Why You Should Avoid Cash4Gold

The true character of those around us are revealed during times of struggle and crisis. During hard times, you would hope that people would come together and help one-another through the trials. All too often though, hard times make for fertile grounds when it comes to taking people for all they're worth.

I initially became aquainted with Cash4Gold through their TV ads which run during the prime time hours. Having been a speculator in bullion on and off for a couple years, I thought it might be an easy way to make some money ... had I the need to in the future. I went on with my day to day activity without giving Cash4Gold much thought.



When gold began its bullrush up the commodities market, I thought again about the ad I'd seen. I did a Google search and eventually found this article: http://www.cockeyed.com/citizen/goldkit/cheat.shtml

It immediately answered my questions about how Cash4Gold effectively takes advantage of peoples' ignorance; not a very upstanding thing to do during a recession, or any other time for that matter.

Feeling playful, I decided it was high time to see if Cash4Gold had improved their practices since the article. Long story short, nope.

I have a number of 1/4, 1/2, and 1 ounce stamped and certified foundry bars. This wouldn't be any fun if I gave them all the answers directly on the product being evaluated, so I needed something else. The 'else' came in the form of gold shot. Many times when bullion is poured, there is splash. Often that splash is just re-melted and re-cast, but occasionally it'll be weighed and put in a vial and sold "as is". That is what I happened to have.

At the time, gold was going for $989 an ounce back in September. The test subject was a verified vial of 0.342 ounces of 24 karat gold. Value for the vial, roughly $338.28 at the market value for the day.

Now, when selling bullion, you have to expect that the entity purchasing your gold is going to want to be able to make some profit in the end as well. You honest pawn shop will do for anywhere from 80% to 90% of melt value. Bullion dealers and some times banks will go for 90 to 95%, and maybe a flat transaction fee. The idea is that you should be getting the lion's share of the value of your commodity... I mean, it just was YOUR gold (or silver, or ceramic kittens, whatever you deal in.)

Before I sent out my gold, I had run across this controversial article: http://consumerist.com/2009/02/10-confessions-of-a-cash4gold-employee.html

Instead of sending my gold in their "refiners kit", I packaged the bullion into their kit, and then shipped their kit in my own insured box. I did this because I know the value of my gold was over the $100 limit on "un-insured" packages automatically receives.

Before too long I get a check for... get this... $97.32. The phone couldn't fly any faster off of the handle.

I already knew this was going to happen, what I didn't know is how bad it was going to be. Now some of you may be thinking that this is fraud, a scam, etc. And why your opinions are founded, Cash4Gold legally isn't doing anything wrong. Ethically yes, legally no.

If you read through their disclaimers, contracts, etc, they never explicitly claim to give you the value of your gold; instead they will make an offer. I can offer you twenty bucks for your house, the offer doesn't have to be based on value. The "praying on the ignorant" comes from the fact that most people assume they're getting a "good" deal.

They had verified the gold was 24k, and assigned their own offer to my bullion. The thin ice would have come had they tried to claim the gold was anything less than what it was; which again would not be difficult for Cash4Gold to do, but we'll give them the benefit of the doubt.

The phone conversation went a little like this:

C4G: Blah blah blah.
Me: You sent me a check for $97 dollars. I sent you a 1/3 ounce vial of 24k bullion with a value of approximately $340 bucks.
C4G: I'm so sorry, let me see if I can straighten this out. *hold music*
*Five minutes later*
C4G: Would an additional $210 be sufficient?
Me: That's approximately 90% value, okay.

Had I never called; had I assumed I'd received fair value, I would have been out a significant amount of money with almost zero recourse had I decided later that I'd been effectively cheated.

Cash4Gold is going to make a mint off of you one way or another. If you sell your gold now, they'll just sit on it until it makes a certain amout of profit as prices rise, then they'll sell. They could even offer you OVER market value... but why make profit later when they can make a lot more now by playing on peoples' ignorance?

Why not keep your money local to your community and seek out a home town bullion trade? The time and peace of mind will be worth it... and you'll probably walk away with more cash in your pocket.

Remember:
Educate
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J