There's No Cold Hard Cash When Selling Gold

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By Doug Maine
The TV commercials are everywhere of smiling merchants paying consumers wads of cash to buy old gold jewelry. There’s a problem, though. You’re not going to get cash and you might be surprised how much the buyer takes off the top.
Here’s the first thing that’s going to surprise the average consumer. You won’t get hard currency in return, so don’t expect to leave the store jumping up and down with a big wad of cash in your hands.
Another shocking thing is how much stores can vary in their payments. Some will charge a commission as little as 15% while others might charge as high as 50%. The commission is what the store takes from the value of your jewelry before paying you.
“For safety, people are given checks,” said George Lozada, the owner of Lozada Jewelry on Park Street in Hartford. “They go with checks, no more cash. It’s the law; it’s for safety.” (Even Lozada skirts the intent of the law on his website showing three one hundred dollar bills in an ad announcing the store buys gold.)
[UPDATE: A law-enforcement official contacted CTLatinoNews.com to say, by law, advertisements should not show payments in cash. Consumers who spot violations can contact the police department where the business is based to lodge a complaint.}
The buying of gold is a part of Lozada’s business that has grown in the past few years. “Right now people don’t buy jewelry like four or five years ago,” he said. “Many people come to sell their jewelry.”
Since Public Act 11-100 took effect last Oct. 1, 2011, businesses and individuals that buy gold or other precious metals or stones must have a license from the local police chief or first selectman, or from State Police in towns without local police departments. All license applicants, including employees, officers, shareholders, financial backers and creditors, are required to submit to state and national criminal history checks.
Know Before You Sell
The state Department of Consumer Protection and the Connecticut Better Business Bureau advise persons who want to trade-in gold items to protect themselves and ensure that they receive a fair return by doing the following:
• Before leaving home with your valuables, find out what the market-rate for gold is that day. This information is available from business-news websites and TV channels, which regularly provide information about the value of gold and other commodities.
• Shop around — Visit several reputable jewelers or coin stores to see what value they place on your coins or jewelry and how much they’ll pay for it. Howard Schwartz, executive communications director of the BBB, said that while many gold buyers will use the confusing term “pennyweight,” sellers should insist that they say how much they pay in plain language by asking, “What percentage of today’s market rate do you pay?”
Schwartz also recommends going to stand-alone jewelers, as opposed to mall stores that have higher overhead costs, which they may try to recoup by offering sellers a lower percentage of the market rate. He said he has been in shops that offer as much as 85 percent and as little as 30 percent of the market rate for gold.
• Know the carat and weight of each item you’re selling. The value depends not only on the weight of the item but on the carat as well. Is a particular item 14k, 18k or 24k? Each item you want to sell should be weighed individually. Don’t let multiple items of differing carats be weighed together.
• Look to make sure that the scale used to weigh your gold items is actually certified by an authorized metrology lab. Because the measurements of weight involved in the sale of gold are generally smaller than those of other kinds of commodities people buy or sell by weight, the scale needs to be extremely accurate; that will only be the case if it has been calibrated recently, which should be indicated by a dated seal affixed to the scale.
• Would-be gold sellers can also check the BBB website to see what stores in their area the organization has accredited. Visit the CT Better Business Bureau website and click on “Check Out a Business or Charity.” Type in the name of the business and the city or town in which it’s located and hit “search.”
If you’re not sure whether a local business and individual offering to buy your gold is licensed, call your local police department’s non-emergency number. For other questions or concerns, call the Department of Consumer Protection at 1-800-842-2649.