The Oregon Natural Resources Report - Agricultural News from Oregon

Gold rush has Ag Dept. monitoring local gold merchants

June 24, 2010

ODA inspectors monitor gold buyers and their scales
Oregon Department of Agriculture

The price of gold hovers at about $1,200 an ounce, the US dollar is weak, and the economic downturn is prompting many Americans to find ways of making some cash. As a result, more people- including a number of Oregonians- are looking to sell gold jewelry and collectibles at pawn shops and to mobile gold-purchasing companies that travel from state to state. The Oregon Department of Agriculture wants to make sure that gold transactions are fair to the consumer. “The price for scrap gold is determined by a couple of factors- the purity of the gold or its karat content, and the weight of the item,” says Jason Barber, administrator of ODA’s Measurement Standards Division. “That’s where we get involved. These companies that purchase gold from consumers are using scales to weigh the gold items. We need to make sure they are using legal-for-trade scales that have been licensed and examined by our field inspectors.”

Legal scales in Oregon and 43 other states have gone through the National Type Evaluation Program (NTEP) and its testing procedures for commercial weighing and measuring devices. Before a scale can be put into service for commerce in Oregon, it has to be NTEP approved. That paves the way for ODA to place its own seal of approval on the device after its accuracy and compliance with regulations is determined. It’s up to the scale manufacturer to pursue and receive the NTEP approval.

Unfortunately, not all scales being used by gold buyers are approved and the accuracy may be in doubt. Consumers hoping to get a fair price for their gold item might be at the mercy of a scale that underweighs, giving them less money than they are owed. Some fly-by-night companies are scam operators that grossly underpay by design.

“What we hear from other states is that many of the scales are not legal-for-trade,” says Barber. “Also, the consumer is supposed to be able to see the scale’s indicator and the weighing operation. A lot of times the scale is turned around and the consumer is taking the buyer’s word for how much it weighs.”

Certainly, not all gold buyers are operating scams. But the likelihood of getting short-changed is greatly reduced when the scales have been examined and approved by inspectors.

In March, ODA inspector Ken Nelson checked out a company that had advertised in a local newspaper it was coming to Klamath Falls to purchase jewelry and collectibles from the public. Nelson found four digital scales being used in the final transaction that were not approved and ordered them out of service. That effectively halted sales until the company could bring in an NTEP-approved scale, which was delivered by the next day. The new scale was examined for accuracy and compliance, and okayed. The company was back in business and has since traveled to other Oregon cities for additional business.

“A lot of these companies will advertise in the local paper, radio, or even television station- roll into town- and set up shop in a hotel lobby or the county fairground,” says Barber. “They may stay for a weekend or even a week. We have 18 inspectors across the state that are now constantly monitoring these companies and are on the lookout for advertisements announcing these gold buying events. We will go to the site, make sure the scale is approved, and make sure the devices are licensed with us.”

In the next couple of weeks, ODA will be sending letters to pawn shops to inform them about the need for licensing and approved equipment. Those letters will be followed up with on-site inspections. ODA will continue to respond and check for compliance regarding the random gold buying operations that advertise locally and set up shop for a limited duration.

ODA’s Measurement Standards Division routinely examines approximately 54,000 commercially-used weighing and measuring devices to make sure they are accurate. The scales that are examined in Oregon range from those found at the local grocery’s meat counter to cattle scales, vehicle scales, and railroad scales. All of them need to be inspected to help prevent fraud, and to ensure that commercial transactions are fair and accurate.

Consumers can help themselves during transactions that involve gold. ODA offers the following tips:

* Know what you are taking to the buyer, particularly the karat weight
* Know what you are willing to sell your gold for before you go. Evaluate if your emotional attachment to the gold item is worth more than the price offered
* Check with your local Better Business Bureau or local government on the legitimacy of the business and if they have the appropriate business licenses
* Look at the scale and make sure it has an approval sticker from the Measurement Standards Division of the Oregon Department of Agriculture
* Have the buyer weigh and test items in plain sight. Don’t take anyone’s word for what the gold weighs. It is required that the scale indicator or readout and the weighing operation is in plain view of the consumer
* Get quotes from several buyers, if possible

ODA’s concern over gold buyers does not reflect on all companies.

“Unfortunately, alongside legitimate gold buyers who pay a fair price and screen out stolen property are people who use bait-and-switch tactics, grossly underpay, or won’t pay at all,” says Barber. “Consumers should take an interest in all transactions, including gold sales and purchases. ODA will certainly maintain its interest.”

The Measurement Standards Division has not received many complaints yet about gold transactions and Barber does not consider it a major issue in Oregon at this time. But with gold prices skyrocketing and the number of companies springing up to buy the precious metal, some consumers may be desperate for quick cash and can easily fall victim to fraud or unintentional underpayment.

For more information, contact Jason Barber at (503) 986-4767.

  
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