Beware of gold-sale scams
Published 10:31 pm Thursday, February 25, 2010
With the price of gold skyrocketing in recent years, a number of companies have sprung up to allow people to sell off their gold to get cash.
Bruce Bowles of D.B. Bowles Jewelers in Suffolk has been buying gold for years. He said he bases his prices on the London market, where the price now hovers between $1,000 and $1,100 per ounce — though the volatile market makes the price rise and fall significantly at times.
“That’s why everybody’s in the market for it,” Bowles said. “It’s made it equitable for a lot of people to sell a lot of stuff.”
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During the last few years, late-night television has been inundated with commercials offering cash for gold through a mail-in system. Other companies, like National Redemption, set up shop in hotel board rooms, test and weigh gold pieces in front of clients and hand them compensation right then. National Redemption is in Suffolk this weekend, buying gold at the Hilton Garden Inn in Harbour View today through Sunday, said Linda Coghlan, a buyer for the company.
The company purchases gold items and then, like Bowles and other companies, sends the gold to be melted down to be made into new products. Pawn shops, on the other hand, do not offer as much money for the pieces, because they are doing a resale of the same item, and therefore have to leave room for markup.
Also popular lately are “gold parties,” where a person invites friends and family to their home to sell their gold to a buyer. Such parties, however, are illegal unless the buyer is properly permitted.
Bowles said he has seen the amount of gold being sold at his store rise significantly in recent years, which he attributes partly to the economy.
“I’ve had a lot of people selling because they needed money,” Bowles said. “It’s a good time to get rid of it, because the gold prices are up.”
Coghlan, too, said the sale of unwanted gold can help the economy.
“Our goal is to put money back in their pocket,” Coghlan said. “They turn around and spend that money back into Virginia.”
To determine how much to pay for a certain item, a gold buyer uses an electronic meter and a spot rubbing metal to determine the number of karats, and also weighs the item. The electronic meters send a small electrical circuit through the item to determine the karat weight. The buyer also can rub a small sample of the metal onto a stone and apply acids of varying strength to the sample. The strength of the acid that the gold can withstand without breaking down determines the karat weight.
Both Bowles and Coghlan offered tips for people to ensure they do not get scammed by a gold buyer:
Know what you’re taking to the buyer — particularly its karat weight.
Have the buyer weigh and test your items right in front of you.
Look at the scale. It should have a sticker from the U.S. Department of Agriculture Division of Weights and Measures.
Know what you’re willing to sell your gold for before you go. Evaluate if your emotional attachment is worth more than the price offered.
Get quotes from several buyers.