When an estate needs to be liquidated to fulfill the terms of a will, or a trustee needs to obtain best value for assets, jewellery, coins and other precious metal items frequently form a part of the mix.  The GoldSmart Network specializes in the evaluation and purchase of the following:

• Karat gold and sterling silver jewellery
• Sterling silver flatware and hollow ware
• Platinum and palladium
• Gold and silver bullion bars and coins
• Canadian and US silver circulating coinage

The principals at GoldSmart have over 30 years experience in the precious metals business, including the management of one of Canada’s leading refiners and at The Royal Canadian Mint.  Learn more about the people behind GoldSmart and our business standards at the following links:

• About GoldSmart and the people who founded the company
• The GoldSmart Code of Conduct
• Things you should know before you sell

The GoldSmart Knowledgebase provides a wealth of information for clients who may need to learn quickly about precious metals, what they have, what it is worth and why.  At GoldSmart we strive to constantly build this Knowledgebase as a resource for people who may only need to sell precious metals once in a lifetime and need to do the research to know they are getting fair value.  There are dozens of entries in the Knowledgebase but the following links may be particularly helpful:

• The Jewellers Vigilance Canada Guide to Selling Your Gold
• The Estate and Trustee Service home page
• Market Prices for Jewellery
• Market Prices for Silver Coins
• Market Prices for Gold Coins

You can contact The GoldSmart Network Toll Free at 877-599-6533 or by email at info@goldsmart.ca

• Should I sell my old gold?
• Is my jewellery “estate quality”?
• How will the value of my gold be determined
• What happens to gemstones?
• Who can I trust?

The guide also contains a seller’s checklist and some useful conversion charts.

Jewellers Vigilance Canada is the ethics watchdog and consumer protection agency in Canada for the jewellery and precious metals industries.  This guide, as published by the JVC, and the other articles here in the GoldSmart Knowledgebase are designed to make you a fully informed seller before you decide if and where to sell your old gold.

But, as is so often the case, it pays to remember that we are not in the United States and we care about the Canadian dollar price of gold which is often quite different, as it is today.  Using our same example the CDN price of gold back on September 16 was about $1764.00 per troy ounce while the CDN price today opened at $1799.00.  That’s right.  The Canadian gold price has risen $35.00 CDN while the USD price has fallen $55.00 USD.

So, what’s going on?

Well the first, and most obvious, answer is the exchange rate between the Canadian dollar and the US dollar.  The Canadian dollar has been tremendously strong for the last few months, so much so that we have become used to the Canadian dollar buying as much as $1.05 US.  All that changed in the last few days.  The value of the Canadian dollar dropped by almost 2.5 cents this morning alone.  Since the Canadian value of gold is basically the US value converted to Canadian, the weaker the Canadian dollar the more gold appears to be worth when the price is converted from US to Canadian.

But there is more to the story.

Canada is viewed as a resource rich country, and our dollar is thought of as a resource dollar.  When commodities, like gold, drop in price around the world, the perception is that Canadian GDP will be reduced and therefore it is fair to discount the Canadian dollar.  It’s either a self fulfilling prophecy or a balancing mechanism depending how you look at it, but the fact is that big changes in the price of commodities tend to be offset by big, or sometimes bigger, changes in the value of Canadian dollar.  The effect is that the Canadian price for commodities stays more constant, or sometimes even moves in the opposite direction, as it has done this week.

In addition, investors around the world are fleeing anything with a risk profile: the Euro, equity markets, commodities.  When money leaves these investments where does it go?  You guessed it: the US dollar, bolstering the greenback against other currencies.  This raises another timeless question on which we have another article in this Knowledgebase: “Is gold a safe haven investment?“  In fact the US dollar is still the world’s reference currency and is still the safe harbour money rushes to when things get too rough out there.

Here in Canada, sellers of gold are getting more this week than they did last week, despite the drop in the USD price!

What does it mean?

Gold and platinum prices are driven by radically different fundamentals.  Gold is primarily an investment while platinum is primarily an industrial commodity.  Only about 10% of gold production is consumed by industry while almost all platinum goes into things like catalytic convertors for cars.

The gold price responds mostly to “fear factors” such as sovereign debt, inflation, increases in the money supply, deteriorating confidence in currencies such as the Euro.  The platinum price responds mostly to the industrial outlook, automobile production, chemical industry demand for catalysts.

In the current world scenario it isn’t hard to see why the PGR might drop below 1 and the prices become uncoupled.  In the past such anomalies have not lasted long.  Most technical analysts seem to feel the same rule will apply this time, but as long as the world struggles with debt and flat industrial demand it will be interesting to watch the PGR.

At GoldSmart we set the bar high for our own standards in buying your gold. We created a Code of Conduct for our own company so everyone at GoldSmart is clear on the ethics and practices we follow. We know there are a lot of gold buyers out there, and it is tempting to choose the one with the most memorable ads or the best web site, but we think you owe it to yourself to measure them against the GoldSmart Code and see if they measure up.

Here is the GoldSmart Code of Conduct:

1. We publish our prices on our web site and update them daily to reflect the London 2nd Fixing for gold and silver and the noon exchange rate for conversion of the US dollar to CDN.  Not only do we publish what we pay, we pay what we publish.  There is no fine print specifying “in office prices” or any other out-clause to our price list
2. In addition to looking for karat marks and maker’s trade marks with a 10 power jewellers loupe, we have available at least two testing techniques, chemical and electronic, to verify the karat of the customer’s jewellery.
3. We use accurate scales and we verify the scale in front of the customer using standard weights.  Our scales are calibrated in grams to at least 1/10 of a gram to ensure an accurate weight
4. We weigh and evaluate the customer’s jewellery in the customer’s presence.  There is no back room at a GoldSmart Gold Party.  The customer witnesses and participates in the entire evaluation process of their jewellery so they understand and agree with the evaluation before making a decision
5. We calculate the value of the customer’s jewellery on a form with the daily prices printed on it.  No GoldSmart consultant can use anything other than the pre-printed price sheet and settlement form to calculate the value of the customer’s jewellery
6. We explain in advance that coloured stones and diamonds can be removed and returned to the customer if they wish.  We do this at no charge and in the customer’s presence.
7. Sometimes an estimated value is required, if there is a large non-precious component such as a watch movement.  If the customer accepts the value, we remove the non-precious component and weigh the item again.  If the final weight results in a higher value, the customer gets the higher value.  If the final weight is lower than expected, the customer gets the original estimate.  The customer never gets a lower price than our original estimate.
8. We explain in advance that we buy precious metals to be melted and refined.  We make it clear that we are not jewellers.  There is no chance of their jewellery being resold, but there is equally no chance of them buying it back if they change their mind.  We always ask that the customer remove any item to which there is sentimental value or about which they are unsure.  If in any doubt, we refuse the customer’s items until they are certain they no longer want them.
9. We have vigorous Know Your Customer, Anti Money Laundering and Anti Crime protocols.  We obtain valid name, address and phone number from every customer.  We photograph every customer’s jewellery and catalogue the photographs by date

If your gold buyer doesn’t score 100% on each of these points, you need to reconsider.  A high price means nothing if the scales are inaccurate.  An accurate weight means nothing if 18 karat gold has been categorized as 14 karat.  The buyer needs to comply with the whole Code of Conduct and you need to be able to witness the whole process so you can see that you are getting a fair deal.

May 30, 2011

5:30-8:30 pm

Come and learn about Gold and Silver.  Find out how Gold buyers figure out the value of old gold and silver.  It’s an evening of learning, fun and profit.  GoldSmart will assess old silver and gold items and offer to buy that evening.  We will also serve light refreshments in this historic building.  Space is limited, so please be sure to let us know if you are coming and if you plan on bringing a friend.

Got a ring you’d like to have sparkled up?  Bring it along too and we will clean it in a professional ultrasonic cleaner so it shines like new.  Donations accepted for the Weekend to End Women’s Cancers.

Sandi LaFlamme from the National Women’s Show in Ottawa with a winning guess of $101,241.00

Congratulations Sandi! Contact GoldSmart at info@goldsmart.ca to collect your Kobo eReader.

SELL your gold and silver on the spot at GoldSmart’s highest SHOW SPECIAL rates

LEARN how to get the most for your old gold and silver through the group selling power of your network by holding a GoldSmart Gold Party

WIN a Kobo eReader by guessing the value of our “Jar of Jewellery”

FREE ultrasonic cleaning of all your jewellery on the spot

Consumers have learned that it’s smart to convert old jewellery to cash and use it for something productive.  The challenge today is for consumers to choose a channel through which they will get best value, fair and accurate.  A key determining factor is obviously the offered price, but the price is not always what it seems.

You cannot really understand the price offered unless you also have some idea of the underlying markets used to determine the price.  At GoldSmart our price page also includes the latest markets, foreign exchange rates and a chart of the gold price for the last 30 days: Click Here to see what I mean.  Anyone with a calculator can understand exactly how our prices are determined.  We are completely transparent and consistent.

At GoldSmart we also constantly shop all the major, and not so major, gold buyers to see what they are up to.  A recent audit of the web sites of some companies in this business turned up the following interesting anomalies:

• A price chart dated April 11, even though the audit was conducted April 15.  The real price had risen substantially in those 4 days, but was not reflected in the buyer’s chart.  At GoldSmart our charts are updated every day, and we sometimes adjust prices intra-day if the market is very volatile.  You always get the most current price
• A price chart with fine print: “In office prices”.  This means that if you use any of this buyer’s other services: gold parties, fundraisers, community events, they will pay a lower price.  At GoldSmart our price is consistent to all sellers.  At a gold party, through a mail-in or at an agent: we always pay the same price
• A price chart in “dwt” unit of measure.  These are “pennyweights” which is a US unit of measure for precious metals.  You should immediately be suspicious if you see this.  A pennyweight is about 1.55 times the weight of a gram, so prices in pennyweights look high unless you read the fine print and realize you have to divide by 1.55 to get the real price per gram.
• A buyer promising to beat any competitor “by 20% of the price difference”.  A clever bit of mathematical sleight of hand.  If the offered price is $20.00 per gram and the competitor’s price is $21.00 the difference is $1.00.  20% of $1.00 is twenty cents! This offer makes it sound like this buyer will beat a competitor by 20% until you really think about what is being said.

As a consumer seeking to convert old gold to smart money, published prices are the first thing to look for.  Then you need to spend a few more moments to see if there are any “tricks” built in to the quoted prices.  Look for complete transparency, including the latest markets and exchange rates and charts of recent price changes so you can see exactly how the price was calculated and whether now is a good time to sell.

The highest price is nice, but only if it is real!

In this case the victim was approached by a legitimate seeming business person seeking to sell Mexican gold pesos.  Mexican gold pesos are a well recognized and respected gold investment coin, so there is nothing suspicious at this point.  However, the seller was willing to take an amount meaningfully less than full market value for the coins in order to make a quick private sale for cash with no records of the transaction.  Naturally the buyer was suspicious and wanted to take precautions, but also wanted to take advantage of this money making opportunity.

The seller suggested the buyer name the location for the transaction to occur. The buyer suggested the safety deposit vault of his own bank where, he reasoned, he would be safe and security cameras would record the event.

Buyer and seller met at the appointed place and time, the buyer carrying the whole $45,000.00 required to complete the transaction, but the seller arrived with only 3 coins.  The seller then explained that he wanted the buyer to be totally comfortable so he gave him the three coins to take away to be verified.  The only security he asked was that the buyer put the whole $45,000.00 in a window envelope, with a $100.00 bill showing through the window.  For good measure the seller took the envelope and sealed it with tape so it could not be tampered with and asked the buyer to deposit the envelope in the buyer’s safety deposit box until tomorrow when they would meet again and complete the transaction.

What can go wrong?

The buyer takes the coins and has them verified by a coin dealer who gives him the bad news that, although good copies of the right diameter and thickness, they weigh too little and are therefore counterfeit.  The buyer rushes back to the bank, into the safety deposit vault, retrieves the envelope which is still sealed with a $100.00 bill showing, just the way he left it, except upon opening the envelope he discovers that all the other “bills” are plain paper.  A clever bit of sleight of hand by the seller when sealing the envelope and the switch was done.

The final insult?  The banks security cameras were out of order the day of the event!