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Educational Consumer Tips

Buying Gold

Author: Better Business Bureau
Published:
Category: Service

If you are interested in buying gold, please take the time to check out the first set of educational tips from the BBB. If you are looking for purchasing gold for investment purposes (such as gold coins or bullion), please refer to the second set of tips to further assist you. 

Gold Jewelry

The word gold, used alone, means all gold or 24 karat (24K) gold. Because gold is soft, it is usually mixed with other metals to increase its hardness and durability.

The karat quality marking tells you what proportion of gold is mixed with other metals. The most common marks for gold jewelry are 18K or 750 (signifying 75% gold), 14K or 585 (58% gold), and 10K (42% gold). Ten karat gold is the lowest level allowed under U.S. law.

Jewelry made of higher-karat gold is more yellow in color and slightly softer than gold jewelry made of lower-karat gold, which may include copper, silver, zinc, or other metals. Consumers also need to be concerned with the alloys if they are allergic to certain metals or have a high acid content in their bodies. Acid can turn the jewelry you wear black, appearing to be of poor quality when it actually is not.

A wide choice of styles and designs is available in gold jewelry. Because of its creative design and manufacture, designer jewelry may cost more than generic gold jewelry, but having the designer's name stamped inside increases the value of the piece.

To be sure you are receiving the best value for your money when buying gold jewelry, follow these tips:

· Be sure the item is clearly marked with karat weight and manufacturer.

· Note if the item will be susceptible to damage in the future.

· Be sure the karat weight of the item is listed on the sales receipt. 

Gold Coins or Gold Bullion

If you’re interested in buying gold as an investment in the form of gold coins or gold bullion, check out these tips from the Federal Trade Commission:

  • The price of gold will fluctuate over time: There is no guarantee the gold will maintain its current value or increase in the future. 
  • Value of bullion coins is usually determined by the content of their precious metals: It may not always depend on rarity or condition.
  • Prices change upon a daily basis: It all depends on daily prices of the precious metals within the world markets.
  • Coin dealers, bankers, brokerage firms, and precious metal dealers will charge higher than the actual value of gold: You should take the time to make comparisons before making a final purchase.
  • Sellers may claim government will confiscate gold: This claim leads to people purchasing historical coins at prices which exceed their value. However, there are no current federal laws or Treasury Department Regulation which support these claims.

Above all, it is important for you to take the time to do your own investigating to ensure you are not taken advantage of in any manner. The FTC provides some of the following tips:

  • Ask for the coin's melting value, this information should be highly available and this refers to the basic value of the coin if it were to be melted down and sold.
  • Take the time to consult with a trusted financial adviser for specialized knowledge.
  • Get an independent appraisal since that of the seller might be inflated to maximize their own profits.
  • Weigh the additional costs you will need to invest in such as a safety deposit box, insurance, or possible off site storage to keep your gold secure. 

For more information, please visit: http://www.consumer.ftc.gov/articles/0134-investing-gold

9/16/14