MILWAUKEE -- Law enforcement and local governments are scrambling to shut down an industry that has grown up around the booming cash-for-gold business nationwide: Thieves are snatching jewelry, then converting it into a quick payday at the shops.
Thousands of shops have opened to take advantage of high gold prices and hard economic times, and police in some cities have noticed an uptick in burglaries and thefts.
"Law enforcement is just swamped," said Maureen Walter, of the State Police in Maryland.
Concerned about a growing criminal trade, Milwaukee passed an ordinance this summer to help police spot stolen jewelry being sold before it was too late to recover.
Other cities are rushing to take similar measures.
Gold-buying businesses began proliferating when prices started rising in 2005, reaching more than $1,000 an ounce in 2009 and around $1,200 now. "Cash for Gold" billboards cropped up along highways, TV commercials urged watchers to mail in their gold for money, and exchanges opened in unusual places like liquor stores and hair salons.
In Milwaukee alone, the number of businesses licensed to buy jewelry increased from 16 in 2007 to 59 last year. In Maryland, one of the states revising its enforcement, licensed vendors of precious metals more than doubled in the last two years to 545. The businesses included not only shops but gold-buying events at hotels or Tupperware-like parties in homes.
Local authorities couldn't keep track of all precious metals changing hands and discovered that not all of the sellers were people with jewelry they no longer wanted.
Police here said they caught several thieves and drug addicts who confirmed they were stealing jewelry to sell to the shops.
No comprehensive statistics on gold or jewelry thefts nationwide are available, but burglaries increased about 4 percent overall in Milwaukee from 2007 to 2009, while all other crimes decreased -- a pattern investigators linked in part to stolen gold.
Investigations last year at six shops found $75,000 in stolen jewelry and led to the clearing of 16 burglaries, said Milwaukee Police Officer Glenn Podlesnik. The city fined the shops about $64,000 for failing to keep required records on sales.
In Anne Arundel County, Md., east of Washington, D.C., arrests for stolen goods sales at gold shops and pawn shops rose 200 percent from 2007 to 2008.
Authorities say the gold sales overwhelmed anti-crime record-keeping requirements designed for pawn shops. Even when there was a required holding period for items bought, the jewelry often had been resold or melted down to make new precious objects before police caught up.
Gold shop owners insist they are providing a legitimate service for customers in hard times and shouldn't be blamed for the crimes.
In July, the Milwaukee Common Council voted to require all gold-buying shops to electronically submit the seller's name and photo to police, along with a photo of the items sold.
Last fall, Maryland passed a similar measure and, on Oct. 1, will require buyers to have a fixed location. Last year, Florida started requiring mail-in gold-buying companies to put sales information on a database accessible to law enforcement.