Gold Rush Indicates Hard Times for the Portuguese
Source: AFP, Thomas Cabral (2/21/11)
"A debt-strapped population sells off heirlooms to pay monthly bills."
"We buy used gold for cash," read posters plastered on street corners and shopping malls. The solicitations are also made in page-long newspaper advertisements and radio spots.
"The sector is witnessing a real boom," said Rui Pinhao, director of Valores, which catapulted to leader within the used gold market over the last two years with 150 franchises across the country.
"Last year, we have tripled out gold purchases and 2010 was our best year in two decades," he said.
The used gold market is among the few booming these days in Portugal, as the government enacts tough austerity measures to pare a soaring public debt and deficit.
Recently announced cuts in public sector pay have triggered a series of strikes, including one crippling rail services this week.
The market is also blossoming thanks to rising prices for gold over the last 10 years, Pinhao said, benefiting the Portuguese "who have always been very fond of gold jewelry."
Based on data offered by Valores and its top rival Ourinvest, buyers make a profit of between 1.5 to 2 euros ($2 to $2.7) per gram of gold, which is then melted into ingots and resold on the international markets.
Faced with an era of belt-tightening, "the Portuguese are not hesitating," Buyer Pinhao said.