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Silver and gold spot prices are steady after a rocky stretch of record gains and losses.
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Market volatility has created headaches for local coin shops that buy precious metals.
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“If you make this mistake, your capital runs out really fast,” one shopper told Business Insider.
If January was a party in the precious metals market, February is a hangover.
Gold was around $5,300 an ounce and silver was around $120 at the end of January. The expansion of record gains and losses has stabilized in the early days of February.
“These price moves have caused a lot of damage across the board,” HSBC precious metals analyst James Steele told Business Insider.
One type of business that bears the brunt of volatility is local coin shops, where people often trade gold and silver. The high prices have led to a huge influx of salespeople, but some shops tell Business Insider they are scrambling to offload excess metal from their usual locations.
While the market was in its tailspin, Tim Heuer said his shop, University Coin & Jewelry in Madison, Wisconsin, was still making deals.
Heuer said one customer came in to sell silver when the spot price was $98 an ounce and falling: “By the time I wrote his check, silver was already down $3.50 when he walked in the door.”
The current volatility puts those businesses in an uncomfortable position, beyond quickly changing spot prices that erode profit margins.
Local coin shops play an important role in the circulation of physical gold and silver by providing a reliable way for individuals to sell their bars, coins or scrap metal.
If someone bought a gold bar at Costco last year and wants to return it for cash, a local coin shop is one of the first places they can go.
And when these shops turn around and sell some of what they buy, most of the metal is sold to refineries to be melted down and made into new bars or coins.
That flow has been disrupted in recent months as a run in gold and silver prices has encouraged more people to trade in their metals, leading to a backlog of raw materials at refineries.
Jarrett Niese, president of Precious Metals Refining Services in Chicago, said his company stopped buying scrap silver in October, when prices topped $50 an ounce, which was gathering dust on old silverware, plates and other knick-knacks.
And since then the market has only been deserted.
