A veritable gold rush has begun in the past few years, as the price has been going up and investors have jumped on the bandwagon. However, wherever money is involved there are also scams, and gold buying scams have been proliferating as well as the price of the metal.
Bandwagons attract wolves
Anywhere money is involved, scams are sure to follow. Gold, for instance, has been attracting attention in recent years due to higher prices. It still is; the spot price of gold recently reached $1,565 per ounce on the Comex, a commodities trading index, according to Forbes.
However, by 2010, warnings were emanating about gold scams, especially gold buying scams. By March 2010, according to Parade magazine, the Better Business Bureau was receiving hundreds of complaints of gold buyers paying pennies on the dollar despite promising much more. The Hawaii BBB, according to KHON, a Honolulu Fox affiliate, received 500 such complaints alone in the first 10 months of 2011.
For instance, an investigative series by The Examiner, a Beaumont, Texas, newspaper, reported offers of $60 and $250 by a gold buyer for two coins worth $10,000 and $13,000, according to an Oct., 2010 CBS article.
Scams still abound
According to CBS, many gold buyers are still promising top dollar but offering far less in person. Buyers aren’t required by law to pay spot price for gold as they couldn’t profit, but they are low-balling sellers.
An investigation by six CBS stations nationwide looked at a number of buyers from a large gold-buying company Treasure Hunters Road Show, which operates in the field under at least eight different company names, including “Ohio Valley Gold and Silver Refinery,” “THR and Associates” and “Premier Estate Buyers.” The investigation found the buyers weren’t entirely on the level.
Undercover reporters got appraisals from THR’s buyers using 15 gold pieces worth a total of $8,000., of which 13 were certified independently as 18 karat gold. Only two of six of the company’s buyers appraised them as such.
One told the undercover reporter that half the coins were copper. Others said the coins were less than 18 karats. One said some 18 karat pieces were 14 karats; another said an 18 karat piece was 10 karats. One offer for the 15 pieces came out to $1.50 per pennyweight, 30 times less than spot price.
People looking to buy or sell gold should be cautious. Retirees, according to CNBC, are common victims of gold scams. Some look to buy or sell to make some quick cash but many wind up as victims of a scam. Buyers and sellers alike should be checked out beforehand by the consumer. Also, according to Parade, if at all possible, pawn brokers are a better venue to sell gold. Pawn shops were found by Consumer Reports to pay up to 70 percent of the spot price, compared to 30 percent or less by mail-in gold buying companies.