Cash for Gold: Scam or Score?

Recently, I had a need for some extra cash and decided to sell my old scrap jewelry. I went in to a local dealer with a handful of mismatched gold in various karats, and came out with $145.00 dollars and a smile! He was helpful and friendly the moment I walked in; not judgmental, arrogant, or behaving like I should appreciate his even allowing me into the store. Instead, he was forthcoming about what was really occurring with gold in the marketplace. My entire experience turned out to be a pleasant and profitable one, but yours could vary depending on the honesty of the dealer, amount of gold you own, karat of the gold and the total weight of the gold.

I started my venture by doing my homework. I used Google to seek out current scams and any information on the price of gold. I read up on as much as I could to find out which practices I should be leery of. I also followed the reference links found in other scam stories that came up, and thought this one to be extremely credible: http://www.goldfellow.com/sell-my-gold.aspx.

(CNN has a really good scam report here: http://money.cnn.com/video/news/2009/11/06/n_cmr_sell_gold_party.cnnmoney/).

Once I had enough ammunition, called several places who specifically advertised offering cash for scrap gold. I asked what the going pennyweight rate was per payout. If the proprietor was evasive or insisted to only discuss it in person, I crossed that dealer off my list. (Of course I have little knowledge about gold, but enough to force the dealer to use precaution in being untruthful, since it was obvious I had some working knowledge or at least appeared to be.)

I also considered these other factors:

Years In Service: If a company has been around 30+ years in the business, their longevity is a fair testament that they are committed to providing fair customer service. Although I chose to use a local dealer, I can safely say every honest dealer's practices are the same, no matter the location. The company you choose should bank their reputation on their ability to provide you with fair and honest service.

It is better to use a local dealer, rather than some random company online. If you get burned you can hold the dealer accountable by getting local law enforcement involved. Always be sure to get a receipt of the final sale, in case you have to file a police report later. If you want a true unbiased account, check out the Better Business Bureau to find out if there are any complaints filed against your dealer. Even typing in "cash for gold complaints or scams" + "name of proprietor" will produce enough information to help you decide if you are about to be scammed.

Full Disclosure by the Proprietor: The more information provided to you about how they arrive at the final payout dollar amount, the better. If the website (or store clerk) you are considering doesn't provide a chart listing their payouts per karat in pennyweights, it's probably a scam. There should also be a complete list of what the dealer considers valuable and will accept. Don't give your gold upfront. Never ship your gold out of state in one of those yellow envelopes or allow a local dealer to take it to a back room to appraise. You may lose some or all of your property.

Examples of Scrap Valuable Metals or Precious Stones:

• diamonds
• antique silver items
• broken chains
• brooches and pins
• bracelets
• class rings
• cuff links
• earrings
• gold coins and bars
• gold jewelry
• gold teeth, dental crowns and bridgework
• gold plated and gold filled watches and eyeglasses
• items with missing stones
• money clips
• necklaces, pendants and lockets
• rings including wedding rings and bands, class rings
• platinum jewelry
• silver coins
• sterling silver key rings
• sterling silver flatware

FYI - No costume jewelry or semi-precious stones! You won't get a cent.

Decide Whether You Have Scrap or Retail Gold: Although you may have some or all of the items listed above, it doesn't mean they are scrap gold. What qualifies for scrap is anything that is damaged, broken, or missing parts. Don't scrap anything that may be in good condition, a family heirloom or has sentimental value. Remember, "scrap" is the operative word since the jeweler's intent will always be to melt down your gold, separate the impurities, and refine it into a raw form for sale. My jeweler informed me that these are unprecedented times for the price of gold. It is at it's highest per ounce ever, but you will never get the original price you paid for it. Typically you will receive 60% of the gold's value. Never accept less than 50%. You should fair well if your gold is a handful of single earrings, broken chains, pendants, etc., but if the jewelry has a larger value than if you scrapped it, you would be better off finding a jewelry store or consignment shop that would be willing to contract with you to sell the item used (unless it is an antique - at least 100 years old).

Beware of appraisals. These can be a rip off too, unless you truly have an antique. Most appraisals can cost upwards of $200.00 and are subjective. (Meaning there are no set collective prices a dealer can draw from. It's mainly based on supply and demand or what a similar item has drawn in previous auctions or retail stores.)

Validate It's Actually Gold: It's imperative to validate the authenticity of your gold. My dealer used special tools to tell whether the gold was real or not. He used a gold sample kit, where he rubbed each piece on a testing stone and then applied a drop of acid solution. I can't say much about the resulting chemical reaction, except he was well experienced and must of known what it should look like depending on the karat. You can purchase kits that will accomplish this as well, but it's $50.00 or more, and it may not be worth the investment unless you have a large piece of gold jewelry and you aren't sure if it is gold. You also need to know the karat of each piece. The mark is pretty evident on bracelets and necklaces, but less prominent on earrings. Using a jeweler's eye loupe, my dealer found the karat mark on the clamp of each piece. You can accomplish the same thing with a strong magnifying glass.

Learn the Weight of Your Gold: You might ask yourself..."How do I weigh my gold" and "What is a pennyweight?" For the first question, well, you can't weigh gold by putting it on your bathroom scale or postage scale at work. You have buy a scale designed specifically for weighting gold; however, this is unnecessary. If you have a reputable dealer, he/she will weigh the gold in front of you with the scale facing you, so you can read the output in decimals. Be sure you have your trusty payout chart to reference during the weighing. Gold is a soft metal that is mixed with other metals to give it strength and manageability. Remember, the higher the karat, the more gold content in the item. For instance, 14K is better than 10K, and so on.

The definition of a pennyweight is:

pen⋅ny⋅weight  /ˈpɛniˌweɪt/ Spelled Pronunciation [pen-ee-weyt] Use pennyweight in a Sentence See web results for pennyweight See images of pennyweight –noun (in troy weight) a unit of 24 grains or ¹/₂₀of an ounce (1.555 grams). Abbreviation: dwt, pwt Origin:
1350–1400; ME penyweight, OE penega gewihte. See penny, weight 1 ounce of gold equals 20 pennyweights.

If you are so inclined to check the market for the going price for gold, you only need concern yourself with the weight measurement. Knowing the pennyweight doesn't really matter in your transaction, except to help you understand how gold weight is measured. 1 ounce = 20 pennyweights. You can find out the weight of your gold by multiplying the number of pennyweights you have of each karat by today's gold price per pennyweight to get the approximate cash value of your gold. (Problem is, you have to already know the exact number of pennyweights you have.) I preferred to have the dealer do it for me, since he displayed enough trust up to that point. If the jeweler refuses or doesn't have the capability to weigh your gold (i.e. you have gone to a retail chain store), find a jewelry repair shop by searching the yellow pages online as an alternative to finding someone to weigh it.

Shop Around: Take your time and compare several quotes before setting on a payout. Once you finalize the sale, there are little or no returns. Good luck!