19 ms·

We Buy Broken Gold

204 points by diodorus 12y ago

mherdeg 12y ago
Hmm. How does this description of a swindle jive with the amount of gold that is in Apple's 18 karat gold? http://leancrew.com/all-this/2015/03/apple-gold/ http://leancrew.com/all-this/2015/03/apple-gold/ "“Now we multiply that by fourteen for fourteen karat and divide it by twenty-four for twenty-four karat, which is what it would be if it were 100 percent gold,” you explain to the seller. “That gives us the price for your fourteen-karat gold. Multiply that by fifteen, for fifteen grams. Now, fourteen karat is 56 percent gold and 44 percent base metal, which burns off at the smelter, so we multiply that by 0.56. … The real key to this scam is that you’ve deducted for the impurity of fourteen karat not once but twice: first, when you calculated the per-gram price and again when you “deduct for the base metal."
- Terr_ 12y ago
  I think it depends on whether the portion of the product which is "18k gold" can be easily and lossless-ly separated from the "filler".
- jonah 12y ago
  Supposedly they're not using ceramic-matrix gold in the Edition, but rather a more traditional alloy.[1] [1] http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-watch-is-made http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-wa...
- jeffreyrogers 12y ago
  Since it is by weight the filler doesn't affect the value of the gold in the case of Apple.
sukilot 12y ago
Note these are the same people who sell you your diamond engagement ring. Every woman who insists on a ring like this is starting your marriage on a lie. I got dragged into a store like this and paid thousands of dollars to a racist asshole who told me how much smarter we were than those Christianss who come in to buy jewelry for Christmas. I'll probably never really forgive my wife for doing that (but she is wonderful in so many way, just a victim of that propaganda like so many others), and God help me if my daughter doesn't know better by the time she grows up.
- bronson 12y ago
  It's not entirely her fault. First thing all her friends want to do when they hear the great news is see the ring. It's a sickness in our society.
  - therealwill 12y ago
    I'd rather buy her a car, even if it is 2x, 3x more expensive than a ring. At least it has some utility and it definitely has a wow factor to impress her friends with.
    - monochromatic 12y ago
      But diamonds are forever! /s
    - GhotiFish 12y ago
      That's actually pretty clever. "Look honey, you could stand on tradition and insist on an overly ostentatious ring... or I can get you a Lexus. Up to you!" "Oh that ring's lovely, did you see my wedding gift? It's parked just outside."
      - chrissyb 12y ago
        The diamond still sparkles though, even after a car wreck.
        geon 12y ago
        Implying something about women and driving? Shame on you.
        tomp 12y ago
        The car can still get you home, even after you're robbed and your diamond ring is stolen.
      - seunosewa 12y ago
nosuchthing 12y ago
Reminds me of when Bank of America's "Financial Analysts" announced Bitcoin was worth $1300 [1]... almost immediately after China announced the ban on Chinese financial institutions using BTC [2]. [1] http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin-gets-valued-bank-of-america-puts-a-price-on-the-virtual-tender/ http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin... [2] http://www.bloomberg.com/news/articles/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions http://www.bloomberg.com/news/articles/2013-12-05/china-s-pb...
patio11 12y ago
This is one of the reasons why poor people stay poor, because they typically have a wildly disproportionate value of their household's portfolio in jewelry or gold (+), often explicitly because of the ability to use it as savings or collateral. It happens to be an abominably bad vehicle for both. + I'm trying to find the citation but I think the average value in the US for households in the lowest wealth quintile is > 25% of their assets.
- prawn 12y ago
  There is a great meme photo around of a wealthy celebrity and their entourage. The wealthy guy is dressed normally. Each member of the entourage is laced with a giant gold chain. Can't find it now to verify with Snopes though.
- bcg1 12y ago
  I wonder if you might be oversimplifying? There are many reasons why one might not want to hold cash or traditional investments. Especially if you are subject to wage garnishments, judgments, etc. As someone who has been pretty much as poor as you can be, I can say with confidence that those in the lowest wealth quintile don't have what most would consider to be a "portfolio", they are just getting by... its not a good plan to have a bunch of gold to pawn, but at least it is something that is highly liquid if necessary, as long as you can do math yourself to avoid being scammed. Also, all investments go in cycles... if you bought and held gold instead of tech stocks in 1999-2000 you're killing it right now... if you bought gold in 2011 not so much. Poor people aren't poor because of their investment choices - they're poor because they live beyond their means and don't save.
  - eigenvector 12y ago
    Living beyond your means is pretty easy when your means aren't enough to live on.
    - kefka 12y ago
      Not to mention, companies "give you" involuntary credit, which they then pass on to collections.
deleted 12y ago
[deleted]
marincounty 12y ago
I am not a fan of government oversite, but I wouldn't mind putting a few regulations on Precious metal dealers in the United States? I would like to see some standards in weighing the metals, and maybe minimum amounts required per gram of metal?(tied to market values) The fine for breaking the law would be just enough so the average shop would think twice about ripping off the public. No, I wouldn't expect the FBI to run regular stings, but if shop owners knew they might have a federal agent on the other side of the counter they just might not be such horrid individuals? I rember being swindled over some silver when I was younger, and really desperate. I still think about it whenever I pass a pawn shop, or gold buyer. (actually, I think some states/counties already have some laws regarding weights & measures, but precious metal buyers never get caught? I know some larger recyclers are inspected, but these little places open 24 hrs/day get way with absolute thievery? Maybe they think every sale is stolen? Or, they just don't care?)
- lotu 12y ago
  Perhaps the government could post "suggested" prices online that way people could easily check if they are getting ripped off.
- SteveGerencser 12y ago
  The prices are already out there for anyone that wants to look. $1150 spot, 28.35g per ounce = $40.56 per gram. Avg 2.5g for a woman's solitaire ring = $101.40 for pure gold. 14k Gold = (14/24) = $59.15 in gold. -25% for the store and the refiner and you are at $44.36 to buy that 14k gold band. I just looked up that same ring on a wholesaler website and retail is $245.49 plus shipping to get it to the store. That's how a ring you paid up to $250 for is "worth" $45 when you try to sell it for scrap. No one tried to screw anyone, it's just math.
  - shutupalready 12y ago
    > 28.35g per ounce No, it's 31.10g per ounce. The price of gold is always quoted as troy ounces[1]. You used the figure for the avoirdupois ounce which is used for anything that isn't a precious metal[2]. Though it doesn't really affect the argument you're making since 28.35g and 31.10g are pretty close, but how do you not know about troy ounces as a "former jeweler" (as it says in your profile)? That's like a doctor saying body temperature is 105F or 40C. [1] http://en.wikipedia.org/wiki/Troy_ounce http://en.wikipedia.org/wiki/Troy_ounce [2] http://en.wikipedia.org/wiki/Avoirdupois http://en.wikipedia.org/wiki/Avoirdupois
PhoenixWright 12y ago
Kind of a tangent but I looked up one of the buyers in the story. Incredibly fascinating guy: http://en.m.wikipedia.org/wiki/Armand_Hammer http://en.m.wikipedia.org/wiki/Armand_Hammer
- igonvalue 12y ago
  Who also happens to be the great-grandfather of Armie Hammer, who played the Winklevoss twins in The Social Network.
stevewilhelm 12y ago
If you want an inexpensive, liquid, vehicle for investing in gold look at SPDR Gold Shares. http://www.spdrgoldshares.com/usa/ http://www.spdrgoldshares.com/usa/
sspiff 12y ago
> Why would a wealthy diamond merchant in a three-thousand-dollar suit want to cheat me out of a hundred bucks’ worth of gold? How else do you become wealthy and buy $3000 suits?
- _yosefk 12y ago
  There are other methods, but regardless, it doesn't explain why keep doing it once you got that $3K suit. A relevant question for someone who got there using other methods, BTW. I think the answer is in the power of habits coupled with an unlimited and growing desire for money.
  - sspiff 12y ago
    Like power, money is addictive. People who got their power or wealth through immoral means often don't stop once they have "enough".
    - padobson 12y ago
      Or at least "enough to play it straight"
    - sobkas 12y ago
      There is no "enough", when you want everything.
  - fnordfnordfnord 12y ago
    The suit is not a reward, it's a prop that helps you get more.
- cmdkeen 12y ago
  It's intriguing that the same issue crops up in the financial industry with product fees. Fund managers with high fees are not the best but people mistakenly apply the "I must be getting what I pay for" concept, not appreciating that the best managers charge lower fees because they're operating at larger economies of scale.

204 points by diodorus 12y ago

Hmm. How does this description of a swindle jive with the amount of gold that is in Apple's 18 karat gold? http://leancrew.com/all-this/2015/03/apple-gold/ http://leancrew.com/all-this/2015/03/apple-gold/ "“Now we multiply that by fourteen for fourteen karat and divide it by twenty-four for twenty-four karat, which is what it would be if it were 100 percent gold,” you explain to the seller. “That gives us the price for your fourteen-karat gold. Multiply that by fifteen, for fifteen grams. Now, fourteen karat is 56 percent gold and 44 percent base metal, which burns off at the smelter, so we multiply that by 0.56. … The real key to this scam is that you’ve deducted for the impurity of fourteen karat not once but twice: first, when you calculated the per-gram price and again when you “deduct for the base metal."

Terr_ 12y ago
I think it depends on whether the portion of the product which is "18k gold" can be easily and lossless-ly separated from the "filler".
jonah 12y ago
Supposedly they're not using ceramic-matrix gold in the Edition, but rather a more traditional alloy.[1] [1] http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-watch-is-made http://atomicdelights.com/blog/a-glimpse-at-how-the-apple-wa...
jeffreyrogers 12y ago
Since it is by weight the filler doesn't affect the value of the gold in the case of Apple.

sukilot 12y ago

Note these are the same people who sell you your diamond engagement ring. Every woman who insists on a ring like this is starting your marriage on a lie. I got dragged into a store like this and paid thousands of dollars to a racist asshole who told me how much smarter we were than those Christianss who come in to buy jewelry for Christmas. I'll probably never really forgive my wife for doing that (but she is wonderful in so many way, just a victim of that propaganda like so many others), and God help me if my daughter doesn't know better by the time she grows up.

bronson 12y ago
It's not entirely her fault. First thing all her friends want to do when they hear the great news is see the ring. It's a sickness in our society.
- therealwill 12y ago
  I'd rather buy her a car, even if it is 2x, 3x more expensive than a ring. At least it has some utility and it definitely has a wow factor to impress her friends with.
  - monochromatic 12y ago
    But diamonds are forever! /s
  - GhotiFish 12y ago
    That's actually pretty clever. "Look honey, you could stand on tradition and insist on an overly ostentatious ring... or I can get you a Lexus. Up to you!" "Oh that ring's lovely, did you see my wedding gift? It's parked just outside."
    - chrissyb 12y ago
      The diamond still sparkles though, even after a car wreck.
      - geon 12y ago
        Implying something about women and driving? Shame on you.
      - tomp 12y ago
        The car can still get you home, even after you're robbed and your diamond ring is stolen.
    - seunosewa 12y ago

nosuchthing 12y ago

Reminds me of when Bank of America's "Financial Analysts" announced Bitcoin was worth $1300 [1]... almost immediately after China announced the ban on Chinese financial institutions using BTC [2]. [1] http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin-gets-valued-bank-of-america-puts-a-price-on-the-virtual-tender/ http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin... [2] http://www.bloomberg.com/news/articles/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions http://www.bloomberg.com/news/articles/2013-12-05/china-s-pb...

patio11 12y ago

This is one of the reasons why poor people stay poor, because they typically have a wildly disproportionate value of their household's portfolio in jewelry or gold (+), often explicitly because of the ability to use it as savings or collateral. It happens to be an abominably bad vehicle for both. + I'm trying to find the citation but I think the average value in the US for households in the lowest wealth quintile is > 25% of their assets.

prawn 12y ago
There is a great meme photo around of a wealthy celebrity and their entourage. The wealthy guy is dressed normally. Each member of the entourage is laced with a giant gold chain. Can't find it now to verify with Snopes though.
bcg1 12y ago
I wonder if you might be oversimplifying? There are many reasons why one might not want to hold cash or traditional investments. Especially if you are subject to wage garnishments, judgments, etc. As someone who has been pretty much as poor as you can be, I can say with confidence that those in the lowest wealth quintile don't have what most would consider to be a "portfolio", they are just getting by... its not a good plan to have a bunch of gold to pawn, but at least it is something that is highly liquid if necessary, as long as you can do math yourself to avoid being scammed. Also, all investments go in cycles... if you bought and held gold instead of tech stocks in 1999-2000 you're killing it right now... if you bought gold in 2011 not so much. Poor people aren't poor because of their investment choices - they're poor because they live beyond their means and don't save.
- eigenvector 12y ago
  Living beyond your means is pretty easy when your means aren't enough to live on.
  - kefka 12y ago
    Not to mention, companies "give you" involuntary credit, which they then pass on to collections.

deleted 12y ago

[deleted]

marincounty 12y ago

I am not a fan of government oversite, but I wouldn't mind putting a few regulations on Precious metal dealers in the United States? I would like to see some standards in weighing the metals, and maybe minimum amounts required per gram of metal?(tied to market values) The fine for breaking the law would be just enough so the average shop would think twice about ripping off the public. No, I wouldn't expect the FBI to run regular stings, but if shop owners knew they might have a federal agent on the other side of the counter they just might not be such horrid individuals? I rember being swindled over some silver when I was younger, and really desperate. I still think about it whenever I pass a pawn shop, or gold buyer. (actually, I think some states/counties already have some laws regarding weights & measures, but precious metal buyers never get caught? I know some larger recyclers are inspected, but these little places open 24 hrs/day get way with absolute thievery? Maybe they think every sale is stolen? Or, they just don't care?)

lotu 12y ago
Perhaps the government could post "suggested" prices online that way people could easily check if they are getting ripped off.
SteveGerencser 12y ago
The prices are already out there for anyone that wants to look. $1150 spot, 28.35g per ounce = $40.56 per gram. Avg 2.5g for a woman's solitaire ring = $101.40 for pure gold. 14k Gold = (14/24) = $59.15 in gold. -25% for the store and the refiner and you are at $44.36 to buy that 14k gold band. I just looked up that same ring on a wholesaler website and retail is $245.49 plus shipping to get it to the store. That's how a ring you paid up to $250 for is "worth" $45 when you try to sell it for scrap. No one tried to screw anyone, it's just math.
- shutupalready 12y ago
  > 28.35g per ounce No, it's 31.10g per ounce. The price of gold is always quoted as troy ounces[1]. You used the figure for the avoirdupois ounce which is used for anything that isn't a precious metal[2]. Though it doesn't really affect the argument you're making since 28.35g and 31.10g are pretty close, but how do you not know about troy ounces as a "former jeweler" (as it says in your profile)? That's like a doctor saying body temperature is 105F or 40C. [1] http://en.wikipedia.org/wiki/Troy_ounce http://en.wikipedia.org/wiki/Troy_ounce [2] http://en.wikipedia.org/wiki/Avoirdupois http://en.wikipedia.org/wiki/Avoirdupois

PhoenixWright 12y ago

Kind of a tangent but I looked up one of the buyers in the story. Incredibly fascinating guy: http://en.m.wikipedia.org/wiki/Armand_Hammer http://en.m.wikipedia.org/wiki/Armand_Hammer

igonvalue 12y ago
Who also happens to be the great-grandfather of Armie Hammer, who played the Winklevoss twins in The Social Network.

stevewilhelm 12y ago

If you want an inexpensive, liquid, vehicle for investing in gold look at SPDR Gold Shares. http://www.spdrgoldshares.com/usa/ http://www.spdrgoldshares.com/usa/

sspiff 12y ago

> Why would a wealthy diamond merchant in a three-thousand-dollar suit want to cheat me out of a hundred bucks’ worth of gold? How else do you become wealthy and buy $3000 suits?

_yosefk 12y ago
There are other methods, but regardless, it doesn't explain why keep doing it once you got that $3K suit. A relevant question for someone who got there using other methods, BTW. I think the answer is in the power of habits coupled with an unlimited and growing desire for money.
- sspiff 12y ago
  Like power, money is addictive. People who got their power or wealth through immoral means often don't stop once they have "enough".
  - padobson 12y ago
    Or at least "enough to play it straight"
  - sobkas 12y ago
    There is no "enough", when you want everything.
- fnordfnordfnord 12y ago
  The suit is not a reward, it's a prop that helps you get more.
cmdkeen 12y ago
It's intriguing that the same issue crops up in the financial industry with product fees. Fund managers with high fees are not the best but people mistakenly apply the "I must be getting what I pay for" concept, not appreciating that the best managers charge lower fees because they're operating at larger economies of scale.