High Gold Prices Driving Jump in Scrap Metal and Recycling

Bloomberg recently reported the safe depository company, Malca-Amit, is seeing a 90% jump in demand for storage of precious metals and stones in its Singapore-based branches. It’s hardly surprising given the 26% increase in gold and 37% rise in silver prices year-to-date. Like the rise in any metal, high prices are spurring many to dig through their old jewelry boxes and reappraise Grandfather’s gold watch for its intrinsic value.

According to Bloomberg:

With prices headed for their biggest annual gain since 2010, more people are unloading old treasures, recyclers are expanding capacity and some jewelers are seeing their businesses transformed.”

The chart below shows scrap gold recycling is up 10% this year, which is its first annual increase since 2009.

China and the East in general, have seen surging demand for gold since the beginning of the year. Usually, the increase in prices will slow demand, but the reverse is happening with many countries and banks rushing to stockpile the yellow metal. Now, individuals are also beginning to see the potential.

Soon Beng Gee, 43-year-old small business owner, told Bloomberg he’s been gathering up old family jewelry and selling it to a local dealer. “If the price is good,” Soon admits, “might as well sell.” With more than a third of the world’s bullion supply coming from recycled metal, millions of individuals like Soon will have a critical impact on gold’s price moving forward.

Gold scrap buyer, Baird & Co. is planning to significantly expand its 20-ton-a-year refining plant. “We’ve un-mothballed parts of our plant,” Executive Director Tony Dobra said. “When prices were lower, we struggled to get enough material to meet demand. Now we’re seeing double the volume we did a year ago.”

Economic instability, Brexit, waning capital spending, and central banking fiascos are all helping add to the global uncertainty. In response, investors are looking to buy gold and silver to act as a hedge against a weakening dollar-via-inflation and as a way to preserve wealth.

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