Scrap gold buyers shut up shops as price collapses
THE pot of gold at the end of the rainbow could be empty as scrap gold buyers are pulling out of Ireland in their droves.
Outlets which buy and sell gold to customers are shutting up shop -- with one company closing more than half of its branches since opening five years ago.
This week the Irish Independent reported that the price of gold had crashed, suffering close to a 40pc drop since its peak in September 2011.
The tumble left thousands of investors across the country nursing heavy losses, but it looks like consumers who once sat on heirlooms and other items of scrap gold got out early.
Cash Encounters, which also operates under the name Cash for Gold Ireland, said it has closed 18 of its 32 outlets due to a huge fall in business.
A spokesperson said that during the peak of scrap-gold buying in 2009, each of the company's outlets could have expected to complete up to 30 transactions per week. However, that figure has now fallen to fewer than five.
"There had been a lull in business for the six or eight months prior to Christmas," the spokesperson told the Irish Independent.
The spokesperson said that most of the British scrap gold companies had now retreated from the Irish market, due to a combination of oversaturation and a reduction in supply.
"The market from the scrap jewellery end has just diminished. People have either dispensed of it over the years, or can't be bothered selling it."
The company has attempted to offset some of its losses by diversifying its business, which includes the sale of mobile phones, tablets and related accessories.
However, it maintained that gold is still a sound investment despite the drop in value in recent years.
The spokesperson said: "What goes up, comes down, and what comes down, goes back up. It's on a bit of a rise again to what it was prior to Christmas."
Another company called Irish Gold Bullion also experienced a drop in business last year, but is more hopeful for 2014.
"2013 was a quieter year, and it affected business somewhat," a spokesperson said. "But we're optimistic for this year. We've had a good start. I believe prices have bottomed out, and we should see modest gains for 2014."
The business said it hoped to make up losses from gold on the back of another valuable metal, silver, which it claimed is undervalued.
Mark O'Byrne, director of gold investment experts GoldCare, said that "the whole shtick these companies make is that gold is at record highs, that now is a great time to sell your gold. We know anecdotally that the companies are suffering an impact".