Fools and Their Money - Is Scrap Gold Mail Order a Rip Off?
I never understood why anyone in their right mind would put scrap gold in a flimsy envelope clearly marked as "contains gold" and send it off to some complete stranger just because they ran a TV ad.
What sense does that make?
First you don't know what could happen to that uninsured envelope in transit.
Second, you don't know what percentage of envelopes which arrive get tossed into the "missing address" bin that you just KNOW is sitting in the sorting room.
The sorting is probably done by minimum wage employees - making the real question what percentage of your envelopes get accidentally lost by staff and what percentage get lost intentionally by the company?
You simply can't know and some companies may be legitimate but there are stories all over the Internet of people reporting their gold was "lost".
Now, if you get past those hurdles, how do you know you will be given the right weight? Do you have a .01 gram scale to pre-weigh the items so you know what you sent? Or, are you just going to take the word of the stranger offering to pay for it? Even a local sale can be iffy, especially if the scale used isn't carrying a state weights and measures seal indicating it is accurate.
Do you even know what "tare" weight is?
In weights and measures it is the compensation for the weight of the package or scoop holding the item being weighed. Most scales can be set to an arbitrary "tare."
Do you know what fraction of your items is 23K, what is 22K, what 14K, and what is just plated? It matters because 24K is pure gold (or pure gold plate) and anything less is only part gold. Two ounces of 12K gold is only about 1 ounce of valuable metal.
I've had people tell me they could tell at a glance if jewelry was plated or solid gold. If it isn't worn through to the base metal that is simply impossible, you can't "see" into metal. If you are experienced then you can often tell by the weight, but no one can tell just by looking.
Also, as someone who used to make jewelry I have to tell you that you can easily buy little stamps which mark anything from iron to gold with a 12K, 14K, 22K, or 24K stamp.
Experienced people can tell if something is 22K, 14K, or 23K just by the color, but they still need to test and it may just be a thin layer of plating.
Virtually no gold except for bullion is 24K because it is too soft to handle and even a gold bullion coin isn't pure gold (although they will weigh enough more than 1 oz. that the actual gold content is 1 Troy oz the way a Krugerand is made.
So, is it FOOLISH to send an unknown and un-provable amount of precious metal to someone who puts up an ad?
What a smart person would do is go to their local jeweler and see what they would offer. Even a pawn shop will usually give you a pretty decent price for gold if you are selling it outright. Check out at least two offers.
The difference is that these businesses are local, you can find them next week, and your gold never leaves your sight until you get paid.
And pass on the mall tables set up for just a day or two which then disappear. They might be honest, but why take a chance? That jewelry store or pawn shop has been in the same place for decades.
There are legitimate mail order bullion dealers who will pay an honest price for your scrap gold but I've never seen any of them advertise on TV. If you use one, insure the package and under no circumstances mark the contents on the outside, leaving a Rolex sitting on the park bench is much smarter.
As a rough guide, it turns out that mail order gold buyers advertising heavily will give you up to about $100-$150 for every Troy ounce of pure gold which they would sell back to you for about $1100.
Yep, if you get anything and you get an honest weight then you will get up to about 20% of the true value maximum.
An honest buyer would give you about 80% of the true value perhaps more depending on various factors such as how difficult it will be to refine the gold.
This is the sad other side of the fake gold coins being sold on TV as told in my earlier stories.
After months of ignoring the problem while the public was being gypped the mainstream media (starting with the NBC Today Show today) is beginning to report on these scams. Since the junk gold ads run on TV this is sort of biting the hand that feeds them which might just possibly explain why it took them so long for them to begin to pay attention.
If you had to ask me just why TV stations are always so slow to check out scams by their advertisers I really couldn't say, but if you do as I always suggest and try THINKING, I bet you can make a good guess at some potential reasons why most scams don't get publicity on TV until they have been out there so long that they have pretty much gotten all the big suckers already.
If they are real people and not just actors in those ads I wonder how many of those happy smiling people in the ads would feel if they knew that the gold they got $450 for was actually worth closer to $5,000 at a pawn shop?
John McCormick is a reporter, /science/medical columnist and finance and social commentator, with 17,000+ bylined stories. Contact John through NewsBlaze.
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