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Selling gold to local businesses...(rant!)...*long post*

jwebs

Elite Member
Joined
Aug 29, 2011
Messages
698
Location
Montgomery, AL
So, I planned on sending the gold that I just found into the refinery for some extra holiday cash, but I figured I would take it to one of the "fine jewelers" in town to see what I could squeeze out of them. Now I know that the pawn shops and other places in town wouldn't pay more than a 1/3rd of actual melt, as I asked around before I sent my last shipment in for melt. I figured the jeweler would be different...

I went in, and they quoted me a payment of $159 for 16.0 grams of 14kt gold. I was floored by the low offer, so I didn't even bother to try to negotiate. I thanked them for their time, and walked out. On my way home, I decided to stop at *another* well established fine jeweler in town. They quoted me about the exact same price. This time, I asked, and explained that I knew the intrinsic value of my items, and that I was very curious as to why both *reputable* establishments that I went to would offer so low an amount for scrap jewelry. The people that were there were apprentices, and did not know of their boss's reasonings, so once again, I said thank you and went about my merry way.

Now I'm a bit curious. The second place that I went to advertised on an electronic marquee that they "buy jewelry at top dollar" along with various other ads for special sales they were having(its located on a busy boulevard in a prime commercial location). I'm wondering if, regardless of how pressed people are for cash, anyone really accepts those prices? I mean, COME ON! I understand turning a profit is a necessity, but paying 30% of value of a highly traded, easily converted commodity like gold is just downright ROBBERY! I mean, I may be a little biased a little because I had an expectation of losing maybe 10% from going to a local fine jewelry store to sell as opposed to half that if I sent it in for melt, but I was willing to take another small cut for cash in hand today...but I was ***thoroughly*** disappointed in the integrity of these establishments.
I couldn't help but think that they are banking off of people coming to them because they don't have the reputation of a pawn shop, yet they're paying pawn shop prices, as they may just be assuming that the majority of the population is just ignorant about the value of their possessions. These people are probably making money hand over fist, and yeah, we live in a capitalistic society, and if it's not illegal, then it's fair game...as long as you get what you want. I think that that's just wrong, especially when you make your profits on the misfortune and ignorance of people, most of which are probably just having hard times, and may rely on the person they're going to with their goods to be honest and informative...but I guess that's just too much to ask in world where money rules everything....

Then again, the price of gold is insanely high right now for this exact same reason...so now it becomes a relative paradoxical mystery on who to blame for these people undervaluing goods so severely.

I don't know...I just felt a lack of decency at the offers of those stores, and it led me to wonder how widespread that type of thing is, and how much things of this nature might actually be hurting our society as a whole overall.
 
All I got to say is ( www.aragold.com ) NO body can beat there prices!!!!!!!!!!!!! Don't deal with jewelers, pawn shops!!!! They are all RIPOFFS!!!
 
Those folks take advantage of sellers who need the money "right now". ARA is a much better deal is you can wait a few weeks....

Dusty
 
I would of asked the boss of the second place "why do you guys say top dollar paid for gold, when I got a flyer in the mail from (insert made up refiner here), and they quoted me almost (3-4 times higher, but be realistic) more than you guys?

Your right 30% is robbery, and to be honest, it should be REPORTED to the police. Some states have a minimum percent that jewelry stores and pawn shops are supposed to pay for melt. I think somewhere around 60% of melt.

If these businesses get away with paying only 30%, then call the news station and have them run a story.

Think of all the elderly and uneducated (about proper gold prices) people they are scamming.


These shady operations need to be shut down as soon as possible.

As much volume as they operate on, they should pay AT LEAST 80% of melt.

When sent to the refiner, they get 97%.

That's 17% margin.

If they sell $5,000 worth of gold a month, that's over $800.

30%......they should really be taken care of by the police or the BBB.
 
I think if you look deeper into the economics part of it, you'd see that making 17% off of a transaction would cripple a business. That 17% goes to wages, rental, other monthly bills and the like. Unless they dealt in massive quantities, they would be out of business in no time. Yeah, paying 30% is absolutely rediculous but for the "strapped for cash" folks, 60-65% would probably actually be fair IMO. They're in business to make money.

With that said, how ARA is able to pay 97%, especially for such a fluctuating commodity is beyond me but I will sure use them when the time comes.

PS- and I'm no economics major so dont take my numbers for gospel, I was using an educated guess.
 
I think if you look deeper into the economics part of it, you'd see that making 17% of of a transaction would cripple a business. That 17% goes to wages, rental, other monthly bills and the like. Unless they dealt in massive quantities, they would be out of business in no time. Yeah 30% is absolutely rediculousbut for the "strapped for cash" folks, 60-65% would probably actually be fair IMO. Their in a business to make money.

With that said, how ARA is able to pay 97%, especially for such a fluctuating commodity is beyond me but I will sure use them when the time comes.

PS- and I'm no economics major so dont take my numbers for gospel, I was using an educated guess.

Most pawn shops make money off of other items. The 17% they make off of gold won't run the business, but it's a BIG supplement to their income.

They also sell some gold and silver rings if they are nice looking, if they buy it for $150 and clean it up, and a Jewelry wants $500 for the same ring, they could sell it to someone for $300 even if melt was only $200.

With that said. They make a lot of money off of consumer electronics like game systems and televisions. They can easily pay 80% for gold, and still make a lump of money.
 
My mom recommended me a small shop that she goes to have jewelry fixed , the man owns it and he is the only employee. He gave me 80 percent of scrap witch I thought was very good.

To me it was a no brainer , the silver I had brought was all bought for super cheap back when I was in my teens. My mom and I would go to jewelry conventions and the stuff was dirt cheap. With that and the silver/gold I got , I had very little invested if anything at all.

I think pawn shops and the cash for gold places are a insult.
 
I can understand and almost expect the behavior from a pawn shop. But the places I went to weren't pawn shops. These were fine jewelers, with maybe a few million dollars worth of jewelry on hand in the stores. Obviously not much at all of their revenue comes from scrapping gold. This is why i was so appalled at the offers...I'm an informed person, so I knew what price to expect to be reasonable. They didn't know that, which tells me that they basically expect ignorance, probably from their experience, and profit from it at a ridiculous margin. I was .5 second short of a burst of laughter when the first place showed me a price...I had to remind myself of decorum, and that I was a quasi ambassador for my hobby, as I told them how I acquired it. I think I might look into that news station/paper info thing. Thanks for the idea CM.
 
I was just griping about this the other day. I found a mens wedding band, 4.2 grams of 18k 5 diamond chips and looked like it just came off the jewelers shelf. After the wife ran an add to determine if someone had lost it recently, I decided it was my ticket to the F2 I been wanting. Also had a 2.4 gram opal ring at 14k..so off to the jewelry stores I go. First one offered me $30 for the two, second one offered me $40...I bit my tongue and walked out, but that is just robbery. The problem is, they are buying from people who have no idea what gold prices are so 40 bucks for some ring they have laying around sounds like a good deal.
 
I was just griping about this the other day. I found a mens wedding band, 4.2 grams of 18k 5 diamond chips and looked like it just came off the jewelers shelf. After the wife ran an add to determine if someone had lost it recently, I decided it was my ticket to the F2 I been wanting. Also had a 2.4 gram opal ring at 14k..so off to the jewelry stores I go. First one offered me $30 for the two, second one offered me $40...I bit my tongue and walked out, but that is just robbery. The problem is, they are buying from people who have no idea what gold prices are so 40 bucks for some ring they have laying around sounds like a good deal.

These places take advantage of the uneducated.

If they offer you $40 and you know melt is (let's just say) $80, tell them "Why are you only offering me $40, when the gold in these is worth $80?

Then maybe they will realize your not uneducated about gold prices and offer you more.
 
Its like any other business.
MAXIMIZE PROFIT.


You name it. 100% /200 % margins are the norm..

There is a difference between making money... and shamming people... making them think what they are paid is a good price, because they didn't know what the actual value.

They have other tactics too, like tare-ing the scales so the item is lighter than actual, and testing the gold, lying saying it's actually a lower karat.
 
Well I know that you can lump a majority of coin shops in with them.With all of these businesses it is the same buy very low and sell very high. This is why I dont deal with them in any way shape or form. When the jeweler was speaking of top dollar paid in his ad, he meant you would be paying top dollar for his goods.
 
These places take advantage of the uneducated.

If they offer you $40 and you know melt is (let's just say) $80, tell them "Why are you only offering me $40, when the gold in these is worth $80?

Then maybe they will realize your not uneducated about gold prices and offer you more.

That doesn't make him a thief. He has a brick and mortar shop, rent, utilities, maintenance, insurance, salaries, payroll taxes, inventory carrying charges and a reasonable profit for him to make a living, feed his family and maybe salt some away for retirement. This means that he typically has to sell merchandize at between 3X to 4X cost to make the business sustainable.

The same thing applies if he is getting merchandize from a distributor or from someone off the street that tries to sell him some jewelry.

In the end, its your decision to sell it to him or go direct to a place like ARA or Midwest Refinery.
 
That doesn't make him a thief. He has a brick and mortar shop, rent, utilities, maintenance, insurance, salaries, payroll taxes, inventory carrying charges and a reasonable profit for him to make a living, feed his family and maybe salt some away for retirement. This means that he typically has to sell merchandize at between 3X to 4X cost to make the business sustainable.

The same thing applies if he is getting merchandize from a distributor or from someone off the street that tries to sell him some jewelry.

In the end, its your decision to sell it to him or go direct to a place like ARA or Midwest Refinery.

I understand what you're saying here, but the I truly believe that these people are lacking in integrity when it comes to this one particular issue. When one oz. of gold is worth ~1800 dollars, and you offer to pay $550 dollars for that, no person in his right mind would not see that as commercial robbery. Even costs withstanding, when you begin to multiply that figure, you can clearly see that none of what you mentioned would be problematic in solving, as well as throwing in yachts, private jets, and a host of other hyperbolic(but necessary to prove a point) luxuries...most, if not all, coming from ignorance or maybe even inaccessibility...
 
Honestly, it would be like me taking that same gold into an established, respected jeweler and expecting to get an amount of, say, around $1500...it seems comical to even think that, but that's basically what they're doing.
 
This is an easy one. How can they get away with "robbery"? Because there are suckers that will sell for that price and they don't "have" to buy gold so they don't care if the rest are offended.
 
Laptops, TV's, Power Tools, Sports Equipment......all that stuff doesn't really have a set value. There is no book on the value of used power tools, laptops...etc.

Most people can easily figure out what their used stuff is worth using the "what should I ask for this in a yardsale" method.

So they usually have an idea of the approximate value, and when they go into the pawn shop, if they are offered what they think it's worth, they will sell it.

If the pawn shop makes some money on it, who cares? Again, there is no set value to argue over. The sellers was offered what they thought was fair.

Coins don't really have a set value, they have a "average value". People really should not take it to heart, because not everyone is going to pay what the book says it's worth.

Coin values are just guidelines of what to give for coins, and around what price you should sell them for.

The price of coins can be argued. Maybe there is a nick or a scratch that the buyer sees, and thinks it's worth less than what you told them.

No big deal, you bought the coin for $10. If the book says it's worth $20, and he offers you $17.50....you made money.

People realize when they sell coins that they won't get book value for them. If the seller has to sell it for book value, certainly they can't give you book value for it, or they don't make any money.

But, like I said, coins do not have a set in stone value, because your not always going to get paid what is set in stone.

However gold and silver is a different story.

There is nothing to argue about it being 14k if it does test to be 14k

There is nothing to argue about if you weighed in on high-precision scales, and it weighed 8.21 grams.

There is nothing to argue about that the refiner is going to pay the pawn shop $262.89 for it.

It's a precious metal. It HAS a set value. The refiner is not going to look at the ring and think "oh, it has a scratch, it's only worth $200".

The pawn shop can buy the ring for $200, and make $62.89 on the ring.

That's only 76% of melt. But still, it's a somewhat fair offer.

Now let's say they do this 5 times a day. They make on average $50 for each piece of gold they buy.

That's $250 a day.

31 days in a month (this one). There are 4 Sundays, they are closed on Sunday.

$250 a day they make on gold. That's 27 days in a month they made money on gold.

They made $6,750 that month.

However, that's just an example.

Let's say they buy 10 ounces of gold a day. That might sound like a lot, but remember, just one gold chain can weigh one ounce.

Let's just say all the gold they bought was 14k to make things easier.

They bought $9,958 in gold per day, for 28 days.

$278,824 worth of gold a month.

Remember the 76 percent? That's not the greatest payout, but it's still decent.

After all the gold they bought in a month....operating on a 22 percent margin, they still made over $61,000 dollars that month.

That's a pretty good income. A small pawn shop would probably not buy near as much gold, but like I said....you can survive on a 20 percent margin.

Summing this all up, gold and silver have set values. When you intentionally pay people very low amounts, when you know your going to get what the value is, that is robbery, clear and simple.
 
A buddy of mine went to a shop that stated on the radio that they pay %80. He called me with the quality and weight they said and their offer. It was only like 25 to30% is all they offered. He told them what the melt value was and they said that the market closed at a very low rate that day. I was watching the market and it closed 1.0? Higher. He walked out. I told him to use ARA.
 
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