contact: info@hpg.com
July 2010
Cash-for-gold: Legitimate or a scam?
"There's gold in them thar' hills!" said the prospector. There's gold, too, in many homes throughout America, gold that can be exchanged for cash. In fact, the combination of rising gold prices and declining income has led many families to begin exploring their jewelry boxes, digging through cobweb-covered chests, and unlocking safes in an effort to discover gold treasures that can be exchanged for hard currency.
Unfortunately, this combination has also given scammers a "golden" opportunity. Some set up phony gold parties, where you and your neighbors are pressured to sell your gold earrings, chains, rings, coins, and necklaces for much less than they're worth. Other fraudsters use the Internet to entice customers to part with their valuable gold. Still others work their trade from hotel rooms and traveling auctions, hoping to snag the unwary with snake-oil promises.
Of course, many gold brokers and buyers are legitimate. Nevertheless, this is one business transaction where it pays to do your homework. If you're thinking about selling gold jewelry or coins for cash, take a few tips from the Better Business Bureau and others who have seen gold-for-cash scams up close.
According to the FBI, there are over 14,000 scam artists at work on any given day. Perhaps the information presented here will help you avoid becoming a victim. If you have questions, please call us. Remember, if it sounds too good to be true, it may well be a scam.
- Understand the scales. In the U.S., gold is measured in pennyweights, and there are about 20 pennyweights to an ounce. There are 28 grams per ounce in a common U.S. scale and about 31 grams per Troy ounce. Make sure the dealer doesn't weigh your gold based on the pennyweight scale, then pay you by the gram. You'll end up the loser.
- Know your karats. To learn the karat value of your jewelry, check out the posts of earrings, the insides of rings, and the clasps of necklaces. 24-karat gold is pure gold. A ring that's 14-karat gold is 14 parts gold and 10 parts other metals. (By law, a piece of jewelry containing less than 10 karats can't be labeled as "gold.") Don't let the dealer place your 14-karat jewelry on the scales alongside your 18-karat jewelry, then pay you for the lower value.
- Check out the company. Ask the Better Business Bureau whether complaints have been filed against the firm. Use a search engine to locate prior customer reviews.
- Send gold by insured mail. Don't put your valuable class ring in an envelope and send it by regular snail mail. If it gets lost or stolen, you have no recourse or record.
