All that glitters may not be cash

By Megan Woolhouse
Globe Staff / March 5, 2010

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As the price of gold hovers near historic highs of more than $1,000 an ounce, consumers have faced a barrage of flashy billboards, glaring electronic signs, and high-octane television advertisements promising they can make a mint by trading in unwanted jewelry.

But what the ads don’t say takes the shine off gold buyers’ pitches.

“People think there’s a big cash grab waiting for them and that’s simply not the case,’’ said Ben Popken, comanaging editor of, owned by the publisher of Consumer Reports. “It’s a really bad deal for consumers.’’

To find out just how much gold jewelry might fetch, the Globe purchased three pairs of identical 14-karat gold hoop earrings at a local department store; each pair had a retail price of $160, and a sale price of $62.

First, an independent gold coin dealer - Miles Coggan, a rare coin and precious metals specialist who co-owns JJ Teaparty in Downtown Crossing - was asked to estimate the actual value of the gold in the earrings. His finding: $14.65 a pair.

The Globe then sent a pair of earrings to each of two mail-in cash-for-gold companies, and awaited a check for their value. The third pair was taken to a jewelry shop and, later, to a mall kiosk that buys jewelry.

So what did the earrings fetch on the gold buying market? Between $3 and $7.

Cash4Gold, a mail-in dealer in Pompano Beach, Fla., offered the smallest amount, sending a check for $3.25, or 78 percent less than the value established by Coggan.

A clerk at Nasr Jewelers at the Hanover Mall offered to pay “about $6.’’ Gold Rush, a kiosk at South Shore Plaza in Braintree, set a price of $6.76 - although Gold Rush chief executive Rob Guthrie later disputed the figure’s accuracy, saying “that margin doesn’t sound right.’’

“We offer customers a price, and if they’re not happy with the price, they say, ‘No thanks’ and walk away,’’ Guthrie said. “We don’t pressure people. It’s a very low-stress transaction, it’s basically a trading post.’’

The fourth company, Gold Stash for Cash, did not sent a payment more than a month after the earrings were mailed to it in Gilbert, Ariz. A representative said a check for $6.11 had been sent in February. She offered to cancel it and issue a new one.

Popken said such outcomes are typical: “The payout is surprising for most people because the ads are full of people saying, ‘I went on the vacation of a lifetime thanks to Cash4Gold!’ ’’

He researched pricing by gold dealers after receiving complaints about low payouts and found that Cash4Gold usually pays 11 to 29 percent of the actual value of jewelry.

While many companies deal in cash for gold - including Dollars4Gold, GoldKit, and GoldPaq - Cash4Gold is probably the best known, thanks to its massive nationwide advertising campaign. The company bought a 30-second Super Bowl ad in 2009 featuring MC Hammer and the late Ed McMahon lightheartedly trading in their gold.

But many people have not been amused by Cash4Gold. The Better Business Bureau branch in South Florida said it has received hundreds of complaints about the company. The Florida attorney general’s office is investigating customer claims that they received pennies for gold and could not get their jewelry returned when requested.

Jeff Aronson, the chief executive of Cash4Gold, said his company performs a vital service and complaints are relatively few, considering that the company has processed nearly a million transactions. He downplayed the Florida attorney general’s investigation, saying it was a routine “inquiry.’’

“We deal extremely closely with the Florida AG,’’ Aronson said. “We’re dealing with them and cooperating with them fully.’’

Aronson said the Cash4Gold payout for the earrings sent by the Globe may have been lower because his company pays the costs of mail transactions, which offers customers confidentiality and convenience.

Consumers often confuse the price they pay for jewelry with its actual value, he added, unaware of the steep mark-up for the craftsmanship that goes into a piece. Some “don’t have realistic expectations of what they’re sending in,’’ Aronson said.

When the Globe attempted to sell its gold earrings, it was a challenge to find out how much each company would pay per gram or ounce. None advertised rates or answered direct questions about pricing structures.

Instead, dealers said they measured gold by the “pennyweight,’’ an obscure unit of measurement primarily only used by jewelers. Gold Rush and the clerk at Nasr Jewelers would not disclose what they paid per pennyweight, which fluctuates with the price of gold. At Nasr, the employee simply weighed the earrings and made an offer. Subsequent phone calls seeking comment from Nasr executives were not returned. The clerk at the Gold Rush kiosk said he could only pay only what his computer program authorized.

The mail-in companies also do not disclose how much they pay per pennyweight in advertisements or in the envelopes they send to customers to collect gold.

On the day of the earrings transaction last month, Cash4Gold was paying $6.51 per pennyweight, according to a supervisor, which the Globe calculated to be about $10 a gram. For most of February, the fair market value of 24-karat gold - its purest form - was about $36 a gram. A gram of 14-karat gold was worth about $20 because it is 58 percent gold and 42 percent other metals.

Many Cash4Gold complaints made in Florida came from customers who said they did not receive any money for their jewelry. Joanne Start, 68, of Brookfield, said she ordered an envelope from Gold4Cash and filled it with some unwanted necklaces and bracelets in 2008 after seeing a TV ad. Start said Cash4Gold paid her $7 within a week, so she sent more necklaces, bracelets and some costume jewelry she wasn’t sure contained gold.

After several weeks and many phone calls and e-mails, she said, a customer service representative called to say Cash4Gold never received her envelope.

“I got angry,’’ Start said.

Start said Cash4Gold eventually found the packet and mailed her a check for $30, along with an apology. But Start believes her jewelry was worth more.

Michael Galvin, a spokesman for the Better Business Bureau of Southeast Florida and the Caribbean, said the agency has received more than 325 complaints about Cash4Gold since June 2007, including many like Start’s.

The nonprofit bureau advises people who want to sell gold jewelry to take it to a reputable local dealer for an appraisal before mailing it or selling it at a mall.

Megan Woolhouse can be reached at

Correction: Because of a reporting error, this story about turning in gold jewelry for cash misstated the number of transactions conducted by Cash4Gold. The company has processed nearly a million transactions since 2007. A sentence was also omitted from the story. At the time of the Globe’s transaction, Cash4Gold was paying $6.51 per pennyweight for 14-karat gold, which equals a payout of about $10 a gram. The full market value of a gram of 14-karat gold was about $20.


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