Gold rush 2.0: Americans cash in as precious metal hovers near all-time high

We’re in the middle of the Gold Rush 2.0. But this time folks aren’t making money finding gold – they’re making money selling it.

With gold near an all-time high, selling for over $3,200 an ounce, folks are raiding their jewelry boxes and heading to pawn shops, jewelers and smelters to turn their little-worn necklaces, watches, bracelets and earrings into cold hard cash.

"Every day we have more customers just coming in, selling their gold, raiding their cabinets and stuff like that, looking for jewelry,"  said Sabashden M. Hernandez, who works at family-owned A&M Precious Metals in Los Angeles’ jewelry district. "I have not seen anything like this. I've been in this business for about eight years and this is pretty crazy for me."

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And at A&M, people are getting their money’s worth. Because the price of gold is so high, customers are getting 99% of the gold’s market value. The shop only takes a 1% cut. 

So how does A&M make a profit? Quantity. On a good day, Hernandez is buying over 400 ounces in gold – at 24k, that’s over $1.2 million.

"A couple years ago, we would have about seven to eight appointments a day. Now we're in a range of 15 to 20 customers a day," said Hernandez.

Hernandez says his shop acts as a middleman. The gold is melted down into gold bars, which are then sold to refiners. Refiners turn it into a form that jewelers can work with, getting back to storefronts in no time. And it’s all done in a few block radius in downtown Los Angeles.

Hernandez holds up a jar filled with gold pellets – the contents weigh exactly 1 kilogram.

"Jewelers here in the jewelry district grab this so they can make chains and stuff," said Hernandez. "The kilo nowadays is about $107,000."

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Behind the front office is where the magic happens. Alberto Hernandez, Sabashden Hernandez's uncle, has been smelting gold for more than 20 years. Their smelter is able to hit 6,000 degrees Fahrenheit. But today it’s running at around 2,000 degrees – roughly the melting point of gold.

After the gold is weighed and assayed for quality, it’s thrown in the smelter. In just a few minutes, and with the help of borax to filter out impurities, it’s in molten form. It’s then poured into a mold, cooled off in water, buffed and weighed.

"We smelted it down and we're going to send that off to the refiner. So that all we were doing was blending it up to make sure we get an even assay when we go to check it right now," said Alberto Hernandez.

The gold is checked for purity. Fourteen-karat gold is 58.3% pure, while 24-karat gold is 99.9% pure (the market price is based on 24-karat gold).

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After it’s checked for purity, the customer walks away with the cash – often surprised by how much money they made.

"I have plenty of customers that say that they're waiting for gold to go up and now that it's over $3,000, it's perfect timing for them. So it's amazing to hear how long they've held on to it," said Alberto Hernandez.

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Hernandez says business changes every day.  When gold is up in the morning, they get more appointments. When it’s down, it’s a little slower. Sometimes customers bring in heirlooms and antiques worth more than their weight in gold.

"I tell them, ‘You sure you want to really melt this down?’" said Hernandez. "’It's an antique,’ and they just want to do it because they want the money right now because gold's hot."