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Major U.S. gold buyer shuts down in wake of fraud

Discussion in 'Financial Cents' started by learningsurvivor, Aug 14, 2012.

  1. tulianr and ghrit like this.
  2. tulianr

    tulianr Don Quixote de la Monkey

    As a jeweler, I feel a bit sorry for folks buying or selling gold jewelry. It's worse than dealing with automobile dealerships. Unless you have a friend in the business, you are usually going to get screwed. You can educate yourself, and receive the lightest screwing possible, but the screwing is still coming.

    Typical markup on gold items in most retail jewelry stores is 300 percent. So, when you buy the item, you've already normally paid three times its wholesale cost.

    Then, when you sell your gold items, the jewelry store will look up the scrap price being paid by the refineries, and give you a third of that price. Scrap price is usually about a third of wholesale price.

    So, you buy an item for $300.00. The jewelry store paid about a hundred dollars for it. The scrap price will be about 30-35 dollars. You will receive 10-12 dollars for it. You receive back 1/30 of what you paid for it. Not such a good investment; but there are things which you buy with your heart, and things you buy with your head.
  3. secondrecon

    secondrecon Monkey+ Site Supporter++

    Hey Tulianr it would be nice that you do not lump all buyers the same , My store pays 70% on spot price , if you would do a little more home work , we dont look as bad as the jeweler
    making 200% . Just to let people know people in the biss, are all not the same . shop around first and then sell ......
  4. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    Pretty much the same here.

    I produce and sell some Mil speciality items, direct to the folks that have earned the right to wear them.

    Markup is not paramount with me, quality and somthing different is.
  5. tulianr

    tulianr Don Quixote de la Monkey

    I don't mean to offend. There are certainly exceptions to every rule, and variations to every standard. I, like everyone else, have to speak from my own experience. My experience is that of a second generation jeweler, and I've been around the business, man and boy, for better than forty years.

    The jewelry stores that I am speaking of are two major national chains, and one regional chain, with which I currently have business relationships. At one time or another, I have worked with just about every major national retail chain, and with quite a few independents. I certainly don't know the policies of every pawn shop and every mom and pop gold buying store front in the country, but I do have a firm understanding of basic procedures throughout the mainstream jewelry industry. As I said in my post, I was referring to "most retail jewelry stores."

    I'm a bench jeweler, and an independent contractor, so I don't do any buying myself, but I am often called upon to help determine authenticity and karat on difficult items, that the stores with which I currently work wish to buy, so I know exactly what those stores' policies are.

    If you guys are giving folks more of a fair shake for their scrap gold, and on retail purchases, good on you. I wish more people and businesses would treat folks the way that they would like to be treated. Maybe you can provide a good connection for other monkeys on this site, so that they don't receive the screwing that is all too common these days.

    I too try to treat others as I would like to be treated, and I hate to see what has become of the retail jewelry industry. It isn't the same animal that it was when I was a youngster. There have always been some sharks out there, but these days, running into anything but a shark is a pleasant surprise.
    Nice to meet you. (y)
  6. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    I was drawn into "rolling my own" when I could not find what I liked. In this I had help from a local retail seller who also helped the local university's students from a Industrial Technology class. The students were required to design and produce an object of their choice. Many completed wedding rings with the aid of this man who was also a local shooter.

    My design started way unrealstic and we did lost wax of my design. Nice "one of" but too expensive for the market I wished to present them too.

    Along the way I soon learned that my major cost was the quality molds needed for production. That being solved by using a commercial caster I then faced the "how to break even", this since I just wanted to get some items to my buying public.

    WELL thanks to all the dishonest money grabbers with the 300% markup most thought my prices too high, this even though I did a 40% markup. Understand the 40% was with the design and casting molds expensed out over X number of items.

    Any way, those who have purchased are happy with the quality and I'm happy to sell to those who enjoy them.

    I'm glad to see another honest soul in this industry.
    tulianr likes this.
  7. tulianr

    tulianr Don Quixote de la Monkey

    I grew up working in my father's jewelry shop, as my own son is doing now. I joined the Marine Corps at seventeen, but managed to come home for a month during the busy Christmas season, every year for quite a while. My deployments just fell right. I'd work in the shop during my entire leave period, and then head back to the Marine Corps. Then, I was sent to England for several years, and when I got back, I found that the paradigm within the industry had changed.

    No longer were we using our own price list; we were using price lists mandated by the chain stores with which we did business. Their prices were twenty-five percent or better higher than our own list prices. No longer were markups at double keystone, as they had been my entire life, they were now triple keystone. Apparently, a 200 percent markup was no longer sufficient, even on repairs.

    When I wasn't deployed, I worked in a store near my base, and I began to see other changes - quality shifting downwards as prices crept upwards. When the industry finally got down the method of casting stones in place, things got dramatically worse. Now, they could construct a hollow POS that wasn't sturdy enough to even take the pressure of pushing a prong over a stone in order to set it. The stones were pushed into the wax, and voila here's your ring. This wasn't always the situation. Once upon a time, all stones were set by hand. You knew that there was enough gold over a stone to hold it, because someone sat there and pushed that gold over the stone. (You didn't have a one-eyed monkey in Pakistan pushing stones into a wax mold, and then gluing stones back into the casted piece if they fell out. You do now. I can't tell you how many times I have hit a new ring with a torch, when sizing it, only to smell burning super glue and watch one or more diamonds from the ring rise up and fall into my desk apron.)

    A few years from the end of my career, I got a teaching position that seemed to secure me in one place until my retirement, so my wife, who is a gemologist and bench jeweler, and myself started up a wholesale repair business. We have continued to watch the quality, of even very expensive items, deteriorate as the years have passed by.

    Fifteen years ago, it would have been a funny joke to say that a diamond wedding set looked like it was made out of Sterling Silver. Now, it isn't funny, because the stores are selling them left and right. I look at them and shake my head, knowing that those diamonds are going to cut their way out of that soft silver long before the couple's second wedding anniversary.

    Fifteen years ago, sales associates would prank call new associates in another jewelry store and ask if they had "black diamonds." It isn't a joke any longer. They are everywhere.

    Fifteen years ago, a one point diamond was the smallest stone you would encounter. Now, I have to stock one-tenth of a point diamonds to replace those which have fallen out of rings. One thousandth of a carat? Who would have thought we'd see such? We have to inspect many rings with a ten power loupe to even see if all the diamonds are still there, following a repair these days.

    I replace twenty times the stones now as I did fifteen years ago. I have to stock diamonds from one-tenth of a point to twenty five points, in round, princess, baguette, white, black, brown, yellow and blue; because you never know what is going to fall out this week. Many rings styles today shed stones like a dog shedding fleas. I feel sorry for the people who buy those rings, some of them two and three thousand dollar rings, because they spend more time in the repair shop than they do on the customer's finger.

    When I have to do a repair estimate on an item, I now have to take into account that the store is going to triple whatever price I give them. If I charge ten dollars, they're going to charge the customer thirty dollars. I often trim my prices as low as I can, just so the customer doesn't get a royal screwing on the other end. My wife has to remind me occasionally that we are not a non-profit organization, and we have bills to pay too. It still doesn't sit well with me to see people fleeced.

    There, that's my jewelry rant for today. Sadly, the jewelry business isn't the only industry so affected in the U.S. It's the same all over.
  8. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    I second all you've said and am glad I knew those things when I purchased/had made items for my wife.
    Sub Button Cast in SilverIMG_8953[1].JPG
    tulianr likes this.
  9. tulianr

    tulianr Don Quixote de la Monkey

    Those are nice. Your design?
  10. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    Thanks, it was a long road from thought to finish. Then again I had to learn the pitfalls and how to have both what I liked and what would sell.

    It is in fact my design but to say it is original is a stretch. It is an assemblage of some common symbols and as it started it was to only be a Sterling Silver Button. It is now the base for a number of other items from Ear Rings to Tie Pin to Pendant etc. Materials vary from base bronze to 14kt gold plate.

    But it does meet copyright standards and is either Hall Marked or Trademarked.
  11. ditch witch

    ditch witch resident bacon hoarder Site Supporter+

    My husband made his wedding ring out of some scrap tungsten at work. It's sort of a double beveled band, clean and simple. Everyone likes it, even more when they find out he machined it out of scrap. Meanwhile, I just had to have the sparkly and I'll be damned if the smaller rocks don't fall out every time I turn around. Always the same ones too. It's under a lifetime repair warranty, otherwise I'd just be wearing a band full of empty settings and a broken center setting where the main diamond broke completely off. I still have no idea how. You know I have this cheap tanzanite and opal ring I got from Squallmart that I have lost in the barn for an entire winter and even run over with my truck, and it hasn't lost a single rock, but I baby this one and all it does is fall apart. One of the stones even cracked and went black.

    I'd have him make me a tungsten band, but dang it I love me some sparkly worse than a crow loves tinfoil.
    tulianr likes this.
  12. tulianr

    tulianr Don Quixote de la Monkey

    Design is my greatest deficiency. I just can't think in the abstract. If a person gives me an example of what they want, or even a detailed drawing, given enough time, I can recreate what I see before me; but to come up with an original design is a near to impossibility for me. I guess that's why I gravitated toward the repair end of the jewelry business. It breaks, I fix it. Nice and simple. No creativity required. My wife has quite a few pieces that I've made for her over the years, but they are generally deviations on geometric designs; nothing like your creations.
  13. tulianr

    tulianr Don Quixote de la Monkey

    Lifetime warranties are a very good thing these days. I can't tell you how many rings I see over and over again because of missing diamonds. A sales associate or manager of one of the stores will occasionally jot a query on the envelope "This is the third time this ring has been in for repair. Can you explain why the diamonds keep falling out?" I'll generally write them a smart-a$$ed reply about the lack of common sense of "micro prongs" which are all the rage now on bridal rings. I point out to them that "micro prongs" means "micro security" and ask them if they would like "micro engine mounts" holding the engine in their car.

    Why the merchandise buyers of these stores can't look at the engineering of a ring and realize that they are going to lose a fortune in future repair costs, I don't know. I suppose my lack of creativity means that I just don't get the nuances of fashion. To me though, the diamonds are the most important part of the ring, and the prongs holding those diamonds should reflect that. Instead, I hear, "I want the illusion of my diamonds floating." I'm thinking, "It's no illusion at all, your diamonds are floating, right out of the ring." I look at a ring and my eye is immediately drawn to the engineering of it. These days, I don't see a lot of them that I'm happy with. I shake my head, fix them up, and send them out, knowing that I'll see them again.
    ditch witch and BTPost like this.
  14. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    Yes it sounds a bit stupid to say that I looked worldwide for two years for what I wanted and could not find something so simple as a Button. Then afterI did my first prototype it was still 10 more design changes till now.

    None the less I value my prototypes above the rest.

    I think you will enjoy this item as it is a multi use piece. The front of this Heart Pendant/Broach is the basic design but this jpg is the back. This prototype is now complete with a Hallmark and the proof mark is cast in place. Please ignore the roughness as I requested this ASAP for my wife as a special present..

    Production models are excellent.

    Yup I have enjoyed this a lot.

    And I just threw in right and left earring Jpgs, seldom are such cast, or at least so I think.
    Sub Heart Pendant_Broach Rear Sterling Silver.JPG Sub Earrings Gold Filled.JPG
    tulianr likes this.
  15. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    My Dad did something close to that.

    It was WW2 and money was tight, he worked at Lake City Ammo Mfg.

    He managed to snag some scrap stainless steel and he produced a ring for each of them. Each was embleshied with file work and with double hearts and other stylish strightline work. They wore them till the day they died and they are now in my care.
    Gotta love folks that know how to do real work arounds.

    Take care.
    tulianr and ditch witch like this.
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