Seth Gold of American Jewelry and Loan – 2013 NPA Pawnbroker of the Year and reality television personality – recently sat down with me and explained why XRF equipment is a must-have technology for pawnbrokers. Here’s what he had to say:
Drop the Acid
by Seth Gold, American Jewelry and Loan
My family and I own a jewelry store in Detroit and run a ton of transactions. Many of our customers come in to pawn or sell us their old gold jewelry. Much of the jewelry is out of fashion or broken so there’s no resale value. We send this scrap jewelry to a refiner to be melted down. Prices are usually based on the weight of the gold content. Solid gold jewelry is 24 karats. Lesser jewelry has less gold content and usually contains other metals and hardening agents. The less gold content in a piece of jewelry, the less money it will be worth to anyone who intends to melt it down. So if I receive less money from the refiner, I will have to offer less money to the customer.
To stay in business, I need to make sure the cash offer is fair to both the customer and to me. Before I hand over money to the customer, I need to know exactly how much gold is in that scrap jewelry. If the customer is mistaken about the karat weight, or if karat marks are wrong and I don’t know the exact content, I could be burned.
So how do I figure out how much gold is in the jewelry? Well, not with acid tests anymore. Acid is archaic. Before we found XRF technology, we used acids. First you have to scratch the jewelry on a stone to get flakes or a streak of gold that can be tested. You are literally rubbing off some of the gold, and you need to make a deep enough scratch to be sure the jewelry isn’t gold-plated. Then you put a few drops of corrosive acid on the gold streak. I’ll say that again. It’s corrosive. It’s dangerous. You need to wear gloves. If it touches your skin, it can burn. You’d better not have any kids or pets around because it’s a caustic chemical, which means you also need good ventilation in your shop. And you’d better make sure the surface you’re using won’t be destroyed. Like I said, acid testing is archaic. You’re destroying the jewelry; you’re burning your fingers, burning your rugs, and creating a mess. You might even be opening yourself up to employee liability.
To top it off, acid testing isn’t always accurate. Most acid kits contain materials to test 10k, 14k, 18k,and 22k gold. The acid rounds to the nearest testing solution; it can’t tell you if it’s 13K or 18.5K.You have to trust that your employees will know all this and interpret the results correctly. Also, certain types of stainless steel sometimes pass the stone test for 18 karat gold. These days, counterfeiting is getting harder to spot. I know many shop owners who were deceived by alloy chains that are fooling the acid test.
When you’re dealing in precious metals – which is very competitive – accurate analysis can make all the difference. If you have a precise read of the content, you might be able to pay your customers a little bit more and get a bigger return. When you use the right technology, like XRF analysis, you can base your judgment on actual readouts. You’re not guessing on what the material is. You’re not relying on the stamp, which could be forged. You are basing your decision on actual content.
How many times has a customer come in with a piece of jewelry that has more than one metal in it? If a piece of jewelry is white and yellow, are you able to determine the actual karat on each color? Is it platinum? Is it white gold? Is it yellow gold? My XRF equipment has technology that can zoom in on a small spot so it can determine what’s platinum, what’s gold, and if there are any other metals in it. That could mean a larger loan, or a smaller loan.
The XRF analyzer that we use also has special patented technology that alerts me if the piece is gold plated. If copper, steel, tungsten or any other non-gold substrate makes up that piece of jewelry, I’ll know it.
And you can show your customer the actual test results. We have our XRF analysis equipment right there on the showroom counter. It takes just a few seconds, and the customer can watch the analyzer as it tests the jewelry right in front of them. They can’t question us about going in the back and switching their jewelry, or giving them less money than it’s worth. That makes them trust us, so they will keep coming back to us.
I understand that most pawnbrokers don’t like spending money, and this technology has a big upfront cost, although some analyzers can be leased. I don’t like spending money needlessly either. But this is a cost of doing business; it will reduce your risk and it will pay for itself. If I told you that you could spend $20,000 but in the end you would save $100,000, you would be crazy not to take advantage of that opportunity. The technology is here. Use it.
Seth will be appearing at the upcoming National Pawnbrokers Association show:
Booth #205 – check schedule for times
July 8-10, 2014
Las Vegas, Nevada USA