Cash for Gold Jewelry Cash for Gold Jewelry

Online Gold Buyer Launches Goldfellow.com

Do your homework before you sell gold.

Gold Exchange - South Florida Business Journal Article

Entrepreneur's Midas touch strikes again in local business

If perfect timing is a gift successful entrepreneurs have naturally, consider Michael H. Gusky naturally gifted.

The Weston-based businessman, who last year sold his leading gold jewelry manufacturing company, Aurafin, to billionaire investor Warren Buffett's Berkshire Hathaway, launched online gold buyer GoldFellow® on Feb. 6. This came just as the price of gold was hitting historic highs and consumers were paying more attention to it. During March, his Web site reported 43,000 visitors.

Gusky's idea is to offer consumers a fast, more secure way to sell their gold, platinum and silver; pay better than most competitors; and boost business by educating people about the cash potential in gold jewelry.

Advertising has primarily been via the Internet, taking prime spots with search engines like Google, which trigger his ads to appear when consumers search for items such as plasma TVs and iPods. GoldFellow®'s national radio campaign is to begin on 450 stations in May, and TV spots are planned for July. The campaigns center on "raising the bar for gold exchange."

"We want people to understand they can turn their broken and unwanted jewelry into money for other things by working with a company they trust," he said, noting more wealthy people are selling their gold - even Kruggerands and high-karat jewelry - due to increased awareness of its current high price or the pressures of the slow economy.

Within the year, Gusky hopes to buy $4 million worth of gold a month and do $1 million of advertising a month for the company he started with his wife, Robin Gusky, and friend, Janis Rafkin, former editor of the Business Journal's SoFlorida Magazine. GoldFellow®'s start-up costs are $2 million, Gusky said, and it has seven employees.

In the past month, GoldFellow® bought $1.65 million in precious metals from consumers. The company processed 300 packages a week for an average payout of just under $700 each, with some worth thousands of dollars.

GoldFellow® isn't the only South Florida company panning for business success in gold.

Cash4gold is competition

Pompano Beach-based Cash4Gold has bought gold for eight years, now averaging about 20,000 packages a month with payouts that range from $20 to $5,000, according to CEO Jeff Aronson. The company, which employs 65, owns a refinery.

GoldFellow®'s competition also includes, Gold Kit, Broken Gold, US Gold Buyers, My Gold Envelope and Sell-Gold.

Having sold more than 300 tons of gold chains, bracelets, rings and earrings with Aurafin, which he founded in 1982, Gusky is seeing familiar pieces return to him as changes in fashion leave much jewelry unworn. If Americans join their international counterparts in understanding gold has intrinsic value - not just as adornment - they will learn to sell, and perhaps replace gold jewelry regularly - selling when gold's price is high, Gusky said.

Gold's mostly upward price trend over the past 10 years has seen a troy ounce (24 karat/0.99995 pure gold) go from $300 at the beginning of 1998 to a record high of $1,030 on March 17. But, by March 20, gold fell to $919 a troy ounce. Recently, the metal seen as a hedge against oil-led inflation and an alternative investment to currencies was at $928.

Regardless of gold's fluctuating price or changes in the economy, the gold-buying industry stands to prosper if consumers begin to sell more of their gold jewelry. Aronson maintains there will be a certain portion of the nation's population that always wants to sell jewelry. Gusky agrees.

"I looked at how consumers struggle to sell jewelry," he said. "Retailers don't buy it. Pawn shops aren't dealers in precious metals, and local independent jewelers aren't there to buy it, they're there to sell it. Some people don't have access to gold buyers unless they drive a distance."

Gold-buying companies advertising on TV often pay consumers a fraction of what is fair, he said, and ask consumers to mail them their jewelry - only offering to insure it for $100, even when the items' value greatly exceeds that. Sometimes, they don't insure it, leaving no trace of packages. Some buyers also mislead by only posting what they pay for larger amounts than most people have to sell, he added.

Gusky: 'I'm raising the bar'

"Everybody is in business to make money, but I was disappointed to learn some companies are taking advantage of people who need the money the most," Gusky said. "I'm raising the bar on how consumers can sell jewelry. The time is right because of the price of gold and the public's increased interest in it. The business should be more transparent."

The Jewelers Vigilance Committee, a nonprofit trade association supported by the jewelry industry, lists tips for selling gold on its Web site, and noted prices buyers pay for gold are not regulated, "so parties are free to negotiate a price that's acceptable to both sides."

To see what their unwanted gold is worth, consumers can print GoldFellow®'s free, in-bound FedEx shipping materials via its Web site, where the company posts daily what it will pay per pennyweight ounce for gold. Each package is insured for $500 - or more under special arrangement - at the company's cost, and consumers can trace their mailings from drop-off to delivery. The company videotapes the opening of packages, assesses the value of the jewelry by testing its gold content and pennyweight, then posts its offers online for consumers within 24 hours. There, they can accept or decline it, and are paid within a day via check or direct deposit.

On April 8, when the price of gold was $915 a troy ounce, GoldFellow® was paying $15.53 per pennyweight for 14-karat gold when the customer was selling five to 10 ounces, while Pompano Beach-based Cash4Gold was paying $6.30. The five to 10 pennyweight range is most typical of the amounts consumers have to sell, Gusky said. On April 14, when gold was about $928 an ounce, Cash4Gold's site did not list that quantity range as an option. Its price per pennyweight for 14-karat gold when the customer was selling 10 to 50 ounces was $16.59, while GoldFellow®'s was $17.04.

Aronson said pricing changes on Cash4Gold's Web site may be made several times a day. Its payouts fluctuate with any change in gold's price due to the company's high volume of business. Cash4Gold's extensive marketing costs also affect its pricing, he said.

Cash4Gold's client procedure is similar to GoldFellow®'s, Aronson said. But FedEx delivery is not always used, there's no videotaping of packages' openings, extra insurance on packages whose value exceeds $100 in insurance must be approved and payouts made by direct deposit carry a service fee.

"My goal is to bring disruptive innovation to the industry," Gusky said. "Gold is very misunderstood in terms of its value."