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Falling Gold Prices: the Effect on Pawn Shops

Posted: Fri Jul 26, 2013 7:52 am
by dualstow
One highlight is that when gold was high, people who used to repeatedly pawn their jewelry and get it back by paying all the interest were now more likely to default. This is because when the price of gold rose, people realized they could borrow more and their eyes got big. They weren't thinking about the interest on this new bigger loan.

Now default rates are leveling off.

http://www.npr.org/blogs/money/2013/07/ ... pawn-shops

Re: Falling Gold Prices: the Effect on Pawn Shops

Posted: Fri Jul 26, 2013 1:51 pm
by dragoncar
So pawning your gold was kinda like renting a call option?