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24-karat advice: Beware

By M.S. Enkoji, Published: Tuesday, Jan. 6, 2009

It could be California’s second Gold Rush.

The skyrocketing price of gold has people mining their jewelry boxes for every bit of the precious metal to sell for cash. Prices have gone from $416 an ounce on New Year’s Eve five years ago to as high as just above $1,000 in 2008. The price hovered at $853 an ounce Monday.

People are cashing in at local pawnshops. Some are responding to TV commercials offering cash for gold mailed in pre-addressed envelopes.

What’s a gold digger to do?

Be careful.

That’s the warning from reputable gold dealers and consumer advocates.

“People who send away jewelry without checking on the company are really running a huge risk,” said Barry Goggin, president of the local Better Business Bureau.

David Adelman, president of the National Pawnbrokers Association, admits he’s a little biased but said, “At least when you walk into a pawnshop, you face the person you’re dealing with.”

Many pawnbrokers – who are licensed and regulated by the state of California – hire gemologists, who can determine if jewelry is more valuable sold as-is or melted down, according to Jan Schneider, legislative chair with the Collateral Loan and Second Hand Dealers Association of California.

Earl Dempsey at California Loan and Jewelry in downtown Sacramento said finding the best price for gold takes research.

But a pawnbroker will give you an immediate assessment – and money instantly – he said.

Michael Gusky, who owns GoldFellow®, a gold-buying business based in suburban Fort Lauderdale, Fla., said a large percentage of his business comes from customers who send him their gold via FedEx.

Gusky posts his prices online, unlike most other mail-in dealers.

“If you don’t sell to us, use us anyway. I’m here to make a profit, but if we can help people achieve a higher price, that’s fine.”

Tips for cashing in gold jewelry:

  • Don’t expect a pure gold price because jewelry is not pure and contains other metals.
  • Jewelry with stones is less valuable to gold dealers because stones have to be removed. Pieces with valuable gemstones shouldn’t be sent through the mail. Deal with a local business and consider an appraiser.
  • Check out companies that are popping up in television commercials offering to buy gold. Make sure you understand policies, such as how to get any jewelry returned if you’re not satisfied with the price. If you ship to those companies, take photographs, insure the package and get a tracking number from your shipper.
  • Pawnbrokers will be able to give you a melted down value and a finished piece value for jewelry, including those with stones.