My wife and I recently sent some items to Cash 4 Gold, a company that allows you to send jewelry or other items with gold content in exchange for a prompt cash payment. The company has become somewhat well known following some mainstream media coverage, a Super Bowl ad, and extensive internet advertising.
First, some background about the items we sent. My wife had a number of broken or unwanted gold jewelry items. This consisted of some broken bracelets and a few single earrings. We brought the items to a number of jewelers who provided similar offers for the larger items. There were four single earrings that none of the jewelers wanted to purchase because of the low gold content and small size. Some jewelers told us that these items were basically worthless.
Because I had always been curious about Cash 4 Gold, I decided that these items would be ideal for an experiment. The process for sending our items to them was simple. We filled out a form online and a few days later received a “Refiner’s Return Pak.” We put our items in the pack and sent it back to Cash4Gold in the postage paid mailing envelope. Our expectations were not very high, but we were curious to see how much we would receive.
About a week later we received a check in the amount of $3.22. The check also included a description of the items we sent and a calculation of the price paid for each. A scan of the check and descriptions appears below. Click for a larger image.
I have bought and sold gold coins before and knew the price of gold, but I had to spend some time figuring out their calculations. Whenever I have dealt in gold, it has always been measured in ounces. They used a unit of weight referred to as DWT, which I later found out represents a “pennyweight” or 1/20 of an ounce. I was familiar with the karat grade, which refers to the purity of the gold. A grade of 24 karat refers to the finest purity gold (99.9% or finer). Each karat refers to 1/24 purity. For example, 18 karat gold is 18/24 pure, or 75% purity.
Based on their descriptions, I was able to determine the actual value of the gold that we sent:
One earring had a weight of 0.07 DWT or 0.0035 ounces and a purity of 18 karat or 75%. Converting to ounces of pure gold 0.0035 X .75 = 0.002625 ounces. Using a gold price of $950 per ounce yields a value of $2.49375. We were actually paid $0.45 for the item. This represents 18.045% of the calculated value.
Two earrings had a weight of 0.56 DWT or 0.028 ounces and a purity of 14 karat or 58.33%. Converting to ounces of pure gold 0.028 X .5833 = 0.016333 ounces. Using a gold price of $950 per ounce yields a value of $15.51635. We were actually paid $2.77, which represents 17.852% of the calculated value.
The check indicated that our payment included their “20% Gold Rush Bonus”. It also stated that if we were not satisfied with out settlement, we could call or email to have our items returned.
I suppose we will cash the check, but the payment of 18% of the value of a liquid commodity is distressing. In our situation, we sent unwanted items with a very low value, primarily as an experiment. Cash 4 Gold undoubtedly has some customers who are forced to sell cherished items with higher gold content and values. Are these people also receiving only 18% of the value?