LA's jewelry district sees new trends in sales of gold and silver

The Standard and Poor's decision to downgrade the U.S. credit rating Friday pushed the price of gold above $1,700 per ounce Monday, as anxious investors turned from stocks toward what they see as more stable investments. In downtown Los Angeles' jewelry district, vendors say they're seeing a change and buying patterns, and a spike in crime.

Los Angeles jewelry merchant David Ely has been in the business for 26 years. His company Oro Tech Jewelry has made and sold wholesale jewelry in the district for years, but when the economy got rough a few years ago, the business changed: Fewer customers wanted to buy jewelry, more of them wanted to sell it as scrap gold for cash.

"I had a few people coming in and they want to cash in their wedding rings, engagement rings … just to pay their rent," says Ely.

So for the past two years, as the price of gold doubled, he made money that way: buying scrap gold from people — even family heirlooms — then melting it down and reselling it. But even that has changed recently, he says.

"Even that died down because people simply out of job and out of scrap gold," he says. "They simply don’t have anything else to sell. We don’t see anything else coming in."

About a block away, Fari Bokhour waited in his FM Discount Jewelry shop on a slow morning. He’s another 20-year plus veteran in the jewelry business. Bokhour doesn’t buy scrap gold, choosing instead just to sell the jewelry. His customers are loyal, he says, but he’s had some tough conversations with the ones who really want gold.

"They’re accustomed to it. They say ‘I bought a chain two years ago, and it was only $200. Now you’re asking $500 for it ?’" says Bokhour. "So I say, ‘Well, prices have changed.’ And so they just walk out. They just walk out."

Those who do stick around, Bokhour says, often take advantage of an increasingly popular installment plan. He convinces others to consider another precious metal he only started selling when gold prices got so high: silver. A $200 gold chain might cost just $60 in silver.

"They say it’s not a bad idea," says Bokhour. "I need to buy a gift and now I can’t afford to pay that kind of money. So nowadays, they tend to buy more silver than gold."

David Ely says in this economy, even silver is out of reach for some of his customers. Young couples are choosing titanium and tungsten wedding bands instead.

Ely adds that robberies are up in the jewelry district. "It’s been a really big problem for all the jewelers since last year," he says. "With the price of gold so high, it’s a quick money for them."

And money with little risk. Ely says the burglars smash a window, grab the gold and turn it into cash in a matter of hours.