Gold rush means hard times in Portugal

LISBON: Portugal’s financial woes have triggered a gold rush of sorts, as the country’s debt-strapped population sells off family valuables to pay their monthly bills.From capital Lisbon to the northern city of Porto, home of the famous fortified wine, appeals to trade second-hand gold jewellery for euros are mushrooming.”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 in 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 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 jewellery.”Based on data offered by Valores and its top rival Ourinvest, buyers make a profit of between 1.5 – 2 euros ($2 – 2.7) per gramme of gold, which is then melted into ingots and resold on the international markets.If merchants are celebrating the booming sales of second-hand gold, they also attest to personal tales of loss large and small; middle-aged ladies selling their jewellery to pay their rent or business owners seeking to recapitalise ailing firms.Faced with an era of belt-tightening, “the Portuguese are not hesitating,” Pinhao said.The tough times translate into good business for 51-year-old Luis Araujo, a former bank employee who opened his boutique in the heart of Lisbon’s old quarters six months ago.The tools of his trade are few — just an electronic scale and a brochure showing the different types of gold, their colour and their degree of purity.”People come and show me what they have to sell,” Araujo says, describing the average seller as a woman aged between 30 and 50 years.

“I weigh, I observe and I make them an offer. If they accept — which is almost always the case — I pay and it’s a done deal.”Araujo’s prices vary sharply, from 20 euros ($27) for a small gold ring to up to 1,000 euros for some 50 grammes (1.76 ounces) of jewellery.”It’s strange but almost everybody feels obligated to justify why they’re selling,” he said. “Some needed money to buy Christmas presents or pay for their son’s marriage.”Others, hit by unemployment and other difficulties, have become regular clients, “selling their jewels one by one to pay their rent,” Araujo said.”The country’s economic situation has turned selling gold as a way of earning money into common practise,” said Ourinvest General Director Luiz Pereira.While virtually all of those selling are individuals, Pereira says some include “business owners who sell their personal goods to recapitalise their companies.”Indeed, Pereira may be among the few Portuguese looking forward to a bumper financial year.”The prospects for 2011 are very positive,” he said, “the crisis has settled in and gold prices will likely keep rising – Yahoonews