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Arizona State Silver Bars BEWARE

Despite the outcry from consumer advocates, deceptive ads run constantly in the papers and on the TV. The uninformed public falls all to easily for slick ads with confusing wording.  This is evident with the new ad that is running in the AZ Daily Star. The full page ad shows large bars, “silver vault bricks”, and armed guards unloading the goods. Here is the real breakdown of what they are selling:

  • 6 ounces of silver
  • Cost is $285
  • or $47.50 per ounce

You can purchase silver locally for $17.50 per ounce (at the time of writing Silver is $15.50 per ounce) . That is $30 less per ounce than the United State Commemorative Gallery is selling their silver for. Some things to keep in mind is that this company (US Commemorative Gallery) is in no way related to any government. It is a private company. But they try to make it sound like they are official, even paying for the endorsement of former US Treasurer Mary Ellen Withrow.

They have created these bars of silver for the sole purpose of marketing them. It is true that you can not get the bars with the AZ stamp on them anywhere else, but be aware that if you try to sell the bars they are only worth the $15.50 spot price.

If all they did was advertise silver bars for the stated price without all the mumbo-jumbo-hokis-pokis then it would not be so offensive. But not only do they have advertising designed to deceive, they also have high pressure sales. When I called them to find out if there was shipping ($9 shipping on one individual piece, free shipping on orders of 2 or more pieces),  and told her I would get back with her about ordering, she went on the offensive:

  • “these are the only known pieces from the Lincoln Treasury” (another company made to sound governmental).
  • “my concern for you is they may be sold out by the time you call back” (isn’t that sweet!)
  • “the phones have been ringing off the hook”
  • “I don’t know how many we have left”

Remember to seek advice of local businesses whenever you see advertising for coins, paper money, gold, silver or collectibles. Usually you can buy the same or similar articles for a fraction of the price. And if you don’t understand what they are selling, then don’t buy it!

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Lying

Statistics. Politicians. Advertising. What do these things have in common? Lying!

Perhaps that is a bit harsh. Would you put coin dealers, mechanics and car dealers in the same group? Most people would. Let’s face it, those reputations are there for a reason. But how do you counter the liars and their lying lies? The  best way is through education. Q: Who is less likely to get ripped off by the mechanic? A: Men, because the shop owner assumes the man has a higher level of knowledge compared to his female counterpart. Q: Who do the mail order and advertisers try to deal with. A: The novice, because they have a lower level of knowledge.

What if you are a novice, how do you stop getting burned?

A great way to spot a bad deal is in the newspaper!

A great way to spot a bad deal is in the newspaper!

There are things to look for in advertising, especially in coins and paper money, that are misleading.

  • “Up To”
  • “Hurry”
  • “Prices Subject to Change”
  • “Actual Prices may vary”
  • “Members of…”

Up to is the catch all you use to give people big dollar signs in their eyes. “I’ll pay up to $2,000,000 for a coin”. That may be true, but what do they normally pay for coins. And what if that coin is worth $4,000,000? Would you sell it for $2M?  In fact the ad we picture was just in the local paper and they say they will pay $100,000 for a 1913 Nickel. Well shoot, ain’t that generous! Except there are two problems. 1) All 5 known specimens are accounted for. 2) The coin is worth $1,000,000+ !

Hurry is a term that all advertisers use. They try to convince you that time is limited or that an item may sell out, or prices may go up (or down depending on the business). One day only! Sunday, Sunday, Sunday!

The prices changing line is used in large volumes of print and radio ads. That price sounds great! And then you call and….oops, so sorry, you missed that price, it changed. So in other words, we just told you want you want to hear to get you in the store or to call, and while you are here perhaps we can do some business!

Members of may need some explanation. Businesses use these pay for memberships to prove they are trusted or reliable. The only problem is that anyone can PAY to get the membership and logo. It does not mean they are trustworthy. The other problem is that many of those associations do not actually weed out the bad guys.

Although these ads may not be lying, they are certainly designed to deceive. Be careful who you deal with, and always educate yourself. Also, take time to ask other people who they deal with. Word of mouth is often a good indicator of who you will want to deal with.

 

 

 

 

 

 

 

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PCGS Price Guide

I have written about the many rip off artists that are wolves in sheep’s clothing. But what happens when your trusted advisor turns out to be a sheep, but the Benedict Arnold of sheep?

The tele-marketers harm the coin market. They give everyone in the industry a bad name. They cause confusion. They misrepresent item’s values.  So I would like someone to tell me how that is different than PCGS’s price guide.  It causes confusion and misrepresents the true value of coins.

Here is what I mean. Today I had a gentleman come in with some high grade Lincoln cents, all PCGS graded. He used the PCGS price guide to value them. Many of the coins are modern (1940s and newer). Many of the coins are not listed in any reputable price guide. So I did some research of recent auctions to try to find prices. Many of the coins on his list were selling for half (or less) of the PCGS price guide.  What good is a guide that is wrong by 50%? Perhaps the weatherman would like to answer that question.

The problem of coins being overpriced in guides is nothing new, but PCGS has positioned itself as a highly trusted brand. So when they portray values, collectors believe them. I’m wondering if there is any brave souls in the industry that are willing or able to tackle this problem. It is a black eye to coin collecting. It isn’t as bad as what the stamp dealers did in the 80’s, but numismatists need to be careful so we don’t go down that same road.

It is very confusing for new collectors to understand value when the first thing they are told is to only buy certified coins and to only trust NGC and PCGS. Then they look at the PCGS price guides and buy based on it. But what happens when they go to sell the coins? No coin dealer likes to be in the position of trying to explain to a collector why their coins are worth 20%-50% of what they paid for them. PCGS doesn’t have to worry about the pricing, they aren’t paying those prices.

As a community it would be helpful if more collectors (hello ANA!) would cry wolf on price guides put out by the “independent” coin grading companies. PCGS and NGC- please just grade coins and don’t set prices. It is a conflict of interest and it causes confusion and misinformation in the marketplace.

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The Jewelry Myth

solitaireNot all Americans are showy. There are many plain sort of folks out there who don’t need fancy things. But even those plain sort of folks can end up with gold or diamond jewelry through a family member or marriage.  And even though these regular people are not consumed with consumerism, they still fall into the trap of thinking diamond jewelry is very valuable.

Before the yelling starts about me being against the jewelry industry, I’m not. I just find it ironic that the same American people who buy a TV for $700 that is worth $70 in 6 years, or buy a car for $20,000 that is worth $5,000 in ten years, get upset when they find out the ring they bought at Zales for $4500 is only worth $450.

Carat Total Weight is a scam.

Carat Total Weight is a scam.

If you choose to spend $8000 on a ring for your engagement, that is okay. Just remember it is probably only worth 10%-25% of that if you buy it at a national chain jewelry store. The reality is that most of the cost of the ring is the store’s overhead. That is the cost of the building, the labor, taxes, and profit. The wholesale cost of the ring itself is a small percentage of the total cost you are paying. And even a smaller percentage of that is the actual value of the diamonds or the gold. When you buy new, you are also paying for the creation of the ring.

This is why when you buy a ring at a major store they usually have a no return policy. Or they have a policy where they will take the item back IF you spend TWICE as much on a new item. Wow, nothing like losing twice as much money as the first time.

Lot's of Volkswagens

Lot’s of Volkswagens

The jewelry industry has great marketers and marketing strategies. One thing you will see often is a ring listed with a “Ctw” – Carat total weight (or TCW). What they will do is put 20 little five point diamonds in a ring and call it 1 carat, total weight. It sounds good at first, like having 100 single dollar bills gives you $100. But it doesn’t work that way with diamonds. It is more like saying that if you have 10 Volkswagens you have a Maserati. Well my friends, if you have 10 Volkswagens you do not have a Maserati, you have 10 Volkswagens!

Not a bunch of Volkswagens!

Not a bunch of Volkswagens!

Some of you may be wondering what the alternatives to buying at the box stores is, and my answer is to shop pawn shops and second hand stores. You don’t need to know much to get a better deal. The rings pawn shops buy from individuals are mostly of the same quality as those you get at Jared’s, Kay’s or Zales. In fact they were probably bought there originally.

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Rip Off Artists HSN ( Home Shopping Network )

If you have cable TV you’ve probably run across the Home Shopping Network, or HSN as it is called. They sell just about everything you don’t need and then some! It would be nice if they did your Costco shopping and sent it to you,  but they try to sell things you probably would never buy at Costco. What’s worse is they have gotten into the coin business.

BUYER BEWARE!

There is nothing that these guys sell that is a good deal. They may sell real coins, which is better than some places, but they sell them at unreal prices. Take a look at this listing from their website.

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  • Price- This 1881 S Morgan dollar graded NGC MS63 is priced for 2x to 3x what you can pick them up for in the open market. You can usually find them for $45 to $60.
  • Fake Images- What really galls me … I should be numb to it by now….is that the images used are fake images, just computer generated. They look nothing like the coin you will get, and the holders are also computer generated and not what real NGC holders look like. I’m amazed NGC allows this.
  • Smarmy Marketing – For extra credit points they have a video you can watch where a guy rants for two minutes about how incredible the coin is and a lady is in the back ground just in shock that they can sell the coins for this price. Well, I’m also in shock that they can sell the coins for that price.
  • Targeting the Elderly- Although this is not mentioned in the advertising this company targets the elderly. Mostly they try to get them because they have money, are easy to bully, and occasionally have dementia.

If you have friends or family members that are shopping with HSN please send them this article. This company will continue to do this as long as people fall for their marketing tactics.

Hey HSN stop ripping people off!

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Of Pennyweights and Grams

If Math makes you queasy, you may want to skip this post and move on to your favorite sports site. There are weights and measures involved in gold and silver that confuse consumers. You can’t blame consumers, this stuff is confusing. And occasionally there is intent by shop owners to deceive. Here is what you need to know. Gold and silver are measured in a unit called a ”Troy Ounce”.  This is different from the ounce you may weigh at home on a postal scale or to measure food. That ounce is called the Avoirdupois and is 28.35 grams. The troy ounce is 31.103 grams. This is the magic number that we use to determine how much silver or gold is in an item. Jewelers have a tendency to use pennyweights. It takes 20 pennyweights (dwt) to make a troy ounce.

In other words a pennyweight is 5% of a troy ounce and a gram is 3.2% of an ounce. Why is this important to you? Because someone using pennyweights can offer a higher price for an item, and yet pay less. Did I lose you? If I offer you $20 per gram for 14k gold, and they offer $25 per pennyweight for 14k gold, then here is what you just got offered per ounce: The $20 per gram equals is $1,063 per ounce. The $25 per pennyweight is only $854 per ounce.  The $20 per gram is almost 25% more than the $25 per dwt.

This becomes very important when people call around to get pricing on silver or gold. I always recommend people go in person to get prices on items. One reason is because of the confusion between pennyweights and grams. A second reason is that someone can tell you one thing over the phone and actual pay a different amount after they weigh your jewelry.

Okay, so we didn’t really do that much math….maybe next time!

 

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World Treasures Mint FAKE silver bars


faketroyThe “World Treasures Mint” is putting out fake silver bars. These bars are marked “1 Troy Oz .999 Silver”. They come in many different designs. They also come in individual holders and some have serial numbers.

 

 

These bars are made to look like real silver bars and are made to deceive. There is nothing on the bar that indicates they are not pure silver. The weight is also off. The bar we examined weighs 34.4 grams instead of the 31.1 grams a troy ounce should weigh. This particular bar has a serial number. You can see, under magnification, that the serial number is copper, as is the rest of the bar.faketroy2faketroyclose

The company sells them as ”Silver Clad” on their website, but they are not marked that way. All you get is a hint that they are clad with the (hard to read) words “In Clad We Trust”.  The average person looking at these bars would have no clear way to know they are not pure silver based on the markings.

 

 

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TV Coin Selling Guy

I had a customer ask about the guys who sell coins on TV. Technically, the question was “which one do you like better”.  Come on, you can’t expect a guy to pick between his kids can you? 🙂

These coin vault type shows have a couple of flaws. The first is that they charge about double what you can buy things locally for.  That assumes you are buying legit items. (We’ll save the fancy boxes for another day.) I don’t know too many business where you can charge a 50% commission and have people fawning over you.  I know some real estate agents who think they are worth that much. You know who you are.

The second flaw is worse, it is the dishonest way in which they represent themselves. That is the coins that they sell are not sold in an honest fashion. Let’s face it, you can go to a major coin show and pay double what a coin is worth. Although if you are an avid collector that would probably never happen. But when you show prices from eBay to justify how you are pricing things on your TV show, that is nonsense.  He always seems to find people pricing things for twice what he sells them for. I guess he couldn’t find any selling for less, hmm…. what are the odds?

The quick answer, just don’t buy from the TV. Even when they sell a good coin, you are paying way more than you can buy them for locally. And if you shop locally you can usually find knowledgeable dealers who are willing to show you the items up close and answer your questions.

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Franklin Mint – 1000 times over

The Franklin Mint has produced ”collector” items  for several decades. The word collector is in quotations because the items that they sell are not really collector items. Yes, people do have them, and keep them, so in the very broad term they are ”collectible”.

The problem with items that are made to be collectible tend to have a negative return on investment. Most things that you can save or collect over time that end up having value are everyday items (like toys or clothes or furniture). They were not made to be a collectible, but people save them because the items are unique or scarce or remind them of their childhood (or a certain time period in history they have interest in).

The only upside to Franklin mint items is that a lot of what they produced (especially in the 1970’s) was made out of sterling silver. Herein lies the value of any of their stuff. Unfortunately, most of the items they sold were at such high premiums that there is little to no hope of actually getting a positive return on your money.

Today, many other companies market based on the Franklin Mint model. They either use the word ”mint” or other official sounding words to make people believe they are getting something of value. Or, they promote an item as ”collectible” or as something that will appreciate in value. Unfortunately most of these companies are the only ones who are getting a good return on their investment, while the consumer is left holding a fancy box!

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If it sounds to good to be true, it is.

The old adage is true. You may have seen a lot of ads on the local TV claiming you can get a ”free trip to Vegas” if you sell them your gold. I’ll point out this small company does not send you to Vegas out of the goodness of their hearts. They pay you less, and use some of the profit from the purchase to pay for your ”free” Vegas trip. Come on in to Old Pueblo Coin and you’ll have a lot more money to spend in Vegas if you buy the tickets yourself AND get a fair price for your gold and silver.

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