if there are so many “cash for gold” places nowadays, chances are that somebody is actually selling them gold. So, why do these somebody sell to businesses when they could instead sell to people who are buying gold in response to late night tv ads and so on? From the buyer’s standpoint this sounds like an especially good idea since the government is not going to track such private cash based transactions. So, the buyers could pay extra, plus they have no managerial and resale overhead to deal with. They are not out to make a buck, they are out to stockpile gold (not sure if there is anything wrong or right with that, frankly).
I do recognize that the typical individual buyer might not be competent to do gold quality examination, but then they could just take it to a professional and pay the fee, right? In fact, why don’t such jeweler professionals advertise for people to arrange for gold sales transactions using their quality certification services?
That’s not the reason people buy/ sell gold. In fact, I doubt that these circles overlap. People sell gold because it’s old jewelery or teeth or similar, and they want the money.
People who are dumb enough to fall for the ads “send in your gold and we will give you money” and not realize they are being ripped off (about 50% of the appraised value), instead of shopping around at real jewelers, won’t realize that they can sell to private people.
People who buy gold (as investment, as opposed to jewelery) do so because they listen to Glenn Beck and other idiots. They are not smart enough to realize they can buy used gold.
Moreover, a certain part of what makes a good salesperson worth his fee is in the first place bringing buyer and seller together. How would the buyer and seller know about each other in the first place, and meet somewhere? How would they be assured that it’s not a couple of thugs with weapons showing up at the meeting? And how would each other assure that the buyer is receiving pure gold, and that the seller will receive his full cash?
There’s nothing wrong morally, or legally that I know off. However, buying gold because Glenn Beck tells you that it’s the only solid thing and paper money is worthless is idiotic and bad investement, esp. if you’re buying now when the prices are high.
You need to distinguish between a jeweler and an appraiser. A jeweler wants to make money. If two private people only want him to value the gold, then he will loose out a sale. (And a jeweler needs gold not for stockpiling, but as raw work material).
Besides, how do you know that the jeweler isn’t in cahoots with one party to give you a higher/lower value than the real value? (A common scam, mentioned in “Going Postal” that Moist von Lipwig did with a glass diamond: the jeweler claimed it was a real diamond and got 10% of the swindled price).
An appraiser (at least in Germany) is state-certified to give only the value. He has no interest in the transaction, because he doesn’t earn anything from it. Instead, he is paid a fixed fee for his work. And because the state controlls him, he is more interested in being honest.
But now you have added the fee for that appraisal instead of the fee for the salesperson/ Jeweler’s cut/ shop service.
Add to that the difficulty of finding more than one buyer/ seller to compare prices - while for halfway smart people, it’s easy to compare half a dozen companies that buy/sell gold - and the advantage dwindles.
After all, you could apply the same thing to other merchandise besides gold. Used car are sold privatly with ads, after all - and you regularly encounter the problem of “how do I know the other guy is telling the truth?” (The ADAC offers an appraisal service, again, for a fee).
You have a gold tooth, one gold earring, and a broken gold necklace that you want to sell. What do you do?
Let’s assume you go to an appraiser, and you find out that the necklace really isn’t gold, and that the tooth and earrings are different purities. How do you find a buyer (Craig’s list ad? "For Sale - one gold tooth)? How do you insure that the buyer is legit, and the check won’t bounce?
It’s easy to find businesses willing to buy gold – often any gold. It’s not so easy to find individuals willing to buy gold – especially the particular extremely limited selection of gold you’re selling. When it comes to selling things, it often either costs you money (pay a fee, take a lower price, etc.) or costs you time (research, legwork, waiting for a buyer, etc.). Lots of people value their time to where it’s well worth it to them to sell to a business for a little less rather than spend all the time it would take to find a buyer and get a better price.
I sold a bunch of silver and gold last fall. I went to a coin dealer. Based on a spot check on eBay I believe I would have gotten about 1/4 to a 1/3 more if I had sold individually on eBay. But that would have been MUCH more work. Taking pics and shipping and dealing with the customer. I was content to just take the money that was offered in exchange for not having to do all that work. And of course, there is no guarantee that I could have sold all that I wanted to that way.
Markets have middlemen when the middlemen offer value to the market.
It’s a common belief that middlemen are parasites who only subtract value and add nothing. Except if that was the case, how do they stay in business?
To take a simpler example, why do farmers sell their grain to distributors? Why don’t they take the grain to the city themselves, and sell directly to people who want wheat to grind into flour to bake into bread? Why this complicated setup of grain buyers, railroads, mills, commercial bakeries, supermarkets, and credit card companies?
You can see the value added created by a distributor who buys wheat from the farmer, loads it onto a railroad, grinds it into flour, and sells it to a bakery. And you can see the added value created by the bakery who takes the flour and makes bread out, and then trucks it to a supermarket. And you can see the added value created by the supermarket that buys bread from dozens of sources and puts it on the shelves so anyone who wants fresh bread can walk in at 5:00 AM.
Of course it might be possible for someone with some scrap gold to get a better price than to mail it to Cash4Gold. But finding a private buyer often isn’t a trivial exercise. EBay and craigslist and freecycle have made these transactions easier, but there is still a lot of value in a middleman–you walk in with your gold, and walk out five minutes later with cash in your pocket. It’s up to the middleman to find a buyer later.
Why would any rational individual want to buy somebody’s gold? Gold is absolutely useless. You can’t spend it or trade it or do anything useful with it, except for a few exceptions like artists, who still would have to have the proper apparatus in their possession.
All you can do with gold is treat it as a commodity that with luck will rise in price. But then the last thing you could possibly want is somebody else’s gold, whose purity and composition you aren’t remotely competent to determine. You can buy authentically pure .9999 bars of gold and be reasonably certain that you are getting accurate value for them, but not from a gold tooth or gold frame or gold trophy.
It’s hard to think of anything less susceptible to individual-to-individual sales. A market in elephants would make more sense if there were actual buyers.
you advertise on a website dedicated to selling tooth and earring, or let’s say on Craigslist. And cash does not bounce.
When amounts involved are relatively small the buyer is not at much risk of outing himself to a criminal gang that might be making a list of rich people. In essence, by doing the relatively “public” action of responding to “gold for sale” CL ad the buyer is signaling “I am Joe the Ordinary Guy who listens to Glenn Beck” as opposed to “I am Scrooge McDuck out to fill a new money bin”.
You don’t need a criminal gang like in a Hollywood movie, just a couple of neighborhood thugs who also happen to look at Craigslist and notice your ad, and decide that stealing your gold-tooth at the rendevouz point is easy enough.
Even if you are the first person on CL to announce gold tooth and it works for you - as soon as the business takes off, the less savoury elements will notice, too, and start moving in.
Again, why doesn’t this happen to every single business of every kind in the country? Most businesses are aware of the possibility for theft and take precautions, but the odds of any single business being robbed are actually pretty low. Why does this change if gold is involved? What about your imaginary gold scheme makes the equation change in any way from the real world dangers of real world valuables all around us?
Gold buying and selling are usually not one-man operations because it takes a lot of effort to get from Product A (gold you bought) to Product B (gold you’re going to sell).
Like other posters have said, when people sell gold, they’re usually getting rid of their old jewelry or dental scrap because they want the money. That jewelry isn’t going to be pure gold, it’s an alloy of gold and various other metals. People who buy gold for investment purposes, on the other hand, purchase it in standard weight coins or ingots of .999 pure gold. Why? Because when gold is going for $1350 an ounce, we know that coin is worth $1350. A one ounce pile of old chains and rings… who knows. Unless you’ve got the means to melt down the jewelry, extract the gold, and cast some ingots, you’re going to have a rough time selling the same gold you’re buying.
Maybe it’s good for the buyers, but if you’re hauling in enough gold for this to work, the local authorities ARE going to want to keep track of the sellers.
Because most of the time, the jewelers themselves are doing the gold buying.
Aw, there goes my SD virginity. Damn.
I think the main thing is appraisal. You could list your gold thingy on ebay, but who is going to believe you? The gold dealer can be sure of what they are buying. Of course, this will cause you to take a hit on value, but at least you get a guaranteed cash back. So it’s a risk benefit thing. You could risk an auction where your final price is devalued by the trust factor, or you could risk a storefront buyer, where your final price is devalued by their finder’s fee.
Yep! Gold is stupid, pointless, and you can not eat gold either. That is why I am volunteering to take all the gold off the hands of everyone at SDMB, and I will all the gold you have, for free!!!, i.e. no charge to you.
Cash is stupid, pointless, and you can not eat cash either. That is why I am volunteering to take all the cash off the hands of everyone at SDMB, and I will all the cash you have, for free!!!, i.e. no charge to you.
Yes, that’s the thing, if someone gathers up a pile of, say, 14K gold jewelry, only about 58% of that pile is going to be actual gold metal. If it’s 18K gold, then it’s 75% gold metal, and so forth. The gold has to be separated from the other metals in the alloy before the actual gold value can be assessed, and many individual jewelry stores don’t have the means to do this on their own.
In the jewelry store where I used to work, the owner occasionally had a fellow she knew “scrap” some of her old jewelry (i.e. melt it down and separate the gold metal from the mix), sell it to an outfit that bought raw gold wholesale, and give her the earnings minus a labor fee. She said it generally was not worth doing unless you had several pieces of jewelry, owing to the amount of non-gold metal in the most popular jewelry alloys.
excellent point, thanks. So there is a fundamental mismatch here between the supply and the demand in terms of the nature of the product.
The authorities issue is a separate one, and of course it is the buyers who should be most concerned about them as opposed to sellers. It is the buyers who are ones at risk of confiscation. Which makes me wonder why aren’t there lots of perfectly legit “gold for cash” type of operations on every corner in Glenn Beck listening areas. Obama can track the shopkeeper’s activity all he wants, but getting him to recollect all the folks that bought there would have been a chore even for Heydrich.