How to Navigate the Modern-Day Gold-Buying Market

Over the past couple of years, soaring gold prices have inspired many retail jewelers to reclaim their gold-buying heritage. However, the tactics they use in approaching the secondary market have evolved considerably since the 1980s—the last time ­jewelers needed to market their gold-buying services to the public.

“For the first time in a long time, retail jewelers are actually taking back what business they lost, namely to less reputable gold-buying outlets,” says Patti Geolat, founder and CEO of Geolat Companies, a specialist in appraising, brokering, and selling fine jewelry.

A brief history of the modern gold-buying market should help put things in perspective: Retailers gave up their hold on the secondary gold market in the late 1980s, when the advent of shopping malls gave rise to retail chains that soon began to outnumber family-owned and operated jewelry stores. Managers of chain stores and mall-based operations didn’t have the authority or expertise to take in gold, so gold-buying requests were turned away. Members of the public took their gold jewelry elsewhere, quite often to pawn shops and establishments positioned outside the fine jewelry industry. 

As gold prices have continued to inch upward, gold buying has ­re-emerged as a lucrative service that retailers can offer their customers. Just ask Debbie Benson-Thacker, owner of Benson ­Jewelers in Florence, Ky. She has become one of the largest gold buyers in northern Kentucky, according to her refiner, NTR Metals. 

Benson-Thacker’s business has benefited from a consistent marketing message, which hammers home her interest in any and all precious metals, from old coins to broken necklaces. Frequency and consistency in these ads has kept her business top-of-mind for gold buying in her market. “If you’re still advertising gold buying, then you’re still doing well with it,” says Mark Motes, COO of Smyth ­Jewelers in Timonium, Md.

Albert’s Diamond Jewelers is another store that stands by the need for consistency in the gold-buying message and medium. Chief marketing officer Mary Colville has supervised the Schererville, Ind., store’s gold-buying print campaign using Ziploc bag inserts. “For the last two years, we’ve been averaging 250,000 inserts a month,” Colville says. “It varies from month to month; last Christmas [we made] a really hard push for pre- and post-holiday season gold buying when we sent out a total of 700,000 gold-buy bags in two months.”

Still, there are other schools of thought on how best to achieve market penetration. Motes started buying gold at his three high-end stores in 2007. The following year, Smyth opened its first retail outlet dedicated exclusively to buying gold. The company opened five more outlets last year, and in 2011 Motes is looking to open another two to three outlets.

Scott Berg, vice president of Lee Michaels Fine Jewelry, has taken a similar approach in his Louisiana market (Lee Michaels also has stores in Texas and Mississippi). The retailer owns eight gold-buying stores in the state’s larger markets that “offer people the trust and experience that come from a high-end retail jewelry business that has served the community for many years,” Berg says.

Benson-Thacker has also established a separate identity to ­promote her gold buying, with a dedicated website: SellYourGold1.com. This unique URL is the major thrust of her online advertising for gold buying. (The chief benefit of focusing her marketing dollars on the Web is the No. 1 search result ranking the site gets on Yahoo Local thanks to a number of online reviews.)

Jenny Caro, owner of Jewelry by Design in Woodbridge, Va., is putting her gold-buying message to work in commercials and video productions. She’s uploaded a 30-second gold-buying TV commercial and a more in-depth video to YouTube; combined, they have received more than 3,600 unique views. Caro says offering nearly double trade-in value over cash and emphasizing education on her gold-buying videos helped her store sales grow 27 percent in 2010.

Scott Slobotkin, owner of David Jay Jewelers in Warrington, Pa., has also taken an in-depth educational approach. But in his market, Slobotkin is using detailed e-newsletters to combat the bad press generated by local TV news exposés on gold buying.

“I sent out a very detailed e-newsletter to my customers in early March, an idea I got from another jeweler,” Slobotkin says. “Local TV stations painted gold buying with pretty broad strokes, so my e-newsletter attempted to answer just about every conceivable question on our gold-buying practices and policies.”