Currently resting around $1,120 an ounce, gold continues to be a highly traded commodity, especially since the economy started it’s decline. This means that if you own a pound of gold (16oz.), you are sitting on close to an $18,000 investment. If you’re rich enough to own a bar of gold (London Delivery Goods Bars are the most common gold bars weighing 400 oz.) you have almost $500,000 at your disposal. But just how would you go about selling your gold? You can’t walk into the bank with a bar of gold and say “Give me $448,000 in cash.” And unless you have a crazy salesman, you won’t be able to pay for anything with your gold, either. Eventually you are going to want to liquidate your gold into cash. And that brings us to Cash4Gold.
This probably isn’t your first introduction to the Cash4Gold idea. The company has done a lot of print and radio advertising, as well as its fair share of commercials. Strangely enough, the company decided on two well known celebrities for its spokespeople, MC Hammer and the late, great, Ed McMahon, both of whom were well know for mismanaging their finances. Ironic perhaps, but the company is doing very well financially, which has spawned a lot of competitors with similar names to the gold buying space.
So how does the whole Cash4Gold process work? Well, the first thing it takes is for a consumer to have gold in their possession that they want to turn into cash. With gold worth so much these days, more and more people are looking to get rid of gold, so I suppose someone had to fill the demand, enter Cash4Gold. By giving the Cash4Gold team a call or filling out a form online, they will kindly send you their “refiners kit” at no charge to you. You are then required to mail in your gold using the prepaid envelope they have provided. Stay with me now.
Once your gold is received, it is evaluated and appraised by Cash4Gold experts. According to their website, Cash4Gold will first take a picture of the items you’ve sent in, then put the items through three individual tests. First, the gold is tested electronically to ensure it’s quality (24 karat vs. 18 karat for example). If the quality of the gold is different then what you suggest in your refiners kit, it is put through a second test called a “scratch test” where the gold is given a small drop of acid solution then scratched with a needle to find the accurate gold quality. Finally, your gold is put through an X-Ray fluorescence scan. This scan can determine the amount of gold you actually have while detecting other elements like copper, zinc and lead. (Just to name a few)
Once the testing is complete, Cash4Gold will determine it’s value, based on the current price of gold and what the testing has revealed. A check is issued the same day. Should you not be happy with the check that you receive in the mail, Cash4Gold offers a 12 day 100% guarantee, so mail your check back and all of your items will be returned. Either your happy with the cash, or you want your items back. On paper, it sounds like there can be no dissatisfied customer right? On the contrary.
Whenever you trust only one source, you are taking a chance by not getting the most accurate of information. A quick internet search will tell you there isn’t a shortage of angry Cash4Gold customers, but why exactly are they upset? Is it because they aren’t happy with the appraised value of their gold, or is something else going on here?
The most glaring piece of evidence that Cash4Gold has going against itself is an article written by the Consumerist just over a year ago. Usually, an article written with personal opinion from a blogging website isn’t worth a ton of trouble, however, this article continues to be one glaring red “F” on Cash4Gold’s permanent record. You see, not only was it written by the Consumerist, one of the largest finance blogs on the web today, but it’s source was a former employee of Cash4Gold who had a few bad things to say.
All in all, ten total points were made in the article against Cash4Gold, most of which contradict the simplicity of everything I’ve explained in the pitch above. Some of the highlights of that article are:
“Your jewelry gets appraised by hand, a magnifying glass, a plastic container, a small weight pad, and a bottle of ORANGISH fluid, which your items are then determined a value for. Not million dollar equipment or specially trained jewelry experts.”
“There have been times when we have received your package and MISPLACED or LOST it at the facility. We CLAIM to not have received the items and even try to convince you that it was lost in the hands of USPS.”
“If you only want the items that we do not find of any value back, you have to pay 10.00 shipping and handling fee to have your own items returned, which varies.”
To be objective, most of the points detail the terrible business practice of Cash4Gold, meaning the shoddy customer service, the delays in getting your check and the real product guarantee they provide. For me, the most important detail of Cash4Gold is if they pay me a fair price. To another source!
Just over one year ago, the Consumer Reports team decided they were going to give Cash4Gold a shot. A lot of negative press had surrounded the company, which offered an opportunity to see if consumers claims were justified, and Consumer Reports decided to “cash in” (pun very much intended). Twenty-four identical gold pendants and chains were purchased from a jewelry story for $175 a piece and valued to have around $70 worth of melted down gold by a few highly qualified appraisers. The pendants and chains were then sent off to organizations like Cash4Gold.com, GoldKit, GoldPaq and even a pawn shop or two. I bet you know how this is going to turn out.
The results of the “investigation” were sadly expected. Cash4Gold sent back checks that ranged from $7.60 – $12.72. GoldKit and GoldPaq each sent back checks ranging from $7.81 – $20.59. And the local pawn shops paid between $25-$50 for each piece, making them a clear winner in the process. Sending your gold to Cash4Gold, in this instance, meant that you were getting 10%-15% of the actual appraised price. Tisk tisk.
So is Cash4Gold a scam? In my personal opinion, no, not by definition. The terms of the deal are clear and no where does Cash4Gold say that you are going to be satisfied with the amount they are willing to pay. Based on the Consumer Reports article, there are certainly instances where Cash4Gold is willing to pay what can only be described as “the low end” of what the gold is worth, but to consider this a scam just isn’t true.
While it’s nice to know that Cash4Gold isn’t a scam, it still is a company that should be avoided at all costs. I would conjecture that the reason the company is able to advertise during the Superbowl and continue its media push is because it undervalues your gold by so much. Operating on more realistic margins may bring in more business and better reviews, but I have no doubt Cash4Gold is secure with its current position. Similar to payday loan companies, Cash4Gold caters to those who are desperate for cash. So if Cash4Gold is not an option to sell your gold too, who is?
If you have jewelry that you are looking to sell, the last thing you will want to do is sell it for the scrap price. One of the reasons Cash4Gold pays a small amount for your jewelry is because it is only interested in the gold. Once you’ve melted down a bracelet for example, you’re usually left with a little gold and a lot of everything else. To keep the best value, have your jewelry appraised by a local outlet or independent appraiser and try to sell it on your own. Hit the jewelry stores and pawn shops in your area and consider selling it at an auction, perhaps even eBay. It may take a little more time than mailing it in to Cash4Gold, but if you really have something of value, there is no reason to risk being another dissatisfied Cash4Gold customer.
Note: This article was featured in the Carnival of Personal Finance hosted by CreditCards.com.