
We Buy Broken Gold - diodorus
http://laphamsquarterly.org/swindle-fraud/we-buy-broken-gold
======
sukilot
Note these are the same people who sell you your diamond engagement ring.
Every woman who insists on a ring like this is starting your marriage on a
lie. I got dragged into a store like this and paid thousands of dollars to a
racist asshole who told me how much smarter we were than those Christianss who
come in to buy jewelry for Christmas. I'll probably never really forgive my
wife for doing that (but she is wonderful in so many way, just a victim of
that propaganda like so many others), and God help me if my daughter doesn't
know better by the time she grows up.

~~~
facepalm
I don't think it's complete nonsense - buying something useless and expensive
is a very strong signal (like the peacocks tail). Buying something useful for
the money instead is not the same thing at all.

So while the diamond thing was created through advertising, it persists
because it has a real function. Maybe it could be replaced by something else,
but that would probably be something just as useless to demonstrate
commitment.

Still, if you can get by without the investment, good for you.

~~~
walls
Some serious diamond astroturfing going on in here. I've never seen anything
so obviously stupid defended so thoroughly on HN.

> Still, if you can get by without the investment, good for you.

I think you might be a little confused about the definition of 'investment'.

~~~
dang
> Some serious diamond astroturfing going on in here.

Accusations of astroturfing aren't allowed on HN. See
[https://news.ycombinator.com/item?id=9180466](https://news.ycombinator.com/item?id=9180466)
and the links there for why.

If you believe you see evidence of astroturfing on HN, please email it to us
instead: hn@ycombinator.com.

------
patio11
This is one of the reasons why poor people stay poor, because they typically
have a _wildly_ disproportionate value of their household's portfolio in
jewelry or gold (+), often explicitly because of the ability to use it as
savings or collateral. It happens to be an abominably bad vehicle for both.

\+ I'm trying to find the citation but I think the average value in the US for
households in the lowest wealth quintile is > 25% of their assets.

~~~
Frondo
Poor people stay poor because there are so many systems in place that squeeze
them, from usurious payday/title loan shops to rent-to-own places; and the
stuff poor people buy is never built to last. There's something to the Vimes
theory of socioeconomic unfairness.

The people who run these systems have free reign to squeeze the poor because
the poor have virtually no political power. (When was the last time you saw a
politician throw a 50c/plate dinner?)

Assigning any part of poverty to poor people's inability to assess gold seems
bafflingly detached from reality.

~~~
euroclydon
_Poor people stay poor because there are so many systems in place that squeeze
them, from usurious payday /title loan shops to rent-to-own places;_

There are also utility deposits, auto insurance, etc. But, there are a
tremendous amount of free resources available to poor people, from food stamps
and food kitchens to clothing. It could be easier for someone with nothing to
scrape together a few thousand bucks than someone in the middle class. If your
food is subsidized, your income tax rate is low, and your lifestyle costs are
low, e.g. not having to insure a home or expensive car, then you should be
able to save quickly.

So, I'd assert that: Impulsive people, those severely uneducated in their
economic alternatives, or those with little marketable skills stay poor
because they continue to make bad decisions.

~~~
lil_cain
You're assuming that poverty doesn't cause impulsiveness, and that poor people
don't face any costs that the middle classes don't.

Both of these assumptions are likely untrue. Poverty makes the cost of many
things higher. Banking is non-trivially more expensive. Public transport often
ends up more than the cost of a car, and that's assuming you can afford a
season ticket. Those in poverty often cannot. Rental is over a lifetime
normally more expensive than buying - and if you're in poverty, you can often
expect rental to include large deposits which you often won't get back.

For the impulsive thing, see
[http://yalepress.yale.edu/yupbooks/book.asp?isbn=97803001209...](http://yalepress.yale.edu/yupbooks/book.asp?isbn=9780300120905).
Essentially if you're poor, there's a good chance that your marginal utility
curve is upward, rather than downward sloping. Which rewards impulsive
behavior in a way that is not the case for those who meet the normal standard
of living in their society.

------
sspiff
> Why would a wealthy diamond merchant in a three-thousand-dollar suit want to
> cheat me out of a hundred bucks’ worth of gold?

How else do you become wealthy and buy $3000 suits?

~~~
_yosefk
There are other methods, but regardless, it doesn't explain why keep doing it
once you got that $3K suit. A relevant question for someone who got there
using other methods, BTW. I think the answer is in the power of habits coupled
with an unlimited and growing desire for money.

~~~
sspiff
Like power, money is addictive. People who got their power or wealth through
immoral means often don't stop once they have "enough".

~~~
sobkas
There is no "enough", when you want everything.

------
mherdeg
Hmm. How does this description of a swindle jive with the amount of gold that
is in Apple's 18 karat gold? [http://leancrew.com/all-this/2015/03/apple-
gold/](http://leancrew.com/all-this/2015/03/apple-gold/)

"“Now we multiply that by fourteen for fourteen karat and divide it by twenty-
four for twenty-four karat, which is what it would be if it were 100 percent
gold,” you explain to the seller. “That gives us the price for your fourteen-
karat gold. Multiply that by fifteen, for fifteen grams. Now, fourteen karat
is 56 percent gold and 44 percent base metal, which burns off at the smelter,
so we multiply that by 0.56.

…

The real key to this scam is that you’ve deducted for the impurity of fourteen
karat not once but twice: first, when you calculated the per-gram price and
again when you “deduct for the base metal."

~~~
jonah
Supposedly they're not using ceramic-matrix gold in the Edition, but rather a
more traditional alloy.[1]

[1] [http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-
wa...](http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-watch-is-
made)

------
PhoenixWright
Kind of a tangent but I looked up one of the buyers in the story. Incredibly
fascinating guy:
[http://en.m.wikipedia.org/wiki/Armand_Hammer](http://en.m.wikipedia.org/wiki/Armand_Hammer)

~~~
igonvalue
Who also happens to be the great-grandfather of Armie Hammer, who played the
Winklevoss twins in _The Social Network_.

------
marincounty
I am not a fan of government oversite, but I wouldn't mind putting a few
regulations on Precious metal dealers in the United States?

I would like to see some standards in weighing the metals, and maybe minimum
amounts required per gram of metal?(tied to market values)

The fine for breaking the law would be just enough so the average shop would
think twice about ripping off the public.

No, I wouldn't expect the FBI to run regular stings, but if shop owners knew
they might have a federal agent on the other side of the counter they just
might not be such horrid individuals?

I rember being swindled over some silver when I was younger, and really
desperate. I still think about it whenever I pass a pawn shop, or gold buyer.

(actually, I think some states/counties already have some laws regarding
weights & measures, but precious metal buyers never get caught? I know some
larger recyclers are inspected, but these little places open 24 hrs/day get
way with absolute thievery? Maybe they think every sale is stolen? Or, they
just don't care?)

~~~
SteveGerencser
The prices are already out there for anyone that wants to look. $1150 spot,
28.35g per ounce = $40.56 per gram. Avg 2.5g for a woman's solitaire ring =
$101.40 for pure gold.

14k Gold = (14/24) = $59.15 in gold. -25% for the store and the refiner and
you are at $44.36 to buy that 14k gold band.

I just looked up that same ring on a wholesaler website and retail is $245.49
plus shipping to get it to the store.

That's how a ring you paid up to $250 for is "worth" $45 when you try to sell
it for scrap. No one tried to screw anyone, it's just math.

~~~
shutupalready
> 28.35g per ounce

No, it's 31.10g per ounce. The price of gold is always quoted as _troy_
ounces[1]. You used the figure for the avoirdupois ounce which is used for
anything that isn't a precious metal[2].

Though it doesn't really affect the argument you're making since 28.35g and
31.10g are pretty close, but how do you not know about troy ounces as a
"former jeweler" (as it says in your profile)?

That's like a doctor saying body temperature is 105F or 40C.

[1]
[http://en.wikipedia.org/wiki/Troy_ounce](http://en.wikipedia.org/wiki/Troy_ounce)

[2]
[http://en.wikipedia.org/wiki/Avoirdupois](http://en.wikipedia.org/wiki/Avoirdupois)

~~~
SteveGerencser
I do know - but customers don't for the most part. So I just used standard and
didn't worry about the pennies. It's a lot easier than trying to explain to
them that there are two kinds of ounces.

~~~
shutupalready
> _but customers don 't for the most part. It's a lot easier than trying to
> explain to them that there are two kinds of ounces_

It's that kind of stuff that makes people think that jewelers and gold buyers
are crooked. Some customers--perhaps only a minority-- _do know_ the
difference, and they will become suspicious and tell others.

Whenever a professional of any kind (car mechanic, doctor, tax preparer, vet)
tells me something that is contrary to a known basic fact, then alarm bells go
off in my head. I start thinking that this guy is either incompetent or trying
to cheat or trick me in some way, and I will tell friends to watch out.
Fortunately it doesn't happen all the time. I generally trust doctors for
example.

In one of your other comments, you said, _There are a staggering number of
honest jewelers and gold buyers out there. But stories about obviously crooked
people are what makes everyone say "see, these guys are ALL crooks"._

Maybe the jewelers and gold buyers--like used car salesmen--have gotten the
reputation they deserve.

~~~
SteveGerencser
And this is why I generally avoid these discussions. Someone will ALWAYS find
a way to say you are wrong even when you are making an error in their favor.
And for the very very few people that do know the difference, when you explain
why you do it the way you do, and they will get more money for it, they tend
to appreciate it. Not all, but most.

------
nosuchthing
Reminds me of when Bank of America's "Financial Analysts" announced Bitcoin
was worth $1300 [1]... almost immediately after China announced the ban on
Chinese financial institutions using BTC [2].

[1]
[http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin...](http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin-
gets-valued-bank-of-america-puts-a-price-on-the-virtual-tender/)

[2] [http://www.bloomberg.com/news/articles/2013-12-05/china-s-
pb...](http://www.bloomberg.com/news/articles/2013-12-05/china-s-pboc-bans-
financial-companies-from-bitcoin-transactions)

------
stevewilhelm
If you want an inexpensive, liquid, vehicle for investing in gold look at SPDR
Gold Shares.
[http://www.spdrgoldshares.com/usa/](http://www.spdrgoldshares.com/usa/)

