Beware of Precious Metals Fraud During Economic Uncertainty

With millions* of people filing for unemployment in the U.S. and an unknown future economy, local pawnbrokers, cash-for-gold operators, and precious metals dealers may see an increase in people cashing in their jewelry and coins for cash.

In fact, a recent industry report headline stated “Gold Volatility Empties Jewelry Boxes in Wild Selling Spree,” and noted that gold buyers have seen a frantic push by individuals racing to sell their little-used jewelry in the U.S. and Europe amid worries of future prices.

Unfortunately, not all those metals coming into stores may be precious.

There have been several reports that California pawn shops were seeing spikes in fake gold jewelry scams. Several law enforcement agencies across the country have seen a trend of people trying to sell their “gold jewelry worth hundreds of dollars” to unsuspecting bystanders. The scam involves folks who say they need to buy gas and don’t have cash, but they will sell their valuable gold ring/bracelet/necklace really cheap. The bystander feels bad and wants to help the ‘unfortunate’ person out, and gives them cash. Unfortunately, when the bystander has the jewelry appraised or tries to sell it, they find out it’s fake.

This gas scam was reported in New Mexico, Colorado, California, and other locations. Some victims were approached at gas stations, others in grocery parking lots.

One pawn shop warned people to be wary because the fake jewlery looks and feels convincing. Unfortunately shops have boxes full of fake gold jewelry, including pieces with fake quality stamps, that fooled either the shop owner or the person trying to sell it.

We’ve warned the gold-buying industry in the past about counterfeits. In “Fake Gold Bead Necklaces Fooling Shop Owners” we reported that a gold bead necklace had fake beads along the strand that looked like the real ones. It fooled the shop owner and he lost $2,000.

These scams are not the only way fake gold gets into the system. GCAL, the Gem Certification and Assurance Lab, listed on its website a number of serious challenges into the jewelry supply chain, including: under-karated metals and irregular alloys, base metal jewelry with false precious metal hallmarks, new plating materials that contain harmful elements, and platings that mask underlying hazardous metals.

The best way pawn shops, jewelers, and cash-for-gold operations can accurately assess if a piece of jewelry is made of real gold is to use an XRF precious metals analyzer. To be absolutely sure of the value of the precious metals they buy, use, and sell, X-Ray Fluorescence technology can be utilized as a fast, simple, nondestructive solution for gold analysis. You can measure the content of all gold and precious metals, as well as determine the presence and concentration of other trace, alloying elements, and dangerous heavy elements, which could impact health and the valuation of the pieces.

The innocent bystander may not be able to assess the jewelry properly and could lose out, but those in the business of buying and selling precious metals should make sure they have the technology to accurately identify the metal and the karat weight. Even a few fake pieces could result in a loss that amounts to more than the instrument would cost.

For details about how portable XRF technology is adding value to the numismatic profession, read the application note: Adding Value to the Numismatic Profession with Portable XRF

* The Employment Situation — April 2020