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The MGS Precious Metals Blog

Manhattan Gold & Silver is an industry leader in precious metal pricing and refining with more than 30 years of experience. During our time in the business, we’ve found the topic of precious metals to be a vast and interesting one. Here on our precious metals blog, we write in-depth posts about the science of precious metal refining, historical and modern uses for precious metals, market news, and much more. Subscribe to our RSS feed to stay current, and discuss the latest posts on our Facebook page.

How Do Pawnbrokers Work?

December 10, 2019 07:00
How Do Pawnbrokers Work?

How do pawnbrokers work? Most people have a vague idea: you bring in something of value and a pawnbroker offers you a loan in exchange. The pawnbroker then keeps your item until you repay the loan—with finance fees.

But before you consider paying off a debt with antiques recovered from your attic, it’s important to understand how pawnshop transactions work.

While the concept is simple, there are still plenty of misconceptions about the industry. Let’s demystify it.

How Pawnshop Transactions Work

Pawnbrokers are small businesses that accept items as collateral for short term loans for anyone who is unable to secure one through a bank or traditional lender. They are licensed on national, state and local levels.

Once specifics are agreed upon, a pawn ticket is issued with the terms of the loan, including fees, expiration date and the item’s description.

If the loan amount is repaid in full--including fees--before the deadline, the item is returned. If the loan is not repaid on time, however, the pawnshop keeps the items. Unlike traditional loans, there are no repercussions for an unpaid load—besides the loss of items. The loan doesn’t go into collection or impact credit reports.

According to the National Pawnbrokers Association, about 80 percent of all customers reclaim their items.

While pawn shops do sell items that have been forfeited by borrowers, loans offer much higher profitability because of the fees they generate. While interest rates vary state-to-state, pawnshops can charge up to an additional 20 percent a month for service fees.

How Pawnshops Evaluate Items

Before a pawn shop buys an item, they will first research what similar items are selling for on the second-hand marketplace. According to Pawn Nerd, they typically offer borrowers about 40 to 60 percent of the item’s current used resale value. That 60 to 40 percent markup will be the pawnbroker’s profit if the item is forfeited.

Pawnshop Loans: Pros and Cons

While the cost of taking out a pawnshop loan may seem steep, consider the pros:

  • The loans are quick and immediate. You’ll usually get your money faster through a pawn shop than an online loan. If you need to come up with a couple hundred dollars fast, it’s a good option.
  • Burrowers aren’t subject to credit checks. While you will need a government issued picture ID for your pawn transaction, no credit check is needed.
  • There is no impact to the borrower’s credit rating. That means your pawnshop loan won’t affect traditional bank loans and interest rates.
  • The interest is per borrowed period. A pawnbroker will generally let you redeem your item at any time--and only charge interest for the period you have borrowed the money.

The downside of pawning is the amount borrowed can’t exceed the percentage of the item’s value. If, for example, you have some jewelry worth $500, you might only be able to borrow $250.

What Do Pawnbrokers Do with Scrap Metal?

Pawnshops would much rather borrowers pay back their loans than forfeit items. After all, a forfeited item can’t be pawned again, and that repeat business is lost for good. And the profits generated by loans far outweigh the profits from selling items.

But that doesn’t mean it doesn’t happen. What do pawnbrokers do with accumulated scrap metal from unclaimed jewelry, for example? Most pawnshops just sell their scrap metal to refiners.

Manhattan Gold & Silver services industries that use gold, silver, platinum or palladium through the course of their own business, including pawnbrokers. After melting, processing and testing, the precious metal can be converted to into bars, casting grain or a quick payout.

According to the NPA, nearly 30 million Americans routinely rely on pawnshop loans. They are cheaper than payday or title loans and ideal for anyone who need cash fast without impacting their credit.

What Makes Palladium So Valuable?

December 3, 2019 07:00
What Makes Palladium So Valuable?

Palladium has been grabbing headlines as of late, being hailed by some as the most precious of the metals. What makes it so valuable?

Jewelry experts think of palladium as an alternative to gold or platinum. Its uses, however, are far more diverse. The most common industrial use for palladium is in catalytic converters for cars. Catalytic converters contain catalysts that convert toxic substances in engine exhaust into inert or less toxic substances. This, in turn, produces a cleaner exhaust that conforms to EPA standards.

You can see why palladium’s catalytic properties make it so invaluable to the automotive industry. According to a report from the New York Times, more than 80 percent of palladium is used for catalytic converters.

But that’s not the only thing that makes this metal so valuable.

What Is Palladium?

Palladium is a silvery-white metal that is mined in parts of Russia, South Africa, Canada and the United States. Its extraction is actually an offshoot of the production of other metals, like platinum or nickel.

Palladium is one of six elements in the platinum group metals (PGMs), along with platinum, rhodium, ruthenium, osmium and iridium. These PGMs are valued for their catalytic properties, or being able to speed up chemical reactions.

According to U.S. Geological Survey, most PMGs are found in ore deposits formed by the cooling of magma. All six PMGs combined make up only 0.0005 parts per million of Earth's crust.

Palladium’s Characteristics

We already know about palladium’s excellent catalytic properties. But what are some of the transitional metal’s other characteristics?

It’s bendy. Like gold, palladium is malleable and ductile and can be beaten into a thin leaf.

It’s high-temperature-resistant. Palladium has the lowest melting point of all the PMGs. It melts at 2,831 degrees Fahrenheit. The melting point of gold, by comparison, is 1,948 degrees Fahrenheit.

It’s super absorbent. Palladium can absorb up to 900 times its own volume of hydrogen. Because of this ability, palladium is used to store and filter hydrogen.

Palladium’s Other Applications

While the majority of palladium ends up in cars' exhaust systems, it is also used in jewelry, electronics and dentistry.

Because of its naturally white color, palladium is often used as an alternative to platinum for making white gold jewelry. It's also much lighter than platinum, and more malleable, like gold, and won’t cause allergic reactions.

Another application for palladium is in electronics in the production of ceramic capacitors found in laptops and smartphones. Ceramic capacitors consist of layers of palladium inserted between layers of ceramic.

Palladium has been used in the dental industry since the late 1970s. Palladium is tarnish and corrosion resistant, which makes it suitable for dental crown and bridge alloys. Palladium is even used in certain kinds of dental amalgams to increase durability and improve the luster of the restoration work.

The increasing demand for palladium has made it one of the most valuable of the four major precious metals: gold, silver and platinum. That's because the amount of palladium produced is expected to fall short of demand in 2019--for an eighth year in a row.

Create Your Own Palladium Chart

Our monthly palladium price chart is updated twice daily with prices based on market fixings published by the London Platinum and Palladium Market (LPPM). Use our palladium chart to see current and historical palladium prices or to create your own chart.

Wyoming: A Hot Bed of Rare Earth Metals?

November 26, 2019 12:33
Wyoming: A Hot Bed of Rare Earth Metals?

Rare earths are elements that are actually quite abundant in the earth’s crust. They are called rare, however, because they share many common properties that make them difficult to separate from each other.

The rare earths (there are 17 elements in total) are silver, silvery-white or gray metals and have high electrical conductivity, which is why they are in demand for use in consumer electronics, computers and networks.

According to data from a 2018 US Geological Survey, China is the world’s largest producer of rare earths, with a domestic output of 120,000 megatonnes last year. It’s worth noting that while the country has taken steps to clamp down on environmentally non-compliant rare earth mines, illegal rare earths mining is still a problem in the country.

Behind China, the top countries for rare earth metal production include:

  • Australia (20,000 MT)
  • United States (15,000 MT)
  • Myanmar (5,000 MT)
  • Russia (2,600 MT)
  • India (1,800 MT)
  • Brazil (1,000 MT)
  • Thailand (1,000 MT)
  • Burundi (1,000 MT)
  • Vietnam (400 MT)

Looking at the outputs, it’s not surprising the U.S. depends on China for 80 percent of its rare earth imports. But if China were to cut off its supply to America, as they’ve threatened to do in the midst of the current trade war, where would the U.S. get its rare earth metals? Wyoming, perhaps.  

Bear Lodge, located near Sundance in the Bear Lodge National Forest in Northeast Wyoming, is home to one of the richest and highest-grade rare earth deposits in the North America. According to Rare Element Resources, it has an estimated 18 million tons of rare earth. Bear Lodge, however, is idle.

Rare Earth Resources had been exploring the area since 2004, and in 2016, got the green light to mine the rare earth at Bear Lodge. The project, however, was put on hold before it even got off the ground when rare earth prices nosedived.

The prospects for rare earth mining in Wyoming picked up steam again after the Trump Administration released its Federal Strategy to Ensure a Reliable Supply of Critical Minerals. The strategy would help RER cut through regulatory red tape.

Right now, the only operating rare earths mine in the U.S. is the Mountain Pass Rare Earth Mine, just north of the unincorporated community of Mountain Pass, California.

Because they chemically bond to each other and surrounding dirt, rocks and mineral sediment, the biggest challenge isn’t finding rare earth metals—it’s harvesting them. The process is also more costly in the U.S. since refining and separation plants have to meet far higher environmental standards.

If China were to cut off its supply of rare earth, the U.S. can just develop their own rare earth supply, whether it be from Mountain Pass, Bear Lodge, or both.

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