Jewellers condemned in cash-for-gold exposé

5.1 k views | Posted September 28, 2010 | By Lorna Goodyer

Jewellery retailers have been tainted by an investigation into dodgy gold buyers that aired last night on Channel Nine.

The television exposé, titled The great gold jewellery scandal, used hidden cameras and an undercover reporter to test the gold prices offered by four gold buying dealers in Sydney.

Throughout the programme, a number of statements unfairly painted a damning picture of jewellers in general that could dampen consumer confidence in jewellery stores when, in fact, the report was an investigation into metal traders.

The ACA website states, “Some pieces selling for over $1,000 retail are actually worth less than $200 – our hidden camera investigation uncovers what shopping centre jewellers don't want you to know.”

Introducing the segment, ACA presenter Tracy Grimshaw said, “First tonight, the stalls and shop fronts that are cropping up everywhere even right outside of your local supermarket, they are the gold buyers who say there has never been a better time to sell them your gold jewellery.

“Tonight our hidden camera investigation puts their claims to the test.”
Before hitting the stalls, the reporter visited a number of unidentified jewellery stores buying several items of gold jewellery and then employed an expert in metal analysis to check the purity of the gold that he planned to offer to the gold buying businesses, saying, “The stores [you buy from] tell you they’re all 9-carat or 18-carat gold, but how do you really know?”

The programme then showed the equipment and the testing procedure of metal testing and the reporter saying, “Before we sell them we have to check that they’re all fair dinkum.”

Interestingly, the programme then reports, “They’re all the real deal!” There was no under carating.

The reporter then went to “four gold buying outlets”; two unidentified shopping centre kiosks and two unidentified gold buying businesses to ascertain what price he would be offered for his gold.

One was later described as a “second hand jewellery store”, most likely a pawn-broker, and the second was described as a “trader” and was clearly an “upstairs” dealer.

On the day of the report, the 9-carat gold price was $43 per gram. The first two gold buying businesses performed more favourably than the kiosks, offering $34 and $36 per gram. However, the second gold buyer incorrectly stated that one of the items – already tested using specialist equipment – wasn’t even 9-carat and refused to buy it, showing a worrying lack of jewellery knowledge from the dealer.

The shopping centre kiosks performed worst, however – offering just $18 per gram for the 9-carat gold pieces. One initially offered a mere $180 but after negotiation eventually paid out $191 for the jewellery originally purchased for $898.

The reporter asked how they arrived at the rate and the dealer said it was company policy not to reveal their gold rate per gram, but claimed to be offering a “very good rate”.

The last gold buying kiosk offered only $192 for jewellery just purchased from a jewellery retailer for $1,030.

In a damning indictment of the gold buying operators, the jewellery retail industry was also tainted when, the reporter said, “It all seems to indicate that not only are the gold buyers cashing in, but the jewellery stores must be adding a big mark-up when you buy it in the first place.”

The ACA exposé also interviewed Don Jones from the Department of Fair Trading, who it said has investigated the gold buying industry and issued penalty notices to several dealers.

The programme said, “He [Jones] says that whether you’re buying gold jewellery or selling it, there’s huge potential for people to be ripped off.”

Jones told viewers, “Gold prices range from day to day and it also involves the quality of the gold, so in some cases you are really relying on the expertise of the person who is buying the gold from you.

“We advise all consumers to shop around. Not just to go to the first place and take the price.”

Grimshaw concluded the ACA segment by advising that viewers might get a return on their gold jewellery, “but don’t be expecting to make a small fortune from it.”

In response to the programme, Jewellers Association of Australia chief executive Ian Hadassin said, “The ACA programme was most critical of the gold buying kiosks that have opened up in many retail shopping centres around Australia and deservedly so. A soon to be published story in Choice magazine will reveal a wide discrepancy in the prices offered by gold buyers with the kiosks offering the least value of all.”

Hadassin explained that the JAA has published on its website "10 Tips for Selling Your Gold", a guide for consumers who are thinking of selling their gold jewellery.

“Consumers should be aware that they should purchase jewellery because it makes them feel good or special. Any re-sale value they might realise at some later stage is a bonus. Jewellery should not be viewed as an investment,” Hadassin warned.

Watch the programme: The great gold jewellery scandal

More reading:
Gold under-carating: Fact or fiction?