How do I Recognize Cash for Gold Scams?

Dale Marshall

One of the early clues that you’re dealing with one of the many cash for gold scams is that when you first contact the company, the representatives won’t tell you what they’ll pay you for your gold. Instead, they’ll tell you just to mail or bring your gold to them to get the best price, hoping for an opportunity to lowball you. Another ploy is to separate you from your gold so they can examine and weigh it, either by having you mail it to them, or, if you’ve brought your gold to a brick and mortar operation like a pawnshop or jeweler, by taking your gold to another room to analyze it. Insist that they examine and weigh your gold in front of you.

Gold investors rarely posses bars of physical gold, but exchange physical or electronic certificates that indicate that they posses gold.
Gold investors rarely posses bars of physical gold, but exchange physical or electronic certificates that indicate that they posses gold.

You can investigate online as well, searching for complaints or reports of scams about the company you’re looking into. Better Business Bureau (BBB) records are also helpful. The many cash for gold scams have accumulated a wealth of unresolved BBB complaints, and subsequently misrepresent their BBB records in their own websites.

Pair of gold rings.
Pair of gold rings.

The more you know about what you’re selling, the easier it’ll be to spot cash for gold scams. Get your best offer by doing some in-person comparison shopping, but first, do some homework. Make a list of your pieces and note the karat purity of each; this is stamped somewhere on the piece, and is usually in the range 8k - 24k, with 24k gold considered 100% pure. Next, weigh your pieces on a home postal or kitchen scale. You should be able to round the weights to the nearest gram. Armed with this information, you can use an online calculator to get a rough estimate of the retail value of your gold.

As with other consumer transactions, shop around for the best deal, and don’t be shy about it. As soon as the offer is prepared, a scammer will try an “assumptive close” by scooping up your gold and asking who he should make the check out to. Don’t fall for it! Get the estimate in writing, take possession of your gold, and then advise the operator that you intend to shop around. His response will be useful in determining if he’s a scammer. He may even tell you that if you come back later, he won't pay the amount he originally quoted you. A high pressure tactic like this almost guarantees he’s a scammer.

Different shops will provide different written estimates, and there’s no standard as to what sort of information they should contain, but at the very least, it should include the total weight of each grade of gold and the total offer. You can easily compare these figures with your homework; if the weight is off by a little, that’s okay, because they’ll have more sensitive scales than you have in your kitchen. If the final, total offer is under 85% of the retail value, though, someone’s trying to take advantage of you.

Studies have shown that the shops that advertise on television generally pay nowhere near true value for gold. Their ploy is to entice you to mail your gold to them following which they will send you an insultingly small payment — generally 10% to 20% of the retail value. If you call to complain within the short time period allowed, they’ll offer you two to three times the original offer, and many consumers accept, even though the final offer may be no more than 60% of the items’ true worth. If you still refuse their final offer, it may take them up to a month to return your gold to you.

Keep in mind, though, that all cash for gold operations, legitimate and otherwise, are interested only in the value of the gold, not the investment value of jewelry or coins. Ultimately, the gold you sell will be melted down. If you believe your gold has value because it’s a piece of antique jewelry or a valuable old coin, bring it to a reputable jeweler or coin dealer for the appropriate appraisal. If you’re not expecting to realize antique or numismatic value, though, try to deal with refiners, not brokers, because brokers’ profits come from the reduced value they pay you.

Swindlers will offer much less money for high value items.
Swindlers will offer much less money for high value items.

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