We Buy Gold: Jewelry and Coin Sellers Beware

By Shihoko Goto – Exclusive to Gold Investing News

selling gold

The signs declaring “We Buy Gold” are everywhere, and as the price of the yellow metal continues to surge while the economy remains sluggish, more people are eager to sell off their jewelry for some spare cash. It can make a significant difference in how much money will be paid out,  if sellers have an understanding of the value of the gold that they have on hand. 

“You need to do your homework… and understand the value of what you’ve got,” said Frank Finkler, President of New York’s Centennial Casting, a company that not only sells precious jewelry, but purchases gold from individuals. Finkler pointed out that some gold purchasers pay only about 40 percent to 80 percent of the actual value of a piece, but the seller cannot determine whether he has been scammed or not.

It is, however, relatively easy to calculate how much any piece should fetch, with online calculators such as How Much is my Jewelry Worth? and understanding how purity affects pricing. So one gram of 100 percent pure, 24 karat gold is worth just over $53 dollars with gold at about $1,660 an ounce.

Some online companies, however, would only pay about 20 percent of the metal’s worth, while a 10 percent payout of value is also not unheard of.

Still, with more people trying to make ends meet and needing “the cash right now… it’s a very lucrative” business for gold buyers to get into the market,” Finkler said.

Moreover, it’s not simply necklaces and bracelets that people are selling. Rare gold coins are also being sold by people who are unaware of just how valuable their possession is to gold buyers who are out to make a quick profit.

“Despite prominent advertising that may proclaim ‘no one pays more,’ some traveling gold buyers are offering only pennies on the dollar for rare coins,” said Robert Brueggeman, Executive Director of the Professional Numismatists Guild. The PNG, whose members include top rare coin and bullion coin dealers, pointed out that some gold buyers set up shop at a hotel for several days and then move on to another town to offer as little as 3 percent of the actual value of the certified rare coins they were offered. Last year, for instance, a 1925 coin valued at $10,000 by experts was offered $60 by such a buyer.

The surge in gold price has also enticed many individual investors to buy up the yellow metal for profit, but their lack of expertise in the market has led them to be taken advantage of as buyers as well.

Companies such as Goldline International have come under attack from US legislators, with former Democratic New York Congressman Anthony Weiner going on the offensive last year. While Weiner resigned earlier this year amid a sex scandal, Goldline is now facing 19-count criminal complaint for theft and fraud by the Santa Monica City Attorney’s consumer affairs division in California. The consumer protection union alleged last month that the company “runs a bait and switch operation in which customers, seeking to invest in gold bullion, are switched to highly overpriced coins by using false and misleading claims.”

The market veterans, meanwhile, appear to be taking a more cautious approach and shying away from investing directly in the market.

Finkler argued that gold’s current price range was “unrealistic,” and said he would feel “more comfortable” if the price were about half of what it is now, at around $800, especially as any drop in market price would most likely be deep and rapid.

For now, though, his company makes sure that the gold is sold as quickly as it is bought.

“I don’t let it sit overnight… the market’s too volatile for that.”

 

I, Shihoko Goto, have no interests in the companies mentioned in this article.