At Buckeye Gold Company, honesty and transparency are very important. So is educating our customers. So here are five very common lies that we see in the ‘We Buy Gold’ industry, and the truth behind them.
1. We pay (X)% more than our competitors.
Many precious metal dealers claim that they pay a certain percentage more than their competitors (often in the 30% range). If you know how the gold buying industry works, you can figure out that this statement doesn’t make much sense. If a shop wants to pay competitive prices, it should already be paying you 70% or more of the piece’s precious metal value. If one shop is paying 30% more than that, then they are paying 100% of what the piece is worth and will never turn a profit. In the world of business, that means it is an impossible promise to live up to, and is never true.
2. We pay by the gram and not the pennyweight, so you get more.
This is a blatantly misleading statement that, at first glance, seems to makes sense, but doesn’t hold up to scrutiny. The theory is this: If you bring me in a chain, and I tell you that it weighs 10 pennyweights, you can take it to another shop and they will tell you it weighs 15 grams (approximately). Therefore, you are getting more weight for your piece and, supposedly, more money. But this isn’t actually true. While your piece DOES weigh a higher number of grams, each gram is worth less than a pennyweight. The offer will always work out to be the same either way. Let me give you another example. Let’s say that instead of selling jewelry, you are selling a ruler. I tell you that the ruler is 1 foot long, and the guy down the street says, “Its 12 inches long, and I pay by the inch, so you get more.” But he’s paying you $1 an inch and I’m paying you $12 a foot. Who is paying more? We are both paying the same.
3. If you don’t take my offer now, gold could drop and my offer will too.
This is a high pressure sales tactic that you should never fall for. First of all, gold is just as likely to go up as it is to go down. There have only been a handful of times in the last 15 years that gold has dropped significantly over the course of a few days. Even at its more volatile times, gold seldom moves more than 5% in a day. If your gold buyer is honest and cares about his customer, he should still be willing to honor his original price. Even if he doesn’t honor it, the price shouldn’t change that dramatically.
4. This isn’t real, but I’ll pay you (X) amount for it.
This one raises a simple question. If it isn’t real, why are you paying me anything for it? Of course, there are instances where it isn’t that simple. You might have a diamond ring that you are told is real gold with a fake diamond, but they still want to buy the piece for its gold. If this happens, ask to see the diamond test that shows it is fake, and ask them to explain it to you. Diamond testers are very simple machines, and it should be easy for them to explain the results to you. Likewise, someone might tell you a coin is counterfeit, but is still made of gold or silver. This rarely happens, but it does happen. If that is the case, ask them to explain what makes them believe it is counterfeit. Then, do your own research to confirm that what they are telling you is true.
5. Gold prices will be going up/down in the future.
There is a saying in our industry. “Only two people understand why the price of gold moves, and they both disagree.” The point is, no one knows what gold will do, even the experts. It is extremely volatile and has defied every explanation for why it moves.