If you own gold jewelry or coins and want to sell, be careful: Scams abound. Here's how to make sure you don't get tarnished in a gold transaction.
You’ve seen the glittering TV commercials, you’ve heard the breathless radio spots, and you’ve read the WE BUY GOLD! ads online, in print – sometimes even on the side of the road. They all tout the same fact: Gold is selling at an all-time high – nearly $1,400 an ounce, compared to $500 five years ago.
But if you have some gold jewelry or coins to sell, how can you make sure you get top dollar? So many of those ads seem shady – and some really are.
We’ve done two stories urging caution when selling gold, particularly by mail or online. The most recent was in May of 2009 – Selling Gold By Mail Doesn’t Pay. In that story, we did a test with one 18 carat gold chain. First we divided it into equal parts. We took it to a local pawn shop, where they weighed each part, tested it and verified it was 18 carat. Then we took three identical pieces and sent them to three internet dealers: Cash4Gold.com, TurnGold2Cash.com, and GoldKit.com. How much should we expect to get? Well, here’s what Cash4Gold.com told us on camera when we did their story back in 2008:
“You could see prices anywhere from 50% of spot to 80% of spot based on how much again that you’re sending in.”
-Howie Mofshin, Cash4Gold.com
Based on that, each of our pieces of the gold necklace should be worth about $50 when we mail them in… And that’s what the pawn shop said they’d give us. But our online offers? $37 from TurnGold2Cash.com, $11 from Cash4Gold.com, and from GoldKit.com? A measly $5.
Apparently members of Congress finally saw our stories and others like them.
Last Wednesday, the U.S. House of Representatives passed the “Guarantee of a Legitimate Deal Act” [PDF] – or GOLD Act. (Congress loves a clever acronym.) Sponsored by New York Rep. Anthony Weiner, it targets unscrupulous companies that advertise top dollar for your personal gold possessions and don’t deliver, either through outright fraud or low-balling what your precious metal is actually worth.
Weiner mentioned one company by name: Cash4Gold.
“Cash4Gold has used these bad economic times as a golden opportunity to fleece hard working people in need of an extra dollar,” Weiner said on his website, where he added, “Cash4Gold and similar companies paid between 11-29 percent of the day’s market price for gold, while pawn shops paid about 35 -70 percent.”
In fact, Cash4Gold faces a class-action lawsuit [PDF] in California that accuses the company of a “massive scheme to defraud tens of thousands of consumers throughout the nation.”
So if and until Weiner’s bill becomes law – and there’s no telling when the Senate would vote on it and President Obama would sign it – what can you do?
First, check around the house for coins and jewelry just collecting dust. Last month, online gold-broker Gold Promise (which has an A-minus ranking from the Better Business Bureau) hired a research firm to find out how much gold Americans have stashed away. The results were startling…
- 34 percent of men and 54 percent of women have “gold, jewelry, or diamonds they no longer wear.”
- Those men and women each have 4.5 pieces of “unworn jewelry” in the house. Average value: $604 per adult.
- Total value of all that unused gold and jewelry: $140 billion. That’s the exact amount of the U.S. budget deficit in October.
“It’s clear many people have money stashed in their jewelry boxes and drawers in the form of unused and even forgotten jewelry,” says Keith Weinberger, president of Gold Promise. “These pieces represent a staggering amount of money that could be saved, used to pay down bills or applied toward holiday shopping budgets.”
Once you unearth your unused gold, then what? Well, if you’re seeking advice, best to take it from those who don’t actually do the buying or selling. Here are 5 Golden Rules from those who know best.
1. Appraise the situation
If you have multiple pieces that can fetch a good price, you’ll make money by spending some. The American Society of Appraisers (ASA) is obviously motivated to encourage appraisals, but they make an excellent point: With gold at all-time highs, you’ll definitely save more than you’ll spend if you have an expert detail the value of your goods.
Appraisal fees vary, but a good appraiser will tell you the amount ahead of time. “The appraisal should be done for a set fee, not for a percentage of the value of the property,” the ASA says. “That’s unethical.”
To find an appraiser, the ASA has a referral system that lists 3,500 appraisers with various specialties. For jewelry, also check out the National Association of Jewelry Appraisers, who offer the same service.
When you contact an appraiser or three – shop around, of course – ask the following questions…
- Do you specialize in gold coins and/or jewelry?
- Are you licensed by the state, and where can I verify that?
- Do you have any references?
If they’re pros, they won’t be offended by these questions. And they won’t offer to buy the gold you want appraised. That’s also unethical – and it goes against the very reason you’re asking for an appraisal in the first place, which is to get an objective price on your stuff.
The appraiser can also tell you whether it’s best to sell your jewelry and coins for the weight of the gold or whether those items have value because they’re well-crafted or rare. In other words, you might get more money for not selling to a gold company that’s just going to melt down the stuff.
2. Avoid the Internet
The hottest way to sell gold these days is online. Here’s how the website Lawyers.com describes it – under the headline “Scam Alert”…
“They make it sound like an easy way to get some cash. All you do is ask for of one their special mailing packages, send them your gold, and they’ll mail you a check after they test, evaluate, and weigh your gold. The company even has a guarantee: If you don’t think your gold was fairly evaluated, you can return the check or call the company within 12 days of the date on the check, and the company will return your gold to you. Sounds like a good deal, right?”
Of course, it’s usually not. Sometimes, these sites claim the items were lost in the mail. Other times, they purposefully low-ball their offers: “We issue low checks just to have you call us back if you are smart enough to realize that you just got scammed,” one former employer told the website Consumerism Commentary. And that 12-day grace period? The clock starts when the company dates the check they cut you, not when you get the check. So if it arrives in your mailbox 12 days later, well, that’s too late for you to do anything about it.
This is one of those times when the Internet doesn’t offer a better deal than a local brick-and-mortar business. If you live in or near a mid-sized city, local jewelers and pawn shops will give you the same price – if you have that appraisal with you. And even better, you can comparison shop and look someone straight in the eye.
3. Negotiate but don’t infuriate
With everyone on edge about scams, you might think you’re getting ripped off when the price you’re offered isn’t what you’ve seen online. But gold buyers still need to make a profit – you just want them to make a living, not a killing.
“No one will pay the current top dollar for gold, because that would leave no room for profitable resale,” says Martin Fuller, an ASA-accredited appraiser. “Expect to receive a percentage less than the current top price.”
So when you haggle, don’t hassle. Here are three basic concepts you need to know…
- The king is 24-karat gold, and it’s discussed in terms of a “troy ounce,” which is 31.1 grams. If you have 18- or 14-karat gold, you’re going to get less – because 18 karats are 75 percent pure gold, while 14 karats are 58 percent. All the other stuff mixed in with that gold? Not worth a copper penny to the buyer, except for platinum – which is selling for more than gold at around $1,700 an ounce.
- Like we alluded to above, don’t sell the gold until you’ve checked to see if it possesses other value. “The safest bet is to sell gold jewelry that is broken or is an unmatched set,” says the ASA. “Then you can be sure that the pieces don’t have much value as jewelry. Be careful about selling antique pieces, pieces with gems embedded or pieces from a well-known designer. If you have a piece of Tiffany jewelry, for instance, it is probably worth more as is than it would be if it were melted down.”
- For jewelry, realize the price you paid may not be the price you get, even though gold prices have skyrocketed. Reason: “When you bought the jewelry you paid for more than the value of the gold. The price included labor, packaging and the retail mark-up of the item,” says the Jewelers Vigilance Committee, an industry watchdog. “It may have also included non-gold substances, like gemstones. You probably will not be reimbursed for the non-gold components of the purchase price.” And for coins, it’s important to find a reputable dealer, since it’s a lot harder to recognize when a coin is valuable than when a piece of jewelry might be. Find those dealers at the American Numismatic Association’s Dealer Directory.
Finally, if you want to invest in gold – buy some instead of sell some – there are just as many pitfalls. Before you make a move, check out Money Talks News’ Should You Join the Gold Rush? And if you want to buy jewelry to actually wear it, check out tomorrow’s Money Talks News for tips on how to do that.