The Real Reason Local Pawn Shops Are Struggling While Silver And Gold Is Thriving

Throughout 2025 and into early 2026, the prices of precious metals grew at a breathtaking pace. Both gold and silver hit all-time highs at the same time, with silver increasing over 200% between January 2025 and January 2026. Meanwhile, the price of an ounce of gold crossed the $5,000 mark for the first time in history in late January 2026, and continued to rise in value for several days afterward before it finally peaked. While all this was excellent news for those with gold or silver in their possession, many of the places consumers go to offload those goods are in a bit of a jam.

Pawn shops are among the first places people go to get quick payment for their jewelry and coins, and the recent excitement around gold and silver's value has inspired a lot of people to visit their local pawn shops with the intention of both buying and selling. While there is always a looming danger of a crash eating up profit margins for resales, the rapid shifts in price precious metals have experienced this winter make potential profits especially unpredictable. In addition to the market volatility, shops are also at a loss for places to sell the scrap metal themselves, as the refineries that might otherwise purchase the materials are seeing just as much of a surge in business. With large amounts of silver and gold at their disposal — and more coming in every day — pawn shops are at risk of running out of capital.

A lot of factors are responsible for driving the prices of precious metals. Owning gold can protect you against inflation, and the trend of Chinese central banks and other foreign players to invest in gold instead of the dollar has also played its part recently. However the metals' prices have also experienced days of steep corrections alongside their unprecedented highs. Silver's price, for instance, dropped around 30% just days after reaching an all-time high in late January.

Pawn shops resell to both individuals and refineries to make a profit. Amid the present uncertainty of the precious metal market, these retailers risk seeing the commodities drop in value after buying them. Although these shops buy the metals below spot prices, if a huge crash happens after they buy, they still lose out.

In recent years, people have often surged to pawn shops to cash in when precious metal values rose. But while metals were one of the best assets that helped people grow their wealth in 2025, a lot of people also rely on them for emergency funding. Rick Spoerl, the manager of Wisconsin's Rick's Olde Gold pawn shop, explained to Business Insider, "For us to stop buying now would be a little odd. This is something that we haven't seen before, so it's just kind of going with the flow and figuring out what to do in the moment." As of February 2026, Rick's Old Golde imposes daily caps on how much metal it will purchase from each customer that comes in.

It's common for local pawn shops to sell coins and scrap metal to refineries, which then process the metal to be as pure as possible before sending it back into circulation. However, with the amount of gold and silver being sold, a lot of these establishments have excess inventory and need to put purchases on hold.

"It's a real mess," Dave Siminski, United Precious Metal Refining's vice president of sales and marketing, noted to JCK. "Basically, everyone is putting on the brakes. Things are on semi-pause until we figure it all out." Late January also saw Metalor, one of the biggest refineries in the world, publicly announce that it would stop accepting purchases and pause payments to vendors for a period of time. Meanwhile, a lot of smaller players and middlemen are refusing intake because they can not turn their own refined metals over to bigger companies for further processing. This essentially means that the entire refinement chain is getting clogged up, turning silver and gold into potential time bombs for local pawn shops should the precious metals market crash.