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Gold supply runs out in Portugal adding to austerity misery

In times of economic hardship you often see cash for gold shops spring up in most towns and cities, but in Portugal things have gotten so bad that even these shops are being forced to close due to there being no more gold available.

Citizens have been forced to sell their gold jewellery in order to afford to eat after the unemployment level reached a high of crisis proportions. For some this has been the only source of income but now things have come to ahead as the gold supply dries up.

Paulo Oliveira and his wife sold their wedding rings to pay the rent after he lost his job as a builder last month. They were the couple’s last pieces of jewellery. They spoke to Bloomberg news:

“We have no more gold to save us from being kicked out this month,” the 46-year-old said as he stood in the area of downtown Lisbon popular with cash-for-gold stores. “Everyone I know is struggling, even the gold stores are empty because nobody has any more gold left to sell.”

What makes the situation even more shocking is the fact that Portugal was once the home of some of Europe’s biggest gold reserves with the number of jewellery stores and cash-for-gold shops increasing by 29% in 2011. In the first quarter of that year there were two new shops opening every day.

“Business has gone from great to terrible in a matter of months,” Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more demand for gold than 40 years, said in an interview. “The sad truth is that most of my clients have already sold all of their gold rings.”

Unemployment in Portugal has hit a Euro-era record of 15% and many citizens are wondering how they will afford to survive with no job and no more gold left to pawn.
“It’s okay for the gold shops around me to go broke, they’ve already made their profit,” Oliveira said. “What I would like to know is who will help me and my wife when we get evicted?”

The Portuguese government forecasts that unemployment will increase to 15.5% for 2012 and to 15.9 percent next year. An average of 86 people a day sought help for indebtedness during the first half of the year, the Portuguese Association for Consumer Protection said in a report published in July.

Competition between stores has been fierce and as the household supply dries up many of them have been forced to close. Despite the economic troubles ravaging the nation the Portuguese central bank still holds more gold relative to its size than any other Euro nation, most of which was obtained under the rule of the country’s last dictator Oliveira Salazar.

Crazily, the nation’s law prevents the bank from selling any gold reserves to help the government’s budget. Surely in such desperate times the government should be allowed to use whatever assets it has to hand in an effort to alleviate the people’s misery.

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