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Ethics of Gold Dealers Malleable to High Prices


The high price of gold is making some metal merchants into 24-karat cheats, officials say.

Nearly three quarters of dealers visited in an undercover sting operation in New York tried cheating consumers out of their gold trinkets, the city  announced today. And analysts say such fraud is indicative of a nationwide problem that’s only likely to get worse.

New York Department of Consumer Affairs Commissioner Jonathan Mintz says the latest undercover investigation revealed “deceptive weighing practices and widely variable pricing valuations of the same pieces of gold.” After conducting over 450 inspections and nearly two dozen secret stings, the department issued violations to a 74% of gold buyers inspected.

Some gold merchants offered just 30% of the value of the gold: Using three pieces of gold jewelry that were independently appraised at $590, the undercover agents received valuations $175 to $450. What’s more, the daily rate of gold was often not disclosed by most merchants and some 70% did not separate the three gold items when they were being weighed.

With gold up another 14% this year, such stings are unlikely to stop what is a nationwide problem, analysts say. “When there are bubbles the final phase usually involves some sort of fraud or less that ethical dealings by market participants that want to keep the party going,” says Paul Swinand, equity analyst with Morningstar. Swinand says that there has been a “commodities bubble” in the past two years.

Consumers should only sell their gold if they have to and, in that case, receive a significant markup on the original purchase price. “If you bought a gold bracelet 10 years ago when gold was $300 an ounce you should get five times that,” says Peter Schiff, president of Euro Pacific Capital, in Westport, Conn. “Gold is going to have another year of beating the stock market. My advice: hold onto it.”

To be sure, there are many honest merchants out there, Schiff says. Plus, a large number of consumers are in fact choosing to hold onto their gold: The global volume in gold recycling is broadly flat in the first nine months of this year, according to Morningstar analyst Joung Park. Park says people are most likely keeping emergency reserves for a rainy day, and will only sell the most sentimental pieces if they have to.

Here are our experts’ tips for selling gold:

1 Only sell to a licensed secondhand dealer — find more information at the gold.org.

2 The buyer must tell consumers the weight and quality (measured in karats).

3 Beware of “cash for gold” parties – especially if hosted in a stranger’s home.

4 Gold buyers are required by law to check I.D. Don’t buy from those who don’t.

5 “We Buy Gold” TV ads cost money, so prices may be lower. See GoldScams.com.

For buying gold, read more Pay Dirt tips here.


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    • By WebOsPublisher

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      Tool Mentors >
      Rational Rose Tool Set >
      Rational Rose Tool Mentors >
      Comparing and Merging Rational Rose Models Using Model Integrator
      Tool Mentor:
      Comparing and Merging Rational Rose Models Using Model Integrator
      This tool mentor describes how to use the Model Integrator to compare and
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      Activity: Integrate System
      This tool mentor is applicable for all operating systems supported by
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      © 1987 – 2001 Rational Software Corporation
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    • And that is really informative!!!

      I am really glad that this article made me aware that there are a lot of people who would be trying to fool gold sellers!

      i hope many of s would be able to read this for awareness!

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