

Ask HN: What's the deal with "Cash for Gold"? - mikeknoop

I am sure you have seen these infomercials on TV lately. They claim that if you send them your gold jewelry, they will send you cash.<p>Now, because these are TV commercials I am going to assume it's not an outright scam -- that they actually do send you cash for some value times the weight of the gold you submitted.<p>But what's their business model? Are they simply sending you <i>less</i> than the actual worth of the gold by weight? Are they somehow betting against/for the gold market? I am curious to hear your thoughts.
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byoung2
You can Google "cash for gold scam" to hear the horror stories, but basically
here's how it works:

You go to their website or call and request a prepaid envelope.

Once you receive the envelope, you package your gold and send it off to them.
Let's assume that your gold is really worth $200.

They receive it and appraise it, sending you a check for an amount they deem
fair. Sometimes as low as 10% of the fair market value. In your case, $20.

You have a set amount of time (I believe 5-7 business days) to either accept
this amount by cashing the check or returning it and requesting that they
return your jewelry. Some people claim that this time starts from the date of
issuance of the check, not the date you received it. Others report that their
jewelry cannot be located, so they have no choice to accept the small payment.

Those who insist that they will not accept the small payment get a call from a
"senior gold appraiser" who, upon further review, offers them a higher amount,
sometimes double the original payment (the $20 magically becomes $40). People
claiming to be former employees claim that they get a commission based on how
little they can offer you to get you to agree.

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JacobAldridge
Check our Rob Cockerham's exploration - he likes tackling these sort of things
(Dyson and Herbalife cop much larger pastings if you explore the site
further).

<http://www.cockeyed.com/citizen/goldkit/cheat.shtml>

<http://www.cockeyed.com/citizen/goldkit/reputation.shtml>

<http://www.cockeyed.com/citizen/goldkit/gold_kit.shtml>

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dwwoelfel
"Dyson and Herbalife cop much larger pastings if you explore the site further"

I think you mean Kirby, not Dyson. Here's a link:
<http://www.cockeyed.com/citizen/kirby/kirby.html>

~~~
JacobAldridge
You are correct - my bad memory!

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fexl
If they're only offering 10% of the spot value, then by all means stay away.
But if they're offering 50% of spot, that sounds about right for a retail
operation like that. They have a lot of overhead to cover, including smelting,
fulfillment, marketing, salaries, and other expenses.

That said, from what I'm reading at cockeyed.com, it sounds like they're not
using a professional, objective formula for their bids, but instead playing
silly games. Why does it not surprise me that they're in Florida?

The "cambios de oro" in South America offer roughly 50% of spot value. They
pay you for the jewelry, then mark it up a bit and sell it off to a smelter.

If you come in with fine gold, e.g. a Canadian Maple Leaf, obviously they
offer a lot more. They'll try to bid 10% under spot, but you should try to
hold out for 5% under spot.

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cperciva
_Are they simply sending you less than the actual worth of the gold by
weight?_

Yes. Often dramatically less -- I've seen reports of people being offered
under half of the gold value of jewelry.

These companies prey on the stupid, that's all.

