In hard times, “I buy gold” is Italy’s boom business
By Gavin Jones
ROME (Reuters) – Times are now so tough that Valerio Novelli, a ticket inspector on Rome’s buses, is planning to sell his old gold teeth.
“I can’t get to the end of the month without running up debts,” said Novelli, 56, who has to support an ex-wife and daughter. “I know I won’t get much, but I need the money.”
In a country suffering from economic crisis, buying gold off desperate people has become one of the few boom industries.
City centers are being transformed as traditional shops go out of business, their signs replaced by ones that announce “Compro Oro”, or “I Buy Gold”.
The Eurispes thinktank estimates the number of “Compro Oro” shops has quadrupled in the last two years. The growth of the industry is “a very good indicator of the level of hardship in the country,” said Gian Maria Fara, the think tank’s president.
“Business is very good, you can really feel the crisis,” said 30 year-old Alexia Messi, who works in Oro Change on Via Medaglie D’Oro in northern Rome. It opened its first branch five years ago and now has seven outlets in Rome.
“People are never happy to sell, but now they come in with anything – gold, silver, old stuff, new stuff. I would say we have twice as many customers a day as we did a year ago.”
Meanwhile, the toll of the crisis is being felt by traditional retailers. In central Rome, Massimo Della Rocca, 57, who has run the men’s’ clothes shop EDEL since inheriting it from his grandfather 30 years ago, is planning to sell up.
“Things have been getting worse for years but now it’s becoming impossible. Sales this summer are down 25 percent from last year,” said Della Rocca, whose garments are all made in Italy from local fabrics. “It’s sad because this shop has been going for eighty years.”
Former Prime Minister Silvio Berlusconi, who was brought down by an escalating debt crisis in November, liked to claim that with restaurants still full and Italians buying as many electronic gadgets as ever, there was little concrete evidence of economic downturn in Italy.
But the proliferation of pawn shops, with an estimated annual turnover of 7 billion euros, is a very visible sign that for millions of Italians life has changed for the worse.
The euro zone’s third largest economy has been in recession for a year and shrank at an annual rate of 2.5 percent in the second quarter.
There are an estimated 28,000 “cash for gold” outlets in Italy, according to Gianni Mancuso, one of six centre-right lawmakers who last month presented a request in parliament for the government to regulate the sector more strictly.
Several recent shootings in Rome have involved owners of Cash for Gold outlets. Parliament has discussed evidence that the sector is being taken over by mafia groups.
“They are all crooks, they shouldn’t exist,” said Valeria Arcidiacono, a 46 year-old single mother whose teenage son took and sold her gold and pearl earrings at the local pawn shop.
“They were worth 1,000 euros and they gave him 42 euros for them, with no receipt or anything,” she said.
Ranieri Razzante, head of Italy’s anti-money laundering watchdog AIRA, said pawnbrokers had “virtually taken over from banks” as a form of financing for Italian families, as crisis-hit lenders are increasingly reluctant to offer credit.
Bank loans to households were down at an annual rate of 0.6 percent in June, despite inflation of more than 3 percent.
Some 8.5 percent of Italians sold items at a pawnshop in 2011, according to an Eurispes survey.
Some operators are active for just a few weeks before selling on their licenses, making it difficult to counter their activities of money laundering and receipt of stolen goods.
“It’s a well established pattern that organized crime tends to take a lead role in new, high-growth sectors,” said Razzante.
‘PUT IT ASIDE’
While pawnshops in northern Europe buy and sell a wide array of used items, the emphasis in Italy is on gold, reflecting a deeply rooted southern European tradition in which gold is the favored gift, starting from baptism.
“Since I was a child I remember that gold was given as a gift on various occasions and people used to say: ‘Put it aside’,” said Ivana Ciabatti, who represents gold- and silversmiths at employers’ lobby Confindustria.
“We used to laugh at it, but they turned out to be right. Many families are surviving thanks to this gold.”
Meeting her customers gives Giorgia Standoli an insider’s view of the hardship caused by the economic crisis. She has worked for four months in a pawnshop on Via Cesare Baronio, a quiet street in southern Rome’s Appio Latino district.
“It’s mostly women, old ladies that sell whatever they have to be able to do the shopping,” she said. “I think the saddest case I have had was a woman of less than 50, with three kids, who had lost her husband. She came in to sell her wedding ring to try to make ends meet.”
While pawnbrokers are thriving, life has never been so tough for traditional shops, especially small ones which are closing down at an alarming rate. Consumer spending will fall in 2012 by more than at any time since World War Two, according to national shop owners confederation Confcommercio.
Rome’s small shops and boutiques have been particularly hard hit. More than 1,500 have shut so far this year, including some illustrious names, says small retail association Confesercenti.
Lina Rocchi, a storied ladies’ fashion boutique on a prime site next to parliament, announced last month that it was closing down after 80 years.
“There is a sense of desperation among our members,” said Confesercenti President Valter Giammaria, who forecast that unless the economy somehow picks up, another 5,000 shops in Rome and its hinterland would close before the year is out.
Italians are even shunning record summer discounts, with sales down around 25 percent in July compared with a year ago, according to the artisans’ association CNA.
The pawnbrokers, by contrast, can hardly keep up with business. They normally have the gold quickly melted down and sent abroad, making it one of Italy’s fastest growing exports. Official gold sales to Switzerland leaped 65 percent last year to 120 tonnes, up from 73 tonnes in 2010 and 64 tonnes in 2009.
(Additional reporting by Svetlana Kovalyova; Editing by Peter Graff)