Getting cash for your unwanted gold is a great way to get money for the holidays, bills and everyday needs – but only if the company you are selling to isn’t robbing you blind. Experts recommend you take precautions to avoid cash for gold scams.
The Better Business Bureau (BBB) has logged 656 complaints against gold dealers so far this year. A Springfield Illinois company running gold buying shows under at least eight different names racked up 310 complaints in the last 36 months before filing for Chapter 7 bankruptcy protection. Another gold buyer had its BBB accreditation revoked and received an “F” rating due to unsubstantiated advertising claims.
Complaints against gold buyers include valuation and pricing discrepancies, bounced checks and non-compliance with state mandated holding periods.
“There are honest online and in-store gold buyers,” assures Michael Gusky, founder of GoldFellow® a nationwide gold buyer rated A+ by the Better Business Bureau. “But you really need to be knowledgeable about how gold is valued and the red flags to watch out for before you select a buyer,” says the 30 plus year gold industry veteran who previously owned the largest gold jewelry distributor in the United States before selling to Warren Buffett’s Berkshire Hathaway in 2007.
Take the proper precautions
“Start by examining your jewelry to identify their karats,” advises Gusky who appeared on America’s Money Class with Suze Orman on the Oprah Winfrey Network earlier this year. “All gold manufactured in the United States has the karat stamped in the metal indicating the jewelry’s gold content in relation to pure 24 karat gold.”
Jewelry marked 10K contains 41.6% gold; 14K contains 58.3% gold; and 18K contains 75% gold. With the exception of some rare and designer pieces, most gold buyers purchase gold jewelry by karat and weight. Higher karat gold jewelry is more valuable by weight than lower karat gold jewelry.
“It would be difficult to be tricked into accepting payment for 10 karat gold if you examined your jewelry and knew your pieces were marked 14K or 18K, for instance” Gusky explains. “And, if you know you have several different karats of gold to sell, you won’t be fooled by disreputable dealers who weigh all different karats together but pay according to the lowest karat,” adds Gusky. “Jewelry should be weighed and priced separately by karat.”
What to watch out for
Confusion about unfamiliar weight units provides another opportunity for shady dealers to take advantage of you. Gold should be weighed on jewelry scales set to grams or pennyweights. There are 20 pennyweights or 31.1 grams to a troy ounce of gold. These weight units are not interchangeable: If gold is weighed in grams, the pricing should be stated in grams; if weighed in pennyweights, the pricing should be stated in pennyweights.
“A classic gold scam,” warns Gusky, “is weighing the jewelry in pennyweights but paying for it in gram pricing which is lower per unit since there are more grams than pennyweights to an ounce.”
Gusky emphasizes the entire gold selling process should be conducted transparently – whether in person or online.
“If you’re selling in person, make sure all testing, grading and weighing is done in front of you” says Gusky. “If you’re considering selling to an online gold buyer, read their website.”
According to Gusky, reputable online gold buyers should provide free, insured shipping with real time tracking like FedEx®, post the prices they pay daily on the website, provide a written, itemized settlement offer before issuing payment and promptly return your goods at no charge if you decline the offer. Before placing your items in the shipping package, Gusky, whose company GoldFellow® buys gold online and in stores, recommends sorting your gold by karat, weighing it in karat batches and taking photos.
Do your homework
“Before you sell your gold to anyone, check the company’s reputation and history on the Better Business Bureau’s website, www.bbb.org,” he advises. “Look for accredited gold buyers in business for several years with an A+ rating and few or no unresolved complaints. You want your gold buyer to have a good track record and be there tomorrow in case you have seller’s remorse.”
For local gold buying stores, Gusky recommends reading reviews on yelp.com which uses a filter to weed out fake reviews and competitor slander.
“Don’t be fooled by fake recommendation websites,” adds Gusky. “There are some review or ratings websites with names like top ten this or best that which may actually recommend their own sister websites or receive a fee for referring website traffic.”
So who do you trust?
Reputable gold buyers comply with local law enforcement identification and reporting requirements. You may be asked to provide a driver’s license or even a thumb print. Most states also have mandatory hold periods of at least 10 days during which they cannot melt or sell your gold and you may reclaim it if you’re not happy. Gusky recommends asking upfront about the hold period and return policy.
“Bottom line,” says Gusky, “Don’t let anyone pressure you into selling. If you aren’t 100% comfortable, you can always sell a small amount at first. If the check clears and you’re happy, you can always go back and sell more.”