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The 2012 Coinage Magazine Special Issue titled: ‘Gold & Today’s Global Economy’ had numerous excellent articles as usual, but one article in particular caught my eye by author and long time numismatist, Ed Reiter.  The article was titled  “Coin Dealers going for the gold”  which was an expose on unscrupulous precious metal buyers. With permission of the author, Ed Reiter and Coinage Magazine, I have reprinted the concluding segment of the article.

Universal Coin & Bullion of Beaumont, Texas, is a major dealer in gold and silver coins and bullion. As a result, the company was well positioned to handle the rush of business that resulted several years ago from the boom in precious metals. But the company’s president, Mike Fuljenz, also has deep roots in traditional numismatics, especially rare Indian Head gold coins, so he’s keenly aware of the two-tiered nature of the business.

Fuljenz fully understands the economic realities that prompted many well-established dealers to move from collector coins to gold and silver. And the heightened competition – from this source, that is – doesn’t bother him at all. What does alarm him is the appearance of many new – and often unscrupulous – dealers buying bullion, especially gold, from an unwary public.

“The surge in bullion prices has lured a small army of predators into precious metals,” he declared. “They run TV commercials promising to pay top dollar for people’s gold, or place newspaper ads inviting potential sellers to bring their coins and jewelry to experts in local hotel rooms for a generous cash offer.

“The reality, of course, is that they pay their victims a fraction of what their gold is worth – often a very small fraction.”
As a general rule, Fuljenz said, established coin dealers pay the highest prices for gold coins, bullion – and even gold jewelry – offered for sale by members of the public seeking to cash in on tioday’s historically high levels.

“Coin dealers typically pay the most. Big coin dealers typically pay more than little ones. Jewelers are next, followed by pawnbrokers, with hotel buyers and mail-in buyers bringing up the rear. The coin dealers are far above anybody else, including many jewelers.”

Fuljenz has worked aggressively to expose the activities of gold ripoff artists through newspaper articles, TV and radio appearances and testimony before the Texas Legislature. His efforts have earned him a number of awards and also deep enmity from the predators he has been targeting. In pursuing this crusade, he has found a key ally in Jerry Jordan, editor of The Examiner, a weekly newspaper in Beaumont, whose investigative articles have won awards locally, regionally and nationally.

He spoke with Jordan about abuses being perpetrated by hotel-room coin buyers, and the editor’s subsequent two-year investigation resulted in not only a prize-winning series of newspaper articles but also a hard-hitting exposé on a Beaumont TV station.

“We found hotel buyers paying $30 for gold chains with a melt value of $350,” Fuljenz reported. “At the time, leading coin dealers were paying $280 – 80 percent of melt.

“Dealers get 99 percent of melt when they sell it to refineries – less a small refining fee, like $30. So if dealers are getting around 99 percent of melt, buying gold for 70 to 80 percent gives them a fair profit. But paying just 10 to 20 percent is outrageous.

“The worst offenders,” he added, “are these ‘cash-for-gold’ companies that advertise on TV, the mail-in buyers in general and the hotel buyers. And some gold parties aren’t much better.”

Fuljenz advises people thinking of selling their gold to learn all they can about prospective buyers. He cautions, however, that some “golden fleecers” falsify claims that they are members of reputable hobby organizations in order to cloak themselves in undeserved legitimacy and misrepresent themselves as experts.

“Call the organizations to verify their membership,” he counseled. “And remember that mere membership isn’t always a guarantee that someone is honest. In some organizations, you just have to pay the dues to be a member. You really want one that requires scrutiny.

“A PCGS-authorized dealer can’t have had a felony in the last five years. With PNG [the Professional Numismatists Guild], you go through a background check. You want to do business with someone who, if there’s a problem, you have someone to go to.

“All gold buyers are not the same, and people tend to think that when they see a big ad.”