Hair Salon Gives Cash for Gold - Southern Maryland Headline News

Hair Salon Gives Cash for Gold


By ELI SEGALL

CUMBERLAND (Dec. 17, 2008)—On McMullen Highway, a few miles south of downtown Cumberland, Danny Davis Salon sits in a small, four-store shopping plaza.

At the shop, you can get a haircut or some highlights, or buy shampoo and styling gel. You can also bring a bag of jewelry, drop it on the counter, and get some cash for it.

"(Customers) seemed kind of confused by it at first," said Davis, who opened the store 30 years ago and now has a "CA$H FOR GOLD" banner in front.

As gold prices spiked this year, media reports detailed cash-strapped Americans collecting old rings and heirloom jewelry, and swapping them for money at local pawnshops. But alongside the surge in sellers, there's also been a jump in buyers.

In recent months, dozens of Marylanders have received a license to buy secondhand gold, silver and other precious metals from the public. More than 10 percent of the state's 335 licensed buyers became certified between the spring and the fall alone, according to the state's Department of Labor, Licensing and Regulation, which issues the licenses.

Davis, 51, is one such buyer. His cousin, Glen Twigg, a longtime jewelry repairman, oversees the two-month-old wing of the business, buying the precious metals and selling them to refiners.

When asked if it's "mismatched" to have a hair salon that buys jewelry for scrap, Davis, who launched the venture to earn extra income, said it isn't. Other beauty parlors, he noted, sell products unrelated to hair, such as purses and hats.

However, when asked if he knew of other salons like his, Davis paused for a few seconds.

"No," he said, shaking his head. "No."

For many people, the used jewelry and pawnshop industries evoke images of dingy stores and stolen goods, shop owners say. Despite their reputations, the stores are monitored by various layers of government.

In Maryland, this oversight includes criminal background checks on the shopkeepers and an 18-day holding period for all jewelry, giving police time to find out if the goods are stolen before they can be sold.

For every transaction, descriptions of the seller and the product must be recorded in detail, on a white, state-issued form, a copy of which must be sent to the local county police.

State officials also inspect the scale that weighs the jewelry. Frank Loane Sr., a recent precious metals licensee and the owner of Pasadena Pawn & Gun LLC, in Pasadena, described the inspection as meticulous.

"They just sent me a bill for $10 for doing it," said Loane, who, on a black shoulder harness, carries a handgun and two magazine clips of ammunition. "I guess that makes it official," he added, with a laugh.

The main reason for entering the precious metals business, many storeowners said, was the rising price of gold. Traded in commodity markets, gold surged this year because the dollar plunged in value, among other reasons.

Investors bought the yellow metal as a way to offset their losses from the dollar, as gold typically holds its worth better than currencies. Its value was also fattened by increased demand from China and India, whose surging economies helped fuel a consumer boom ? and the purchase of hundreds of tons of jewelry.

At its peak, in mid-March, gold was worth more than $1,000 per troy ounce, well above the roughly $650 it fetched a year earlier. The price has since cooled to roughly $840, as of Dec. 16.

Still, gold was not the motive for every licensee. Pamela Levin, the owner of West Annapolis Antiques Inc., said she buys a few pieces of used jewelry a year from her customers, but only recently learned she needed a license.

Loane said he got a license because he thought jewelry would be a nice addition to his store, which primarily sells handguns and rifles.

For Danny Davis, gold's value was only part of the reason. Another factor was timing.

Over the years, he and his cousin, Glen Twigg, discussed the prospect of Twigg opening a jewelry store in the salon's strip mall, which Davis used to own. Then, earlier this fall, Twigg, 53, lost his job at a Cumberland jewelry store, and the pair found a way to both keep him employed and capitalize on the gold craze: Buy used jewelry, and sell it for scrap.

The salon is not a pawnshop, which accept personal property as collateral for high-interest, short-term loans. Davis does not make any loans ? he only buys and sells.

So far, he and Twigg have had a trickle of customers, buying $5,000 worth of precious metals. They have not yet turned a profit on the venture.

But there's been a slight boost of patrons lately, and the cousins are optimistic that business will improve.

"We're not doing good yet, you know what I mean," Davis said. "We're new at this."

Capital News Service contributed to this report.

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