Beware of Gold Buying Scams

With unemployment up, the price of gold hitting $1000 an ounce in the last thirty days, and many people outright “spooked” by the economy, you may be thinking it’s a good time to unload some gold jewelry.  Maybe a few rings from your college years?  A necklace from the 1980’s that just isn’t in style anymore?  Or even a family heirloom that you’ve never been fond of.  If that’s what you’re thinking, then there are lots of people ready to talk to you.  Unfortunately, not all of them are scupulous.

Scammers are on the gold-buying circuit, promising everything from “the highest per ounce price being paid” to “overnight cash back.”  ”It’s easy,” they say, to “turn Jewelry into CASH” like in the advertisement shown here.  (Don’t click on that , by the way.  It’ll just frustrate you.) But let me first say this: with the recession at full throttle, this is not the time to be making quick deals with people you don’t know.

Media representatives are reporting that consumers are being taken advantage of by unscupulous gold buyers and it has been an expensive lesson to learn.   In fact, to get a look what’s being written about them by former employees, check out the ComplaintsBoard.com, where someone claiming to be a former employee of Cash4Gold.com has offered their behind the scenes take on the company and… it ain’t pretty!

One local TV station in San Diego decided to try a few of the bigger name goldbuying websites.  They bought their own gold rings for $58 each.  They sent them off to three different websites: www.cash4gold.com, www.goldkit.com, and www.getgoldcash.com.  One of the sites returned $2.80.   Another sent $2.92 (and then later “upped their offer, sending another check for $4.99) and a third sent a check for $7.63.  They took the fourth ring to a pawnshop in the area and got $18 for it.

Now we all know that jewelry made of precious metals and gemstones are more expensive than gold by the ounce, because of the workmanship.  (And thus, you can’t sell it to a pawnshop or anyone and get the value that you paid for it, because you as the purchaser are paying for a “work of art” which the repurchasing agent may not be interested in) but falling from the range of $58 to roughly one-tenth of the value is not evidence of the value of scrap metal; it’s evidence of that sellers are being caught at a severe disadvantage.  (And I personally have never understood how you get your jewelry back, if you don’t accept their “offer?”)

So here’s the best advice: buy and sell from a reputable jeweler.  Deal with people you know.  If dealing with an online jeweler, check their credentials and BBB Rating. Very importantly: Make sure they publish their rates on their website clearly before sending them your gold! If company does not publicly list rates or makes it hard to find, its because they have something to hide!

Go armed with knowledge.  Find out how much gold you have before you take it in for them to weigh.  And find out what the spot price is.  If you know approximately how much value you’ve got, you’ll be able to negotiate a lot more effectively.

And about the heirloom that you’re not so sure of?  Keep it and sell the necklace from the 1980’s.   The heavy gold will be back one of these days, but family treasures never go out of style.