Pawnshops here are reporting a boom in business since the price of gold doubled.

The price of gold has jumped from US$850 an ounce in 2008 to around US$1,700 at present.

Pawnshops reported giving out $3.4 billion in loans during the first nine months of last year because of factors such as their new, lower interest rate promotions, and the unpredictable economy.

Mr Ivan Ho, president of the Singapore Pawnbrokers' Association told The Straits Times that whenever the gold price rose, some people would redeem their items, then pawn them again at the higher price.

Ten pawnbrokers told The Straits Times that up to 60 per cent of their total business in recent years were recycled loans due to increasing gold prices and lower interest rates.

Pawnshops give out loans in exchange for valuables such as jewellery and watches. They profit from the interest on the loans, limited to 1.5 per cent a month.

hteoh@sph.com.sg