The glass display case in Kevin Deuso’s store is full of nothin’. He likes it that way. Deuso, 51, used to fill the case with watches, toys and paperweights. But having goods on display hurt his ability to buy gold and silver.
These days, Deuso still sells the watches, paperweights and other “collectibles,” but only on request. As he explains: “I don’t want to dick around with $20 purchases when I’m trying to deal with somebody here with 1000 bucks’ worth of gold that I can make a hundred or 200 bucks off.”
It’s Tuesday morning at New World Coin & Jewelry, the shop Deuso opened four years ago on Route 15 in Essex Junction. A bearded guy wearing jeans and a black baseball cap, he sits beside a desk bearing a digital scale, a calculator, a pencil and a hammer. That last item is for pummeling jewelry into scrap metal.
Deuso used to own an antiques store, but he switched gears because he thought the precious-metals racket looked promising. Sure enough, since 2005 the price of gold has roughly doubled. These days, two-thirds of the rings, bracelets and brooches Deuso buys are more valuable melted than intact. A few times a week, he sends plastic bags filled with scrap gold to a refinery, where it is purged of impurities and valued at nearly $1000 per ounce.
Deuso is one of several coin- and precious-metals buyers in the Burlington area. There appears to be no love lost between him and his two main rivals, John Martin and Steve Edwards, owners of the Shelburne Road shops Martin’s Coins & Jewelry and Vermont Coin & Jewelry, respectively. But they all agree that the recession is great for business. Deuso has upped his advertising fivefold since 2005, and this winter he opened a second store in St. Albans.
Deuso’s story highlights a simple economic principle, says Diane Piret of the Industry Council for Tangible Assets, a Louisiana trade association representing the rare-coin and precious-metal industries. As the U.S. economy falters, Piret explains, precious metals become safer investments than currency and stocks. That’s good both for people looking to invest in bullion and those hoping to make a quick buck by selling jewelry and valuable coins.
According to Piret, demand for gold tends to rise when the economy tanks. It increased so much during the Great Depression, she continues, that Franklin D. Roosevelt issued a 1933 executive order prohibiting U.S. citizens from hoarding gold. Piret remembers a similar scare happening during the inflation era of the late 1970s and early 1980s. At one point, she recalls, she counseled a “little old lady” who wanted to trade her life savings for two 1-ounce gold coins.
In a phone interview, Piret says she doesn’t think President Barack Obama will forbid citizens to hoard gold. But, since baby boomers are approaching retirement, she wouldn’t be surprised to see a new crop of old ladies, or men, trading in savings for bullion: “People are watching their retirement plans drop like rocks,” Piret notes, “and one of the primary functions of gold is to protect the purchasing power of your money.”
If folks worried about safeguarding a nest egg are buying gold, who is selling it? Interviews with three local coin and jewelry buyers suggest that those who frequent their shops represent a socioeconomic spectrum. Some clients are middle-class professionals trying to sell off estates or “downsize” jewelry collections, the buyers say. Others are working-class people who need money to cover basic expenses.
“More and more people are coming in,” observes Steve Edwards, owner of Vermont Coin & Jewelry. Edwards opened his Shelburne store the same year Kevin Deuso opened New World Coin & Jewelry. Both stores compete for Vermont gold against Martin’s Coins, Queen City Coins, independent buyers and a handful of shops in neighboring counties. Edwards predicts that the number of local gold sellers will increase this summer, when people start looking for money to pay fuel bills.
“We’re behind the [rest of the] country in things going to hell and getting better,” he adds, “so I get the feeling that as time progresses, we’re going to have more and more people.”
Are buyers like Steve Edwards, John Martin and Kevin Deuso getting rich from the gold trade? Probably not. A sales rep at a local jewelry store estimates that a $450 gold wedding ring would probably fetch about $50 at a local coin-and-jewelry shop. Edwards and Martin say they operate on a 10 percent profit margin when they resell the gold to a refinery. Industry expert Piret says tight margins are dictated by stiff competition and fluctuations in the market.
Some stores that buy gold also sell new jewelry, such as Perrywinkle’s Fine Jewelry on Main Street in Burlington. Owner Perry Sporn says Perrywinkle’s has been purchasing scrap jewelry for years, but he’s now advertising that aspect of his business on radio and television as a way to capitalize on the gold-buying “craze.”
Sporn says scrap accounts for less than 1 percent of his store’s total sales. But he wants to make consumers aware of an “alternative” to out-of-state web-based companies that ask clients to mail in jewelry for appraisal. According to Sporn, such websites regularly generate a “tremendous number of complaints.”
Are local gold buyers as cutthroat as the coin dealer David Mamet depicted in American Buffalo? Perhaps not, but it’s a hard-nosed business, for sure, one where talking down the competitor is the norm. The three independent buyers interviewed for this article routinely criticized one another’s business practices while emphasizing that their own operations were the most respectable and trustworthy.
One thing the independent gold buyers agree on is that Perrywinkle’s pays less for scrap jewelry than they do. Sporn, who doesn’t know these shop owners, says their claims aren’t based on hard evidence. (Seven Days cold-called all four businesses to check — see sidebar.) He adds that he doesn’t have a problem with local gold buyers, and that selling gold in Vermont is probably a safer bet than sending it to a “cash for gold” outfit online.
What does Sporn, who has been buying scrap jewelry since the late ’70s, think of the current gold rush? “The craze is basically a cleansing process,” he asserts, noting that there’s only so much jewelry lying around people’s houses. Once it’s gone, gold buying will “die off to nothing.”
Kevin Deuso at New World Coin & Jewelry begs to differ. On a Tuesday morning, he’s fielding calls from his St. Albans store and cutting deals with walk-in customers. One woman exchanges busted earrings and a heart-shaped gold clasp for $20. “Here you go,” Deuso says. “Now go put gas in your car.” After she climbs into a compact and drives away, Deuso puts the jewelry in a plastic bag with about $800 worth of scrap metal.
Deuso recalls that he had his first brush with gold at 15, the year he quit high school to work for a guy named Louie at a Winooski pawn shop. After that, Deuso worked as a mechanic and a mason, but he’s always had a soft spot for gold and antiques. Besides, he says, “I didn’t like working for people.”
If his expansion plans work out, he won’t need to. Deuso initially called this Route 15 store Essex Coin & Jewelry, he explains, but changed it to New World Coin & Jewelry because having a town in the title didn’t suit his business model: He wants to open as many as 60 franchised coin-and-jewelry shops throughout New England.
Will the economy sustain his dream? Deuso, who has no visible teeth, grins widely and says he doesn’t see any reason why business would slow down. He’s been selling gold off and on for 35 years. And, he notes, the circle is unbroken: “There was a guy in Burlington who was doing it before Louie.”
It's true what they say: Money makes the world go 'round. It's also true that in recent months unfathomable sums have gone down the drain - and more are circling it - in the world economy. Unfortunately, that's no April Fool's joke.
Like everyone else, Vermonters have tightened their belts and hunkered down to ride out the recession ... we hope. But not all is grim in the Green Mountain State, as some of our stories in this issue report. So, we're watching the bottom line and counting our blessings.
Click here for other Money Issue stories.
Last week, while reporting this story, I asked local gold buyers how much they pay clients for coins and jewelry. They all declined to answer. “There are no set rules to buying gold,” explained Steve Edwards, owner of Vermont Coin & Jewelry in Shelburne. “It’s no different than if you brought an egg to an antique shop.”
Edwards, John Martin of Martin’s Coins & Jewelry, and Kevin Deuso of New World Coin & Jewelry disagreed on which store offers the highest price for scrap gold. But they all claimed that Perrywinkle’s Fine Jewelry in Burlington pays the lowest. Reached by phone, Perrywinkle’s owner Perry Sporn dismissed such claims as hearsay.
Stymied, I asked my colleague Alice Levitt to cold-call the four stores and request price quotes for a 4-gram, 14-karat gold wedding ring originally purchased for $450 and a 1-ounce “American Buffalo Gold Proof Coin,” which the U.S. Mint currently sells for about $1200.
Here’s what Levitt found: Vermont Coin & Jewelry, Martin’s Coins & Jewelry and New World Coin & Jewelry each offered between $50 and $60 for the ring. Vermont Coin offered “up to” $1500 for the “Buffalo”; Martin’s offered $1000; and New World offered a max of $900.
What about Perrywinkle’s? Turns out the retail store only does scrap quotes in person. I had no precious metal to pretend to hawk, so there my comparison ends. Readers with spare wedding bands to unload may want to test the gold dealers’ claims for themselves.