Thursday’s gold price plunge to a six-year low might hand a new lease of life to the government pawning service at the Monte di Pietà, which has seen a sharp decline in popularity in recent times as customers flocked to jewellers’ shops instead.

Established more than four centuries ago in 1598 during the reign of the Knights of St John, the Monte di Pietà in Merchants Street, Valletta, is a charitable institution that lends money at modest interest rates to combat usury.

Through this service gold and silver artefacts and precious jewellery are accepted as security against loans with a five per cent interest rate, payable within three years.

The rapid rise in the price of gold after 2010 hit this institution hard because the flat rates established by the government are no longer deemed competitive compared to the price per gram offered by commercial gold vendors.

According to the latest rates set by the Consul for Goldsmiths and Silversmiths which were published in the Government Gazette of December 22, gold is being pawned at €31.604 per gram.

Official data tabled in Parliament earlier this month revealed that last year the value of pawned jewellery dropped to €23,357 – almost a nine-fold decrease from 2008, when €202,266 worth of precious items were exchanged for money.

The statistic was given by Finance Minister Edward Scicluna in his reply to a parliamentary question by Labour MP Godfrey Farrugia.

Many of those who had pawned their gold have taken it back, as they deemed it more profitable to sell

“In recent years many of those who had pawned their gold have taken it back, as they deemed it more profitable to sell,” a regular customer at the Monte di Pietà told this newspaper.

“Personally, I resisted the temptation of doing so, as this would mean losing my precious valuables once and for all, unlike with the government pawning service, through which I can reclaim my possessions,” he added.

By law, anyone 18 and over can deposit precious items at the Monte di Pietà in exchange for up to €600 per day.

This cap has at times put off potential customers needing higher amounts of cash immediately, like cases of patients requiring urgent medical treatment abroad. In such instances, pawning offers no remedy and the only alternative is selling.

If the owner fails to pay back the money with interest after the maximum 36-month period, the valuables become State property and are auctioned.

However, no items can be redeemed unless the owner is in possession of the ‘ticket’ he or she received when depositing the items. Should this be lost, the government ought to be notified to prevent the gold being claimed by someone else.