With gold prices topping $1,900 (U.S.) an ounce people are flocking to cash-for-gold dealers to sell their jewellery. Should they?
With gold prices topping $1,800 (U.S.) an ounce for the first time earlier this month and continuing to rise — on Monday gold hit a record high of almost $1,900 — cash-for-gold dealers say their industry has never been busier.
“It really is non-stop,” said Russell “Cashman” Oliver, the man known for his brash television commercials who’s been in the business for 40 years. “People are coming in like crazy.”
Cash-for-gold shops have been sprouting up all over the city since 2009. Even high-end jewellers such as Birks have started buying gold from customers. But in an increasingly booming marketplace that has little regulation, customers selling gold can easily be short-changed .
To investigate how much the pricing spread can be, a Star reporter visited several cash-for-gold shops with 15 pieces of gold jewellery worth about $1,500 altogether, and received offers as low as $500 and as high as $1,600.
The jewellery—mostly 10 and 14-karat pieces with an 18-karat ring thrown in the mix—was appraised by Harold Weinstein Ltd., a leading jewellery appraiser. Vice-president Duncan Parker appraised each piece of jewellery by looking at the number of karats, then weighing them to determine their actual weight in gold. He said all gold buyers should do just that in order to offer a fair price.
The number of karats indicates the amount of actual gold, with 24-karat being pure gold. For example, a 14-karat ring is about 58 per cent gold. The rest is a metal alloy, usually mostly copper.
Industry watchdogs recommend people determine how much their gold is worth and shop around for multiple offers before selling it.
“You need to know who you’re dealing with. You need to find a trusted company,” said Jewellers Vigilance Canada executive director Phyllis Richard. “You need to know the price they are paying per gram … that way you can actually compare and shop around.”
But gold buyers don’t make it easy to price-shop. Most of them are reluctant to offer a price unless you first commit to selling to them on the spot.
“When somebody comes with 20 pieces, I’m not going to spend my time giving you an exact price, then have you go to the neighbours and sell it,” said Moshe Braunstein at Gold Masters on Bloor St.
As well, shop owners and staff usually examine jewellery in the back of their stores, so it’s unclear how they’re determining the price they’re willing to pay. Only Five Star Exchange, a pawnshop on Church St., did the same karat-count breakdown that Parker did in the front of the store. They offered $800.
Keith Perrin runs Goldsmart.ca, which buys jewellery at gold parties. He said consumers shouldn’t commit to sell to anyone until they have an actual offer.
“If you walk into the grocery store and you fill your cart with groceries, but you don’t know what anything’s going to cost you…who would do that?” he said. “And yet people walk into these places having no idea.”
Goldsmart, which largely operates on referrals, publishes the prices they pay for gold online. Their interactive pricing tool says they would pay about $990 for the 15 pieces.
Harold Weinstein used to mostly do appraisals for insurance purposes, Parker said. But in the last 18 months, people have wanted to sell their gold rather than insure it, he’s found.
“We’re getting way more requests from people who say, ‘I don’t need to know what it would cost me to buy it, I need to know what I can get for it.”
Parker said people can expect to receive about 50 to 75 per cent of the gold’s market value, depending on who they sell to. But some mail-in gold services—customers mail their gold in and later receive a cheque in return—pay only 20 per cent of the jewellery’s gold value.
Some jewellery buyers offer prices based on the lowest karat count of the bunch, instead of separating the pieces into different weights—this happened when the Star visited Gold Masters on Bloor St., which offered “at least $500.” Some other retailers start with egregiously low offers in hopes that the seller hasn’t done their research.
“I hate that kind of stuff. Just tell me what you’re really prepared to offer,” Parker said.
Parker said because fewer people are buying jewellery, most people buying gold are simply looking to have it melted down, though some pawnbrokers still try to re-sell it.
Gold buyers in Toronto are required to hold on to their gold for at least 15 days before melting them down, so those with sellers’ remorse still have time to reclaim their goods if they’re unhappy with the deal they made.
Here’s how the Star fared at various cash-for-gold outlets:
“Sometimes, I’ll go a little bit above the price of gold just to make the deal,” he said. “I can’t be silly about it, but I can certainly go five or 10 percent more. Sometimes you just know you want to get them as a customer.” – Russell “The Cashman” Oliver
Gold Masters Cash for Gold: at least $500
“If you came with one piece I would give you my time for free, but when you come with 20 pieces, I’m not going to check each one, give you my time and then have somebody else buy it…it’s not fair.” – Moshe Braunstein, co-owner
James McTamney and Co.: $500
“There are other guys that will offer more but their overheads are probably a lot less than mine,” he said. “We want to try to resell it, and the markets that we’re in right now are not the greatest.” – Chris Short, owner
Five Star Exchange: $800
“If you bargain with me of course I can pay a little bit more,” he said. “If I make $50 or $100, I’m happy.” – Five Star employee who declined to be named.
Harold the Jewellery Buyer: $1,000-$1,500
Bathurst St. and Lawrence Ave.
“We’ve been extremely busy, but we like being busy … I said gold could be at $2000 by the end of the year, but at the rate we’re going it could be $2000 at the end of the month.” –Harold “The Jewellery Buyer” Gerstel
Goldsmart.ca online calculator: $990
“If somebody would be crazy enough to (pay full value for gold), let them do it. But that simply isn’t going to happen,” he said. “This is a business…we do this in order to make a profit.” – Keith Perrin, co-owner