In Greece’s sour economy, gold dealers and pawnshops are thriving | business | Hindustan Times
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In Greece’s sour economy, gold dealers and pawnshops are thriving

business Updated: Jan 03, 2012 21:08 IST

With all the contraction in the Greek economy, with employees laid off en masse and one in four small businesses forced to close, it might seem odd that new shops are springing up like mushrooms in Athens and other cities.

But the stores — pawnshops and gold dealers — are thriving as Greeks who are short of cash give up jewellery and other valuables to make ends meet and pay new taxes. The authorities reported a veritable explosion in the sector, with 90% of the nation’s 224 officially registered pawnshops having opened in the past year.

While these entrepreneurs insist that their services are legitimate, the Greek authorities contend that many of the shops are concealing a rapidly expanding illicit trade in gold, and that much of it is being smuggled out of the debt-racked country, confounding efforts to curb rampant tax evasion.

Similar trends have been reported in other countries that were hit by recession. In the US and Britain, weakening economies and turmoil in credit markets have helped gold dealers thrive. A decade ago, the same happened in Argentina, after its economic meltdown.

In Greece, new outlets are springing up where bankrupt stores have been boarded up. Competing with old-school pawnbrokers who work out of tiny stores on side streets, the new professionals lease central locations, taking advantage of falling rents. They advertise in papers and on TV, and slip promotional leaflets under doors and on car windshields. Many also accept cars, yachts and real estate from Greeks no longer able to finance affluent lifestyles.

“Gold is strong — so there’s a lot of interest in selling,” said Yiannis Spiratos, manager of a pawnshop. “We’re just serving that interest.”