Top 5 Cash for Gold Scams in Canada, and how to avoid them
The reason we decided to start EzyGo in Canada was several members of our family got ripped off by unscrupulous gold buyers practicing various Cash for Gold Scams.
This not only included our Great Grandmother who got stuck with some large unexpected bills, but it also happened to me and my wife in the early part of our marriage.
Cash for Gold Scams Factors
When we sold our old jewellery and we worried about cash for gold scams, we thought that there were only two factors to consider:
- The weight of your metal, and
- Its Purity (e.g. 14Kt Gold)
We also searched for information on cash for gold scams and came across articles like this RCMP warns of fake gold for cash scam in Richmond
But this information is just the starting point in your path through the litany of scams that await you in the “Cash for Gold” market.
Cash for Gold Scams in Canada
We have created these “Top 5 Scams” list to help you truly understand this perilous mission you are about to embark upon.
Scam # 1 - Hoping you need the money urgently
The first thing a well-trained buyer of jewellery does when you walk into their shop is to determine how much duress you might be under before they give you a quote. The more they determine you need money fast, the lower the payout percentage will be.
Have you noticed how all precious metals buyers say things like “Top Dollar” or “Highest Payouts”, but they never actually show their payouts?
If they did ever advertise their payouts as we do at EzyGo, then they could never abuse your circumstances and take advantage of you.
Scam # 2 - When 80% payout for your Gold isn’t 80%
When it comes to cash for gold scams, this one is incredibly effective, as it’s both hard to identify and hard to explain.
Let’s use Gold as our example, and let’s also look into how Gold is calculated. Pure gold is 24 Karats. That means it is 24 parts gold of 24 parts.
18 Karat Gold is 18 parts gold, of 24 parts. Or in other words, 6 parts of this piece are made up of other metals (mostly non-valuable)
So many websites say they pay 80% (or thereabouts) for 24 Karat Gold. That’s great, and it matches what we advertise on EzyGo on our Payouts page. What many folks don’t know is that it’s very rare (if at all) for any jewellery to be made of 24 Karat gold, as it's too soft and unsuitable for daily use.
The most common form of jewellery is 14 Karat Gold (14 parts gold and 10 parts other metals), and the actual payout percentage applied to this is very commonly much lower in a very sneaky way.
Demonstration and Calculations
For ease of calculation for this demonstration, let’s do the calculations on a 10 gram, 14 Karat Gold ring.
Also for further ease of calculation, let’s make the spot price for 1 gram of gold in Canada at $100 CAD
Here is the math:
Purity = 14/24 (or 58.34%)
Weight = 10 (grams)
Spot = $100
Therefore the full value in gold for your ring is, 10 x $100 x 58.34% = $583.40
$583.40 represents the full value of the gold calculated at the spot rate of $100 per gram.
Cash for Gold Scam Example
Now, we the gold buyers pay you a percentage of that amount to cover our costs and profit. At EzyGo, we pay 78% for 14 Karat gold, which would see you being paid $583.40 x 78% = $455.06
So if the gold buyer was legit, you would get at least $455.06 for your gold ring, but that rarely happens.
Instead, the payout percentage offered for gold that isn’t 24 Karat is much lower, and the final payment you receive is significantly less than what you deserve or expected.
How EzyGo operates against Cash for Gold Scams?
When we were building EzyGo, we had several family members go to gold buyers all over the GTHA to see what their payouts were for each Karat of gold, and the lowest payout percentage we saw was just under 40%. That’s 40% of the actual value of the gold contained in the item.
We are so confident that this practice is widely used by the gold buying community, that we have created a “Reverse” on our website where you can submit any metal appraisal by one of our competitors and see what the actual payout percentage is they are offering, and what the difference is between us.
If after using our reverse calculator that you see that our competitor is prepared to pay you more, then we are more than happy for you and you should deal with them instead.
That’s how confident we are, and why we rank this as # 2 in our TOP 5 list of cash for gold scams.
Scam # 3 - The Scales
First, let’s be very clear about a very touchy topic
- All the major and well-known precious metals buyers in Canada use certified scales, as do we in our lab in Toronto.
- We at EzyGo cannot use certified scales in our mobile appraisal vans, as Measurements Canada won’t certify a scale that is always moving (note - we have a sensible way to prove the accuracy of our mobile scales for our customers).
Now we have that out of the way, let’s get to the scale scam and this one won’t take much of your time.
You have seen them around. Cash for Gold operations that pop up in hotel lobbies, or at local flea markets. This is where you should be very wary of the accuracy of their scales, as it's ridiculously simple to make many types of scales report lower measurements for weights.
If you don’t want to be caught being scammed by a bad scale, then we recommend that you weigh your items yourself at home if you can. And if you’re determined to use the services of a pop-up gold buyer, why not get them to weigh a Loonie (6.27 grams) or a Toonie (6.92 grams) in front of you. And keep an eye on them, and make sure they’re putting your Loonie in the exact same spot on their scales that they put your gold items onto.
Having your metals weighed accurately helps limit the cash for gold scams
Scam # 4 - The “Bait & Switch” game
So you’ve decided that you want to send your items to the gold buyer, as you’ve been promised a higher payout. Everything sounds good. This is one of the nastiest cash for gold scams.
Then you get the call saying that your Gold isn’t as valuable as it’s plated or has a lower Karat purity.
Now you’re stuck, and not sure what you can do as you have no way of disproving their claim and it’s going to be a pain to get your items back
Here is how we at EzyGo make sure that this could never happen to you:
- We do our appraisal on a video that you can watch, where we use XRF spectrometers supplied by Fischer Technologies of Mississauga that are incredibly accurate in determining the purity of any metal which are each certified by Measurements Canada
- Again on video, we use scales that are certified by Measurements Canada that accurately show the metal weight of your items to 0.001 grams
- And finally, if for any reason at all you do not want to accept our offer, we guarantee to return your items to you free of charge overnight at your request.
Scam # 5 - Spot Prices not advertised
And the final scam is the easiest and most commonly used by the pop-up guys. Why use the current spot price, when you can use a lower number in your calculations?
Remember in Scam # 1 - we went in thinking this was all about the purity of the metal, and its weight was how we were going to avoid any cash for gold scams. Well, now you know that the Spot Price” is also super important.
Spot Prices Example
As shown earlier in this article, to get your precious metal price we do this calculation:
Spot price x weight x purity % = value
Then we offer an amount lower than value, which we call the payout percentage
But what if at the start the buyer puts in a lower spot price without your knowledge.
Again, if you’re determined to use a pop-up guy, do not trust the data he or she is showing you on their cell phone. Look it up yourself online by doing a quick search, and let them know that you know the spot rate
It's an easy scam, and it's actually hard to see unless you know this calculation in advance and you have all your numbers ready such as weight, purity, and spot price.
EzyGo Cash for Gold Scams solutions
We at EzyGo, have three solutions to solve this problem for you:
- Your appraisal is done on camera, so you can watch a video and see all the measurements first hand on the record,
- Like every major precious metals buyer in Canada, we provide a 24 hour/7 day a week data feed for the current and accurate spot price for each precious metal, and
- In your personal dashboard, you get to see not only your video appraisal but also see our offer to you that goes up and down dynamically as it's directly indexed to the spot price for your metal. That means you can sell your items when you want, at the price you want and expect.
Notable Mention - Undervaluing your Premium Jewellery
When a gold buyer receives a piece of jewellery to appraise, the first question we consider is “is this item a premium piece of jewellery, or even a piece that could be resold easily”? Or, “is the piece unique in some way”?
To just pay you for the metal value on a Gold necklace from Tiffanys is literally highway robbery, especially if the piece is in perfect condition. So this definitely rates a mention on our list of cash for gold scams
If you have a premium piece that you wish to sell, then we highly recommend you do some research on your piece first, and then call around to get an idea if your piece is worth more than just its metals weight.
At EzyGo, we often have customers jump on a Skype or Zoom call with our team so that we can take a quick peek at what you have before you make any decisions.
If you want any further information about these scams, and how our EzyGo systems protect you from these issues, please feel free to contact our customer care staff with any questions you need us to address by email, or by phone at (855) 752-9555.