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Suddenly pawnshops are in the spotlight. Thank the Great Recession and the popularity of reality TV.

Turn on TruTV's hit show Hardcore Pawn and you will catch glimpses of the goings-on at Detroit pawnshop American Jewelry & Loan. A middle-aged man wearing a backwards hat ambles into the store, reaches into his mouth and pops out his gold tooth, slapping it on the counter as collateral for a $10 loan. In another episode an amputee pawns his prosthesis for a $50 loan and leaves on crutches.

Scenes like that are the stuff of hit cable-TV shows, but the underlying high-margin business is experiencing a miniboom and creating an opportunity for investors ­seeking stocks that capitalize on lingering economic woes and down-and-out consumers. It's no longer just the unemployed or uneducated who are flocking to pawnbrokers, payday loan firms and ­bargain retailers.

Pawnbrokers are seeing waves of homeowners unable to qualify for credit cards, entrepreneurs looking for seed capital and small-business owners struggling to make payroll. In some cases pawnshops are stepping in where the banks are stepping back.

"We're servicing people that in the past had easy access to credit," says Todd Hills, CEO of Pawngo.com, an online pawn operation that launched in June of this year and specializes in high-value loans. "Ninety percent of our customers are college educated or own a home. They're in the $75,000 to $150,000 range in income. Bank solutions have dried up."

"We've had 30% to 40% earnings growth over the last four or five years," says Eric Fosse, president of North American operations at EZCorp.

If you've never set foot inside a pawnshop, here's how they work. People in need of quick cash come in with things like jewelry or electronics, and brokers make on-the-spot loans based on the collateral presented. No credit check is necessary, though a description of every item is sent to local police.

Bring in a television worth $300 and you might get a 30-day loan of $100 at 20% interest per month. Pay $120 back after the first month and you get your TV back. Or just pay $20 per month in interest until you can pay off the entire loan. If you miss a payment, the pawnbroker sells your TV after a month's grace. Most states cap the monthly interest rate, which ranges from 4% in New York to 25% in Florida.

The big profits, of course, come from lending and not from selling TVs or Barcaloungers in pawnshop showrooms. In fact, loan defaults are surprisingly low. The National Pawnbrokers Association says that 80% of all pawn loans are repaid.

The gold bull has been good for pawnbrokers. Some 60% of all pawn loans are made on jewelry. As gold prices rise, so do loan values, even for unsellable gold jewelry, which can be smelted and sold. "If gold is at $1,650 today, these guys are only lending on the equivalent of $1,000," says David Burtzlaff, analyst at Stephens. "They've built in a cushion so that if gold falls it doesn't just wipe out their business."

Suddenly pawnshops are in the spotlight. Thank the Great Recession and the popularity of reality TV.

Turn on TruTV's hit show Hardcore Pawn and you will catch glimpses of the goings-on at Detroit pawnshop American Jewelry & Loan. A middle-aged man wearing a backwards hat ambles into the store, reaches into his mouth and pops out his gold tooth, slapping it on the counter as collateral for a $10 loan. In another episode an amputee pawns his prosthesis for a $50 loan and leaves on crutches.

Scenes like that are the stuff of hit cable-TV shows, but the underlying high-margin business is experiencing a miniboom and creating an opportunity for investors ­seeking stocks that capitalize on lingering economic woes and down-and-out consumers. It's no longer just the unemployed or uneducated who are flocking to pawnbrokers, payday loan firms and ­bargain retailers.

Pawnbrokers are seeing waves of homeowners unable to qualify for credit cards, entrepreneurs looking for seed capital and small-business owners struggling to make payroll. In some cases pawnshops are stepping in where the banks are stepping back.

"We're servicing people that in the past had easy access to credit," says Todd Hills, CEO of Pawngo.com, an online pawn operation that launched in June of this year and specializes in high-value loans. "Ninety percent of our customers are college educated or own a home. They're in the $75,000 to $150,000 range in income. Bank solutions have dried up."

"We've had 30% to 40% earnings growth over the last four or five years," says Eric Fosse, president of North American operations at EZCorp.

If you've never set foot inside a pawnshop, here's how they work. People in need of quick cash come in with things like jewelry or electronics, and brokers make on-the-spot loans based on the collateral presented. No credit check is necessary, though a description of every item is sent to local police.

Bring in a television worth $300 and you might get a 30-day loan of $100 at 20% interest per month. Pay $120 back after the first month and you get your TV back. Or just pay $20 per month in interest until you can pay off the entire loan. If you miss a payment, the pawnbroker sells your TV after a month's grace. Most states cap the monthly interest rate, which ranges from 4% in New York to 25% in Florida.

The big profits, of course, come from lending and not from selling TVs or Barcaloungers in pawnshop showrooms. In fact, loan defaults are surprisingly low. The National Pawnbrokers Association says that 80% of all pawn loans are repaid.

The gold bull has been good for pawnbrokers. Some 60% of all pawn loans are made on jewelry. As gold prices rise, so do loan values, even for unsellable gold jewelry, which can be smelted and sold. "If gold is at $1,650 today, these guys are only lending on the equivalent of $1,000," says David Burtzlaff, analyst at Stephens. "They've built in a cushion so that if gold falls it doesn't just wipe out their business."

Skyrocketing gold prices have citizens across the country digging into their jewelry boxes, looking to sell while the market's hot.

Gold surged past $1,700 per ounce Wednesday. It traded at more than $1,800 during August and September, amidst a sluggish U.S. economy and continued uncertainty over Europe's debt crisis.

That means "now's the time" to sell your gold and silver, said Neil Nielsen, a manager with THR & Associates, a Springfield, Ill.,-based company that buys precious metals, coins and antiquities. The company also has a nationally syndicated reality TV series, "Treasure Hunters Roadshow."

"Right now, silver and gold are at all-time highs," Nielsen said.

Nielsen and a co-worker have set up shop in Marshfield's Holiday Inn, 750 S. Central Ave., this week to purchase local residents' old coins, vintage paper currency and scrap gold, silver and diamonds. They are one of 125 THR teams traveling around the country hosting these events.

After examining people's items, they will quote a price. If the sellers agree, the THR representatives will write them a check on the spot.

But the hotel events are not the only place to sell valuables. People also can take them to jewelers, pawn shops and refineries, and there's some debate over which option yields the best price.

Shannon Dalton, shop manager at Wickersham Jewelry in Marshfield, said he can offer at least 15 percent more than the traveling buyers. The jewelers will assess the item and calculate a quote based on the precious metal's spot price of the day.

Although Wickersham must factor in its own "small percentage" of profit and the costs of selling to a refinery, Dalton said its costs still are lower than those of THR, which pays for advertising and renting a space in each town on the tour.

"We can usually give a better price," Dalton said, adding that he would at least match a traveling buyer's quote. "I would say take it to a local jeweler. It's the best value."

Dalton said it's also a matter of trust, noting that the jeweler will take pictures and keep records of the sale, and the store isn't going anywhere.

Euro zone leaders struck a deal with private banks and insurers for them to accept a loss on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the two-year euro zone crisis.

Adding to the sense of confidence among investors, data showed the U.S. economy expanded at its fastest pace in a year in the three months to September, which boosted high-yielding currencies, equities and industrial commodities.

Global equities .MIWD00000PUS hit three month highs, while the euro reached its highest since early September, set for its third weekly gain, but caution over how effective the euro zone plan will be at containing the crisis supported gold.

Gold usually benefits from uncertainty. Although it struggled to retain the day's gains, evidence of ongoing demand for physical metal highlighted investor desire for a safe-haven alternative to stocks or currencies, which analysts said should insulate it from steeper price falls.

Spot gold was last down 0.2 percent at $1,716.50 an ounce at 1345 GMT.

"Commodities in general received a dose of good news over the last 12 to 24 hours from the EU summit. The market is taking it at face value and having a natural reaction to it, which will probably last another 12 to 24 hours before I imagine some questions start to be asked again," said Saxo Bank senior manager Ole Hansen.

"Gold looks okay here but we need to stay above $1,695. So unfortunately we are still close to that and it doesn't take much of a washout to change that picture, but again, it looks constructive above $1,700."

The price of palladium, used in catalytic converters, rose by more than 3.5 percent on the day, while crude oil rose by nearly 3 percent above $111 a barrel and copper rose by 5 percent, set for its biggest weekly gain in nearly 3 years.

"Gold has had a mixed relationship with risk recently -- euro strength has generally been supportive since the September sell-off. But more recently we saw the correlation break down and gold trade as a safe-haven asset once again," said RBS commodities strategist Nikos Kavalis.

"We are looking at ongoing accommodative monetary policy in the U.S. and Europe, and this should continue to help gold. Macroeconomic uncertainty is also supportive - let's not forget that in addition to the European debt problem, we are getting closer and closer to the November 23 deadline for the U.S. debt reduction deal. I cannot be bearish on gold at the moment," he said.

In the United States, a new congressional committee has until November 23 to make recommendations to the Senate and House of Representatives on how to reduce the budget deficit.

GOLD DEMAND FIRM

So far this week, holdings of metal in exchange-traded funds, often viewed as one measure of investor demand for gold, have risen by more than half a million ounces, heading for their largest weekly inflow since the week of August 19 and total holdings are also at their highest since that date at 67.78 million ounces.

Gold ETFs have also pulled in more metal in October than at any time since July as holdings are up by over 700,000 ounces, even though bullion has behaved more like a risk-linked asset, moving in tandem with equities, than at any time in the last five months this week.

Physical demand for gold as well as silver remained robust in Asia, thanks to strong investment demand as well as seasonal buying during the ongoing festival and wedding season in India, the world's largest gold consumer.

In currencies, the euro hit a seven-week high against the dollar, and riskier currencies rallied as the deal to tackle the euro zone debt crisis prompted an unwinding of bearish positions.

In other precious metals, silver eased by 0.1 percent to $33.35 an ounce, while platinum rose 0.4 percent to $1,595.75 an ounce.

Palladium was last up by 3.7 percent at $665.22 an ounce, set for a 9-percent rise so far this week, its largest in almost a year.

($1 = 0.724 Euros)

(Editing by Keiron Henderson)

Earlier, a European Union spokesman said a meeting of finance ministers on Wednesday had been canceled, while euro zone officials said leaders from the single currency bloc would be unlikely to provide many hard numbers to flesh out their response to the debt crisis.

EU leaders are to meet on Wednesday to discuss tentative plans for Greece's debt to be reduced, European banks to be recapitalized and the euro zone's EFSF rescue fund to be increased to provide partial insurance for sovereign bonds.

Spot gold was last up 2 percent on the day at $1,685.70 an ounce, having risen by 4.0 percent over the last three trading days, its best three-day performance in two months. For this month, however, it has underperformed most major markets.

"The risks of the whole euro zone debt crisis are still skewed to the upside, and assuming there is some kind of result of some of the problems, markets should move higher and gold should go higher," said Standard Chartered analyst Dan Smith.

"On the weekly correlations, it does work as a normal commodity, and that will be the way it will work going forward. The European issue is a bit of a doubled-edged sword. That is pretty obvious, but generally, what we're seeing is a modest upturn in a lot of the economic indictors and a lot of the U.S. equities, in terms of results, have outperformed, so I think we are in this environment where things will slowly improve."

The Conference Board, an industry group, said its index of U.S. consumer confidence unexpectedly fell to 39.8 this month, its lowest since March 2009, from an upwardly revised 46.4 in September.

CORRELATIONS ERODE

As some of gold's traditional correlations to other assets such as equities or base metals have broken down, the price has become more unpredictable.

Gold's performance over the past two weeks, in which time it has lost 0.4 percent, has been among the weakest of the major asset classes, lagging copper, European, U.S. and Chinese equities, as well as the trade-weighted euro, the dollar index and U.S. and German government bond futures.

Its correlation with European equities has reached its most positive in nearly six months, while its correlation with the copper price -- often viewed as a key indicator of investor risk appetite -- is at 70 percent, its highest in a year.

That said, longer-term investors are not deterred.

Holdings of metal in exchange-traded funds, often a measure of investor desire for physical bullion, staged their largest one-day rise since mid-September, following a net inflow of over 200,000 ounces, bringing total holdings to their highest in a month.

"The yellow metal is showing little independence at the moment and still moving in line with commodities and equity markets, albeit underperforming. We therefore do not expect any great price swings either in the wake of the EU summit on Wednesday," said Commerzbank in a note.

"Should a solution to the debt crisis be presented, gold will probably be pulled up slightly. Should expectations be disappointed, its character as a safe haven is likely to limit the downside potential."

Silver rose by 0.3 percent to $31.75 an ounce, on course for its third straight daily rise.

Options on U.S. silver futures expire on COMEX on Wednesday. Most open interest centers on put options -- which give the holder the right, but not the obligation to sell metal at a pre-determined price by that date -- at $32.00 an ounce and on call options -- which give the holder the right but not the obligation to buy metal -- at $31.00.

Platinum was up by 0.9 percent at $1,551.99 an ounce, also having risen for three days in a row, marking its largest three-day gain since mid-August.

Platinum has fallen by more than 12 percent this year as concern has grown about the impact of the euro zone debt crisis on demand for cars, particularly in Europe. Europe is the world's largest market for diesel-fueled vehicles, which require a higher loading of platinum in their catalytic converters.

Platinum has had some fundamental support in the last week from import and export data from key trading centers.

Customs data from Switzerland, a major clearing hub for both platinum and palladium, showed exports rose to their highest in three months in September, while customs data from China, a key consumer of metal for jewelry, showed imports nearly doubled year-on-year last month to hit their highest in six months.

Palladium was last up 0.1 percent on the day at $636.47.

By Amanda Cooper

LONDON | Tue Oct 25, 2011 11:23am EDT

(Reporting by Amanda Cooper; editing by Jane Baird)

For the second time in its history, Goldman Sachs reported a quarterly loss, hurt by declines in the value of investment securities and customer trading assets. The bank also cut its exposure to commodities in the quarter.

In the euro zone, Moody's Investor Services warned France's top-notch credit rating could be at risk if the cost of bailing out banks stretches its budget too much, while a reading of German business confidence fell to its lowest in nearly three years this month.

The Chinese economy expanded at its slowest pace in two years in the third quarter of this year, which compounded fears that growth in the emerging world may be insufficient to offset slowing developed economies in Europe and the United States.

Adding to the anxiety over the euro zone ahead of a key summit on October 23, German finance minister Wolfgang Schaeuble doused optimism over the ability of European Union leaders to find a lasting solution to the debt crisis at the meeting, which further curbed investor appetite for risk.

Spot gold was last down 2.3 percent on the day at $1,632.90 an ounce by 1353 GMT, hampered by the strength of the dollar, but traders and analysts said they expected gold to reprise its role as a safe-haven investment and rally in price.

The price hit a record $1,920.30 in early September.

"Overall, it looks like, at the end of the day, that we are in the same trading range of $1,600 to $1,700 and my feeling is that if (the Europeans) don't come up with any results, we are going to go much, much higher," said MKS Finance head of trading Afshin Nabavi.

"People are nervous and ... will take any excuse to sell, but having said that, investors are on the other side and bargain-hunters are on the other side so they will be jumping on the bandwagon again once the price finds a level."

Goldman Sachs said it lost $428 million during the third quarter, cutting its earnings per share to a loss of $0.84, compared with earnings of $2.98 per share a year earlier. =

U.S. shares fell after earnings from both Goldman and rival Bank of America (BAC.N) disappointed investors, while European stocks declined and the euro came under pressure as hopes faded for an immediate resolution to the regional debt crisis.

Normally, such events would heighten investor demand for gold, but the strength of the dollar posed an insurmountable headwind for the bullion price, which tends to move inversely to the U.S. currency.

Gold's correlation to the dollar is at around its lowest in five months, meaning that the bullion price is more likely to move in the opposite direction to the U.S. currency, while its correlation to stocks is around its most positive since June.

"The problem with all this is it's getting tricky to work out what gold's reaction will be if there was a rescue plan or there isn't a rescue plan or there is a downgrade and so on," said Mitsubishi analyst Matthew Turner.

"The only rational conclusion I can draw is internal factors in the gold market are moving around and establishing a new level for gold. And while that goes on, the price won't move in line with other assets in a normal way," he said.

German analyst and investor sentiment fell in October to its lowest level in nearly three years, according to a survey from the Mannheim-based ZEW economic think tank.

EURO WORRIES MOUNT

Elsewhere in the euro zone, Portugal on Monday released its draft budget bill for next year, which showed the recession would deteriorate in 2012 and the contraction in growth would be worse than had been expected when Lisbon agreed to the terms of a bailout in May.

Gold is still set for a near-17 percent gain so far this year, driven by expectations for low interest rates in the United States and by investor demand for perceived safe havens in the face of the turmoil in Europe and rising inflation in the emerging world.

The price of gold also fell in other major currencies including euros, sterling, yen, Swiss francs and Australian dollars, reflecting the breadth of the investor push out of bullion on Tuesday.

However, global holdings of gold staged their first weekly inflow in a month last week, rising to 67.104 million ounces from a 2-1/2 month low below 67 million ounces early last week, indicating that there are still willing buyers.

In other precious metals, silver fell by 3.7 percent to $30.68, while platinum fell 2.0 percent to trade at $1,517.74 an ounce and palladium shed 2.1 percent to be quoted at $602.75 an ounce

By Amanda Cooper

LONDON | Tue Oct 18, 2011 10:54am EDT

"One of gold's near-term problems is diminishing inflation expectations and higher yields from stocks, so the money is following nominal yields -- [and] right now, it's stocks with growth and stocks with big dividends," said Richard Hastings, macro strategist at Global Hunter Securities.

Gold for December delivery /quotes/zigman/661658 GC1Z +0.03%  gained $8.50, or 0.5%, to $1,626.60 on the Comex division of the New York Mercantile Exchange. It traded between a low of $1,585 and a high of $1,637.90.

The December silver contract /quotes/zigman/663010 SI1Z +0.98% rose 79 cents, or 2.6%, to $30.93 an ounce after falling 4.5% in the previous session.

Copper for December delivery also edged 2 cents higher, or 0.6%, to $3.27 after dropped 5.6% the previous session. Slowing growth from China, the number buyer of copper, has been pushing copper prices lower this month, analysts say.

"China is the linchpin in the copper market," said Frank Lesh, a broker and futures analyst at FuturePath Trading. "If they're buying, we're up, and if they're not, we're down, and right now, they're not buying."

The moves in the metals came as the dollar lost ground against other major currencies, including a 0.8% gain for the euro /quotes/zigman/4867933/sampled EURUSD +0.22%  to $1.3648, after lawmakers in Germany voted to increase the European Financial Stability Facility -- the euro-zone rescue fund. Read about the German vote.

"We've reduced the flight-to-safety bid in gold because it appears as if Europe is making some progress with their debt progress," Lesh said.

U.S. stocks also garnered attention from traders, finding support on the heels of a fall in last week's jobless claims and news that the U.S. economy grew at a 1.3% clip in the second quarter. Read about U.S. stock action.

The Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA +0.66%  was recently up 172 points, or 1.6%, to 11,182.

The dollar index /quotes/zigman/1652083 DXY -0.17%  fell to 77.65 from 77.995 late Wednesday.

Also Thursday, an inspection team from the European Commission, European Central Bank and International Monetary Fund will return to Athens as part of the assessment of whether Greece will receive the next round of international aid.

Analysts at Deutsche Bank said Thursday that, in terms of precious metals, they continue to believe gold will be the main beneficiary of the current unstable macroeconomic environment.

"However, some concerns have been raised that the recent correction in precious metal prices during a period of heightened risk aversion is a worrying sign," the broker said.

In particular, Deutsche Bank noted that fading demand for physically-backed gold exchange-traded funds is a possible sign "that investor appetite for gold may be reaching saturation point."

Spot gold and silver prices rose for the second time in three days as equities rallied and the dollar dropped, increasing the appeal of the precious metals as alternative investments.

The Standard & Poor's 500 Index rose as much as 2.2 percent after reports showed that the U.S. economy in the second quarter grew faster than estimated and jobless claims last week declined more than forecast. The dollar fell against the euro as Germany's lower house of parliament approved the expansion of a bailout fund for debt-stricken euro-area nations.

"The strength in equities is helping gold rise," Sterling Smith, an analyst at Country Hedging Inc. in St. Paul, Minnesota, said in a telephone interview. "The weaker dollar is also lending support."

Gold for immediate delivery rose $3.08, or 0.2 percent, to $1,611.88 an ounce at 10:33 a.m. New York time. Earlier, the price dropped as much as 1.6 percent.

Before today, the metal slumped 16 percent from a record $1,921.15 on Sept. 6 as sovereign-debt woes in Europe drove equities and commodities lower.

Spot silver rose 38.13 cents, or 1.3 percent, to $30.25 an ounce.

Gold futures for December delivery fell $2, or 0.1 percent, to $1,616.10 on the Comex in New York, swinging between losses and gains.

Silver futures for December delivery rose 17.1 cents, or 0.6 percent, to $30.305. Before today, the metal tumbled 40 percent from a 31-year high of $49.845 on April 25.

By Alix Steel

NEW YORK (TheStreet ) -- Gold prices were lower Thursday after the Chicago Mercantile Exchange raised the amount of money it costs to buy a speculative gold futures contract and after gold spiked to a record of $1,817.60 an ounce in overnight trading.

Gold for December delivery was down $24.90 to $1,759.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,817.60 and as low as $1,757.10 while the spot gold price was losing $37, according to Kitco's gold index.

The CME finally stepped up and raised margin requirements on gold, that is the amount it costs to buy an 100 ounce gold futures contract, after the metal skyrocketed more than $200 in 3.5 weeks. It now will cost $7,425 to buy a speculative contract and $5,500 to maintain it, both represent a 22.2% increase.

The CME deployed the same technique with silver in May when prices skyrocketed to almost $50 an ounce, which then led to more than a 30% decline in the metal. If the same were to occur in gold, prices would dip to under $1,300 an ounce. However, gold seems to be shaking off the margin requirement as cries for a safety net as the Dow Jones Industrial Average nears bear market territory.

"We noted at the start of the week that a margin hike could dent the bullish sentiment in gold," says James Moore, research analyst at FastMarkets, who thinks, along with other traders, that gold could benefit from a period of consolidation. "But, with little in the way of positive news in-sight and threat of default/downgrades continuing to overshadow markets gold will likely remain underpinned and could potentially extend to fresh highs."

Scott Redler, chief strategic officer for T3Live.com, says that it's hard to buy gold at record levels, his favorite vehicle is SPDR Gold Shares(GLD_), but says "I still expect significant upside due to continued demand ... It looks like [gold] is in the last stage of a parabolic move up to the $2000 mark."

Redler says not to chase gold's recent extension but that "every sale so far has been a bad one."

Gold's frenzied rally has some long-time gold bugs worried. Legendary gold investor Jim Rogers has said that in the end of the gold bull run there will be a huge bubble in precious metals.

"I don't know when that will be," says Rogers. "Most long term bull markets wind up in a huge mania, a huge bubble before it's over and this one will too. Someday, everybody will own gold. Someday, people will be walking down the streets checking gold prices in front-shop windows."

When asked if gold's recent rally qualified as this huge mania, Rogers said it was "not enough frenzy yet, but it is getting very worrisome. I want to keep my gold another several years, but who knows IF this keeps up?"

David Banister, chief investment strategist at ActiveTradingPartners says that gold "could see a final surge to $1,862-$1,900, but that should top it for a while." Banister foresees a multi-month correction that will have gold trading sideways with some big drops along the way.

But for Thursday gold seems content still being a safe haven as even a $30 drop in the spot market doesn't counter act the massive three-week rally. Weekly initial jobless claims in the U.S., which fell to 395,000 last week, did nothing to calm jittery investors. Worries about the solvency of French banks and the country itself not to mention Spain and Italy are still resonating throughout markets, making gold the go-to asset.

Gold mining stocks closed higher Wednesday. Barrick Gold(ABX_) was up 4.02% to $49.66 while Newmont Mining(NEM_) added 0.74% at $55.81. Other gold stocks, Goldcorp(GG_) and AngloGold Ashanti(AU_)closed higher at $50.54 and $44.33, respectively.

--Written by Alix Steel in New York.