Five Things To Know Before Buying Gold at Pawn Shops
- Gold is the most counterfeit Precious Metal on the market today.
Some pawn shop owners count on the average buyer not knowing how to spot fake Precious Metals such as Gold or Silver. Fake Gold is a common occurrence at pawn shops, but that is not to say all pawn shops take part. Some pawn shop owners and employees can spot real Gold coins and bars, in turn selling them at a reasonable cost. It is important nevertheless to be wary of fake Gold at a pawn shop.
- Another problem outside of fake Gold is low-quality Gold.
Many factors contribute to lowering the value of Gold such as abnormal wear, excessive scratches and dents, and fading of the finish, to name a few. There are tricks to fabricate the look of Gold to its once-pristine condition. Giving the Gold a luster using cotton swabs and some polish is enough to mask the look to an untrained eye.
- Cost inflation is common when buying Gold at a pawn shop.
Whether or not a pawn shop owner understands the price point of Gold, the price is often higher than if you buy from an authorized retailer. The goal of any pawn shop is to make a profit and that sometimes means largely inflating the price on Precious Metals.
- The origin of the Gold could be put into question.
Often, the question of where the Gold originally came from cannot be answered. This puts into question the moral and ethical standards of the seller, not the pawn shop. The Gold could be stolen. Knowing where the Gold came from is every bit as important not just from a price standpoint, but from a legal standpoint. Pawn shop owners, in general, have a difficult time tracking the authenticity of a seller's story and how they came across the Precious Metal.
- The pawn shop could be misrepresenting a product.
It is unlikely a pawn shop will have a rare Gold coin like a Pre-33 Saint-Gaudens Gold Double Eagle, and if they do, they will try to up-sell the product to develop more interest as a way to drive up the cost. This is a tactic when it comes to more common Gold products.
APMEX recommends discussing the pros and cons of investing with a financial advisor or professional.