Due to the increased price of gold and silver, consumers are targets of companies and weekend-only expos that advertise the buying of gold and other jewelry for cash.
“Consumers are being inundated with ads and other promotions for companies wanting to buy jewelry,” said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and northern Illinois. “Typically, these advertisements state the business will pay top dollar for jewelry or gold that is no longer wanted. While the hype is significant, consumers need to be cautious of these deals and be informed about the businesses wanting to buy jewelry.”
The following are tips from the Better Business Bureau about what consumers need to know before selling their gold or jewelry for cash:
- The price of gold can fluctuate from day-to-day. As such, it is wise to take a piece of jewelry to several well-established jewelry stores and ask for a price quote or estimate of how much the piece may be worth and then compare the offers. To ensure you are getting the best price for your jewelry, have it appraised before selling.
- Find out the karat and weight of your gold. Pure gold is too soft to be practically used in jewelry so it is combined with other metals to create durability and color. The Federal Trade Commission requires that all jewelry sold in the United States describe a karat fineness of the alloy. One karat equals 1/24 of pure gold by weight. So 14 karats would mean the jewelry is 14 parts gold and 10 parts other metals. It is illegal for jewelry to be labeled “gold jewelry” if it is less than 10 karats.
- Understand the scales. The weight of gold helps determine its value. If you measure your jewelry on a home kitchen or postal scale it is important to understand that jewelers use a different measurement standard called a Troy ounce. A common U.S. scale will measure 28 grams per ounce, while gold is measured at 31.1 grams per Troy ounce. To add to the confusion, some dealers will also use a system of weights called pennyweight (dwt) to measure a Troy ounce while others will use grams. A pennyweight is the equivalent of 1.555 grams. Consumers need to be alert that a dealer does not weigh their gold by pennyweight, but pays them by the gram. This would allow the dealer to pay the seller less for more weight of gold.
- Keep in mind buyers need to make a profit. Just because a piece gets appraised for a certain amount, it is unlikely you will receive the same exact amount for it. What you are paid may be anywhere from 1o to 20 percent less because the purchaser has to make a profit margin on the transaction.
- Beware of large advertised “Expos.” These events generally rent out hotel rooms or meeting halls and advertise with a sense of urgency or limited-time offers, such as weekend opportunities only. The expos may claim that they pay the highest prices, but some local jewelers state that the expos may pay one-third less than local buyers.
- Gold dealers must meet local regulations. It is important to know that gold dealers in the city of Chicago are bound by strict regulations when purchasing and dealing with gold. Per city requirements, when buying gold from a consumer, they must get the seller’s photo ID, retain copies of it, assure that the individual is at least 18 years old, and wait 10 days after the purchase before they do anything with the gold, such as sell it or melt it. In addition to obtaining the identity of the seller, city of Chicago dealers obtain the following when purchasing second-hand jewelry: picture of item, size, detailed description, and any inscriptions or identifying marks. For this reason, many dealers or expos do not want to do business in the city of Chicago. Instead they conduct operations from the suburbs where dealers and expos are not bound by the tight city restrictions. At these locations, once they purchase the gold from consumers, they can pack up shop at the end of expo and leave. Consumers would likely have a difficult time contacting these expos again in case they needed to.
- All transactions should be done in the open. If a buyer wants to take your jewelry or coins somewhere else or to a back room or to weigh, do not agree to do so. This is not necessary and should be considered suspect.
- Don’t confuse pawn shops with second-hand stores. They are not the same, although they may do the same things in terms of buying or selling second-hand items. Pawn shops are regulated with licensing requirements, while second-hand stores are not. This is important to know for the benefit of the consumer.
BE ALERT OF GOLD BUYERS WHO DO THE FOLLOWING:
- Dispute karats. Some disreputable dealers will try to persuade consumers that their gold is less karats than it really is. Identify and understand the karat value stamped on your jewelry.
- Combine karats. Don’t let jewelry of different karat value be weighed together. Some dealers will weigh all jewelry together and pay for the lowest karat value. It’s vital to separate jewelry by karat value.
- Undervalue offers. Some dealers know people are just looking for quick cash to put in their pockets and will offer money for the gold that is lower than the actual value. It is important to know the market price for gold and the weight and karat value of your jewelry to understand the difference between a good and bad deal.