You’ve seen the ads.
They look like they’re filmed with a cell phone, with the talking head screaming, “Just bring me your old gold jewelry and I’ll give you cash — lots and lots of cash.”
Others make it even easier. “Just drop your gold in the mail and we’ll send you the cash.” And of course it’s always “lots and lots of cash.”
Who can resist the pitch: cash for gold?
In fact, so many people are rifling through their old jewelery looking for gold that the only thing that has climbed quicker than the price of bullion in recent months has been the number of people willing to take it off your hands.
And with gold expected to renew its long-term climb toward $2,000 an ounce — up from $252 in mid 1999 — you can expect more hucksters to appear on your television with the same “bring me your gold” pitch.
The problem, says Charlie Pollock, manager of Vancouver Gold, which has stores in Vancouver, Halifax, Ottawa and Kingston, is that “it’s a low overhead business — all you need is a website. So a lot of people are popping up and they have shady practices.”
It’s certainly seller beware.
Last year in Massachusetts when the Attorney General’s Office took the same piece of gold jewelery to a number of store-front buyers they were offered a wide range of prices.
And in the same year the New Jersey Office of Weights and Measures issued more than 1,600 summons against the owners of gold- and jewelery-buying businesses, alleging they used inaccurate scales to fleece consumers.
In Canada, police have yet to launch a full-scale investigation into gold scams. But Pollock says it’s no better here. His firm has done its own informal survey, sending out a piece of jewelery and repeatedly getting lowballed on its value.
Another popular rip-off is to advertise that you’ll give people 100 per cent of the value of their gold.
In other words if gold was trading at $1,400 an ounce, you would get the full price.
But Pollock says the 100-per-cent promise — usually offered only through the mail — is often just a come-on. The seller will get a cheque for 50 per cent of the gold’s value, but is never made aware of its true worth.
There are other problems with the mail, says Pollock, noting in one case in Canada about 60 people were told their gold had gone missing in the mail. And of course, the firm closed up shop.
Pollock also says Canadians should be wary of gold parties. People are invited to bring their gold to these gatherings where they are wined and dined while their gold is weighed. But the people putting on the party often don’t have the tools (or the motivation) to accurately assess the value of the gold in the first place, and those attending usually get about 50 per cent of the real value.
“Make sure you know the prices before you go in,” says Pollock, “especially if you’re going to take a lot of jewelery to the party.”
The same applies to the hustler who blows into town for the weekend, sets up in a hotel room and invites the locals to sell their gold. Like a scene out of a classic Western he usually pays between 30 and 50 per cent and leaves with a tidy profit, while the locals are left wondering if they got their money’s worth.
Pollock has also discovered that where you live will dictate how much you’ll get for your gold. If you shop around in Vancouver and Toronto you can get 70 to 80 per cent of the gold’s value but in Ottawa you’ll be lucky to get 60 per cent. He blames the difference on competition and the prevalence of scams like gold parties.
It’s easy to con someone, says Pollock because selling gold jewelery is also more complicated than just dropping a bracelet on the weigh scale and getting paid out at the current price for gold. There are actually four levels of purity in gold used in jewellery: 10, 14, 18, and 24 karats. And 24K is thought to be the purest form of gold, so the pieces composed of this purity should earn you the most cash.
To avoid getting ripped off, Pollock has these suggestions:
1. Don’t let the dealer dictate the current prices for gold, silver, platinum, and palladium. Make sure you know before entering the store. “At least know the price per gram that you expect to get,” says Pollock.
2. Don’t send your jewelery in by mail. If you’re ripped off by someone operating with a postal box number it’s awfully hard to get even. “For the most part, it’s just really hard to sort out who’s doing it honestly,” says Pollock. “It’s a nuisance and expensive. In general, I would steer clear of them.”
3. Just the facts please. You may get offered a price based on the ounce, gram or a fraction of a pound or even a flat fee. But Pollock says you should get paid by the gram, noting that “there are 31.1 grams in one troy ounce and it makes it easy to compare.”
4. Cut out the middleman. The guys on TV urging you to bring your gold down to the store for cash are middlemen. They in turn have to have a refiner melt down the gold. But you can also take your gold to a refiner, and get considerably more for it in the process. But Pollock says going directly to a refiner only makes sense if you have a lot of gold. If you’re talking about a bracelet or two, talk to a local buyer.
5. Head for the exits if the buyer starts talking about refining costs, commissions or fees of any type. Pollock says you always want to deal with someone who has the equipment to give you an honest appraisal and you should leave with 70 to 80 per cent of the price of the gold you are selling.