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Sixty Dollars for a $10,000 Gold Coin? Sadly, Yes.
I think we'd all like to believe that in tough times, everyone pulls together to help each other. The good news is that many people are doing just that during this down economy. Conversely, some find this fertile ground to take advantage of people in need.
Sure, there are the usual home repair, credit card and Internet scams. As technology becomes more advanced, so do the ways thieves connive to wrest money from gullible or trusting consumers.
Today, a particularly topical method of cheating unsuspecting "patrons" is the traveling gold buying companies. I've written about the companies who try to cajole individuals into mailing their "broken or unwanted" jewelry for quick payments. It goes without saying I would NEVER advise just dropping precious metals into an envelope to be delivered to a faceless person who may or may not be honest. But, what of face-to-face encounters?
It's common to see advertisements for gold buyers coming to a local hotel to "pay top dollar" for your gold. They are there for a day or so and then gone. Do they pay fair market value? Some do. Many don't. This is especially true in smaller towns where there are few, if any, local coin dealers.
In larger cities, many TV stations have made an effort to go "undercover" by taking a fixed amount of gold coins or jewelry to buyers to determine who pays the most. Not surprisingly, the one or two dealers that do soon see sellers lined up around the block. In smaller communities, some news sources have done their own legwork.
The Examiner, a newspaper in Beaumont, Texas, investigated several traveling gold buying companies at hotels in Alabama, Georgia, Louisiana, Mississippi and Texas. They soon learned that the promises of big cash payouts were often far from fact. In some cases, the money offered was just one-fourth or less of the actual value.
Jerry Jordan, news editor of The Examiner, also found that some of the traveling buyers used several assumed names. Moreover, scales used by some buyers to weigh gold may be entirely inaccurate or not lawfully registered, resulting in substantially lower weights and payouts.
According to Jordan, the newspaper brought coins, scrap gold and bullion with a value of over $43,000 to one hotel buyer.
Certified coins are far-and-away ones easiest to determine actual value. Dealers are eager to have the chance to purchase most high-grade certified coins. Moreover, price sheets for graded and certified coins are printed weekly, so the values are widely known. So much more the pity, considering one potential sale nightmare.
In that instance, an out-of-town coin/gold buyer offered only $60 for a rare 1925 $2.50 gold coin valued at $10,000. To make matters even worse, that price was just a fraction of the coin's gold bullion melt value.
The bottom line and obvious lesson from this is that prospective sellers MUST do their homework. If you don't know what you have, find out from reputable sources before any sale. In the age of the Internet, this can be done most anywhere. Better still, this adage has never been truer: "If you don't know your coins know your dealer." By shopping around, sellers will often find the difference between what they get and what they could have received as hundreds or thousands of dollars.
Of course, these experiences aren't meant to be a condemnation of all gold buyers, be they in a hotel or a permanent storefront. Rather, it's a suggestion to do a little homework on both what you have and with whom you're dealing. When it comes to coins, the best bet it to do business with a dealer that's a member of the Professional Numismatists Guild (PNG). PNG member dealers are required to adhere to a strict code of ethics in the buying and selling of coins. If there's a dispute, the PNG organization can intervene to assist with a satisfactory outcome.
So, the next time you see an ad proclaiming "NO ONE PAYS MORE," consider it a two-way street. After all, that buyer really may pay more. On the other hand, you may be the one that pays dearly by all but giving your valuables away.
Editor's Note: A visual of the certified 1925 $2.50 gold coin valued at $10,000 has been sent with this column. Photo courtesy of Universal Coin & Bullion.
To find out more about Peter Rexford and to read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
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