubles and turbulence in the financial markets—not to mention the abundance of late-night television advertisements touting "cash for gold" offers—are prodding more Americans to sell the precious metal while prices are high.
"There's definitely more interest in people selling gold" since the U.S. government's long-term credit rating was downgraded by Standard & Poor's in early August, said Ron Lieberman, owner of Palisade Jewelers in Englewood, N.J.
In August, gold prices hit record highs in nominal terms on 10 days during the month. Gold finished the month up 12%.
"The discussion of the high gold price brings out gold," said David Firestone, president of Firestone and Parson Jewelers in Boston.
Sellers also are digging deeper into their personal gold stocks and parting with items that have greater sentimental or financial value than they were willing to sell when the economy was better.
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"Up until about six months ago, we didn't really see the family heirlooms," said Scot Congress, who owns Congress Jewelers on Sanibel Island, Fla., which caters to high-end clients and also buys gold. "Especially lately, it's been to make ends meet, which is especially frightening to me personally."
Provident promotes itself as "better than a pawn shop," targeting customers who it believes will be able to get their gold back once their financial circumstances improve. Provident says its interest rates are "substantially lower" than the limit imposed on New York pawnbrokers. When the company was born, the U.S. also was battered by foreclosures and bank failures, according to Eugene White, an economics professor at Rutgers University.
Gold typically makes up roughly half of the collateral that Provident takes in, but that proportion has climbed recently, said John Higney, the company's chief operating officer. "We have seen a lot of gold," he said in an interview.
In addition to rising gold prices, Provident is getting a boost from a new advertising campaign: Business at a satellite office in the New York City borough of the Bronx has picked up "drastically" since the campaign started.
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Provident does not set the loan values based on daily fluctuations in the gold price but periodically adjusts them to reflect market moves. The amount loaned per ounce of gold has nearly tripled in less than five years.
Some customers use Provident because they find it easier than getting a traditional loan. "It's a big problem now with the banks," said Pepa Abad Toledo, who uses Provident loans to buy merchandise for her business selling costume jewelry. She currently has an $800 loan from Provident for which she used eight gold rings, two pins and two earrings as collateral.
If a customer doesn't repay a loan, Provident sells the jewelry at public auctions. Ms. Rodriguez decided to surrender a couple of pieces she was using as collateral because they had little sentimental value to her. She still hopes to get her grandfather's cross and chain out of hock.
"I can't let that go," she said. "I like my gold," she added, but she wasn't wearing any "because it's all here."
Write to Liam Pleven at email@example.com