Selling Your Gold - Are you getting ripped off?
Gold Sellers: Rip Off Alerts
Your $75 check from an on-line gold buyer that took three weeks to receive? It could have been $518 in cold hard cash after a ten minute trip to your local refiner.
It could have been worse. Authorities are hearing complaints that 'hotel' gold buying events have been issuing checks which bounce. Local and national news stories have even made the problem worse - highlighting happy customers taking advantage of the high price of gold by selling their outdated jewelry at 'gold parties'. (See CNBS's 'Gold Rush' article below). These stories have yet to mention that the customers could receive much more money with just a little bit of research.
According to complaintsboard.com, online gold buyers such as cash4gold are gauging customers by sending checks for pennies on the dollar. Even after taking into account that these buyers are basing their offers on intrinsic metal value and not 'resale' value, customers are being paid the equivalent of $150 (or less) per ounce of gold. 3 baller (screen name at onlinecomplaints.com) wrote that he manages 4 pawn shop companies. As a test he sent in nearly an ounce of 14K gold to cash4gold.com. (As 14K equals .585 purity, the amount sent was over half an ounce of pure gold). His check? $72.13. "Gold was selling for $920 an ounce. Our pawn shop would have paid at least $200 for that gold," 3 baller wrote. But even pawn shops pale compared to what refineries would pay - a half ounce of gold commands up to $430 at refineries.
Now the real irony about this situation? Look around the web page you're on right now, and you'll probably see ads for buying your gold, even as we explain that they may not be your best bet.
Josh Fields (fictitious name - real person) had been a reputable jeweler in the Puget Sound area before being recruited to develop 'Gold Buying Events' in Washington state. The company that hired him was a newly created entity out of Florida named Gold Buyers of America (aka Hotelgoldbuyers.com). Just three months after Josh opened 4 hotel locations (South Center to Everett), a few customers returned to voice some serious complaints: their checks had bounced. Josh was furious. He had done all the hiring, obtained the local licenses, and even signed the checks for the company. It was his butt on the line. After ensuring the customers were reimbursed, Josh was told the problem was fixed. It was not. More than 30 bounced checks have surfaced so far. Josh helped out all the customers with problems in his territory, then quit. One of his hotel managers left a week later after encountering even more bounced checks. Their web site indicates that they hotelgoldbuyers.com will continue to do business in the Seattle area this week-end.
Back in February, Josh was pumped about the success of their opening weekend at the Bellevue HIlton, where he and a co-worker purchased $15,000 worth of gold, silver and platinum in just two days - after advertising on local radio and setting up shop in the hotel's board room. During a training session with potential employees, Josh mentioned that the company was able to sell the gold at spot for at least $33,000. Not a bad profit margin. It would be more, he noted, if they culled some of the better jewelry for the resale market before melting it.
The largest customer of that first week-end emptied 3 bags full of old rings, bracelets, dental work, necklaces, and a few coins onto the board room table. He took home a check for $5,000. Of course that same customer could have sold his hoard for $11,000, had he driven a few more miles down the road to Pacific Iron of Seattle, where even the general public gets paid up to 92% of spot value. (And he could have done much worse - had he sent it in to cash4gold).
The bottom line? Most gold buyers want to keep the seller confused about what their jewelry is worth. They'll talk about karats, pennyweight, spot prices, overhead, anything except how much pure gold you have - in ounces. So...
1) Keep it simple. Nail them down to what they are actually offering per ounce of pure gold before you agree to sell.
2) Find out if there is a local refinery which buys old jewelry and scrap precious metals from the public. You should be able to negotiate a price between 90-95% of spot value.
3) If your jewelry has any sentimental or resale value - DON'T SELL IT FOR SCRAP. Most buyers (other than jewelrs) will not give you anything for stones (diamonds, opals, etc.). You would be better off to get a reputable jeweler's appraisal, and then list the item on EBay. Or better yet, (from your children's perspective) hang onto it to pass it down to future generations!
Gold Rush (CNBC)
- Gold rush is on at a party near you - Consumer news- msnbc.com
As gold prices have skyrocketed to more than $900 an ounce at the same time as paychecks and job prospects are shrinking, gold parties have tapped into a powerful market.
- The Ecstasy of Gold - CBS 42
We've been seeing it every day for the past month. Whether it's the credit industry or mortgages there's been an absolute drain on the stock market. And of course that affects the U.S. dollar. But when simple cash isn't enough to keep you comfortable