When you work as a gold buyer, you see different types of scams played on people, including other gold buyers. I was taken in by a scam involving bullion coins when I was a gold buyer. As a person who’s consumed true crime since the min-Nineties, I remember the scams very well. Like many scams throughout history, the scammer appealed to the victims greed, ignorance, or vanity. Given that I lasted less than one year as a gold buyer, I only encountered a few interesting scams, some more complicated than others.
The least complicated scam was a man who sold a vehicle and was paid in gold bars. Now, as a person who worked briefly as a gold buyer, NEVER ACCEPT PAYMENT IN ANYTHING OTHER THAN SECURE METHODS LIKE BANK TRANSFERS. Just don’t. An important lesson: always get paid through a secure method. Being paid in any form of bullion (gold, silver, platinum, palladium) requires a lot more thinking and risk. Thinking: how do you know the bullion is real, not fake, and it’s purity. Risk: even if the bullion is real, selling them to a gold buyer means you don’t get the same amount of money that you agreed to be paid.
In this scam, which I encountered on my literal last day of working as a gold buyer, involved a man who was paid in gold bars that he wasn’t sure were real and he felt he may have been scammed. We only spoke over the phone and he mentioned he had “a bad feeling” about the people who paid him in gold bars. At that point, early into our conversation, I was 90% sure he was a victim of a scam and that his instincts were correct.
I don’t know any details as to how the victim and the scammers arrived at this deal to buy a car and pay for it in gold bars. I wish I knew what happened. I wonder if the victim assumed there’s no difference between being paid $5000 in cash versus $5000 in gold bars. There are differences and to make a long story short, secure payments like cash are much easier. Payments in bullion require a lot more work and math.
If you’ve read thus far, it is vitally important you verify the authenticity of the bullion. Are they real precious metals or fake? Even if the bullion have markings or packaging that looks official, such as PAMP Suisse and Johnson-Matthey, they could be fake. If the bullion has no markings, you must get them verified before accepting the bars. If you tell a potential buyer you want the bars verified, make sure you and the buyer take the bars to a reputable precious metals buyer for verification. If you are being scammed this is the point where the scam might fall apart or the scammer will try a different tactic on you.
You need to verify the purity and weight of each bar. Purity and weight is directly proportional to the value. Some bars are 999.9% pure gold while others are less, like Liberty Eagles are 90%. Yay, more mathing!
You do the math as to how much your real gold bars are potentially worth according to the market price. Each day, the market price is different. If you “do the math” every day you’ll see differences in value. At this point, you learn that the amount you agreed to be paid and the amount you’ll get when you “cash in” the gold bars differs every day. You could delay “cashing in” by waiting for the market price to dramatically increase. I don’t recommend this unless you know the purity and weight of your bullion. This is why secure payments like cash are so much easier.
Why make your life more complicated doing all this math? It’s possible that on a given day you check the market price and your gold bars are worth more than what you agreed as payment, buuuuut you haven’t considered what the payout percentage will be when you take the bullion to a reputable precious metals buyer.
Pawn shops and gold/precious metal buyers have payout percentages. These percentages don’t vary wildly between stores, but some stores advertise they have higher payouts. One % is strictly for bullion and is around 98% of the market price. The other is the scrap value % which is around 74-76% of the market price. Time for more mathing!
Hypothetically, you have real precious metal bullion that the market says is worth $100, that means if you sell the bullion to a gold buyer or pawn shop they’ll pay you $98. If you have precious metal that’s not bullion, like a pile of gold jewelry or an bar of unknown purity, you’ll get paid between $74-76 because precious metals that aren’t bullion are bought at scrap value. In short, precious metals that are not in bullion form are bought at scrap value. Jewelry = scrap value. Melted bar of gold with no official markings = scrap value.
Another detail to keep in mind is do not turn bullion into anything else, like a piece of jewelry. As a buyer, I saw more than one example of people who turned bullion into necklaces, pendants, and bracelets. This is bad when you try selling that bullion because we buy ALL jewelry at scrap value. If you turn bullion into jewelry, the bullion loses value because we pay scrap value for it.
As a side note, precious metal buyers who purchase “bullion jewelry” will take the jewelry apart to sell the bullion as bullion. When we do this, the bullion we sell will have a small mark-up (maybe less than 10%) applied like any product sold in retail stores. Not only could you lose money turning bullion into jewelry, the buyers will make a profit off your bullion by selling it with a mark-up.
Back to my customer slash scam victim. It was my final day working as a precious metals buyer, so I never spoke to him again. After he told me the bars had no markings, I told him the only way to verify they’re real is to bring them to us or another precious metals buyer. I told him the bars could be real because people do melt down precious metals to form bars or other shapes, but the purity is unknown. We can verify and figure out the purity and value on the customers behalf. Also, a reputable precious metals buyer can educate you, teach you what to look for and help you avoid scams. Even though pawn shops and gold buyers can be sketchy and underhanded, we hate seeing people victimized by scammers.
I wish I saw the bars because I want to know if they looked realistic or fake. I’ve seen melted bars that were worth $40,000-$50K that appeared dirty, crusty, and orange. Impure precious metals can look very different from pure ones because impurities alter the color. A bar of gold can look so gross and nasty it’s actually funny.
TL:DR please, I beg of you, always stick to secure payments like cash and bank transfers. Never accept precious metal bullion as a payment because it’s too much mathing. Cash is king… unless it’s counterfeit.