Some entrepreneurs have added a gold-buying component to existing businesses, resulting in quirky trademark names like "We Buy Gold and Shoe Repair" (in Glendale) and "R&R Barbershop and Jewelry," at 536 East Dunlap Road in Phoenix.

"I have a partner who's a barber," says R&R's owner, Roman Aaron. "It's very dangerous to sit in a room by yourself. With one shop, I kill two birds — I pay less rent, and I have security."

The city of Phoenix, like other Valley municipalities, regulates the industry by making gold buyers obtain secondhand dealer licenses, which can then be yanked if serious irregularities are discovered. Phoenix had 627 such licenses on file as of mid-June, an increase from 2008, when there were 563.

Gold prices reached a record high of $1,266 per troy ounce last month.
Gold prices reached a record high of $1,266 per troy ounce last month.
Jim Clark
Jim Clark

Buyers must hold on to purchased items for 10 days and document all transactions of $100 or more within 24 hours, a less-stringent requirement than for pawnshops, which have to report everything. Any items with serial numbers also must be reported by gold buyers.

Despite the precautions, stolen items frequently end up sold to the buyers, says Phoenix police Sergeant Jeffrey Dick. Four detectives work in the "pawnshop detail" under Dick, going into pawnshops and gold-buying stores daily to make sure they're following the rules.

If a store takes in stolen jewelry, it could be difficult to recover before it's melted down, he says.

Although 48 secondhand dealers were written up for violations in the past 12 months (compared to 43 pawnshops), only two cases resulted in prosecutions.

In one of the two, Chol Kim, owner of D Jewelers at 16456 North 32nd Street, was accused of failing to report four transactions last April that involved gold coins burglarized from a home in Sierra Vista. Kim paid $21,440 for the coins over a three-day period without filling out the required transaction forms, a police report states.

Kim sold the coins to the Coin Gallery for an unknown profit, but then he apparently had a change of heart (or was tipped off to impending police action). Records state that Kim bought the coins back from the Coin Gallery in mid-May for $27,653 and gave them to the burglary victims. Kim's license was suspended for one week, and he was ordered to pay a fine. (Kim says he doesn't want to talk about it).

New Times visited a half-dozen gold-buying shops for this story, obtaining offers from $13 to $17 a gram for 14-carat gold (about 58 percent pure). At the time, the prices represented about 57 percent to 74 percent of the melt value.

Consumer advocates warn that some shops — or the hosts of gold-buying "parties" in private homes — may offer just pennies on the dollar for gold, especially if you're trying to sell something more complicated than a ring, or an object containing mixed metals.

Most of the people who come into "Sell Us Your Gold" on Indian School Road and Goldwater Boulevard in Scottsdale want to get rid of broken jewelry, says the store's youthful owner, Imraan Siddiqi. If someone brings in something really valuable, Siddiqi claims, he'll tell them to sell it on eBay.

The tiny store is little more than a place to stand and a counter with a scale and calculator to help conduct transactions.

Like at other shops, Siddiqi tests the quality of gold he buys by rubbing it on a rectangular brick called an "Arkansas stone" (typically made of novaculite). Drops of nitric acid are applied to the vague smear left behind. If the smear stays a gold color, it's gold.

The weirdest thing anyone has brought in? A dentist in scrubs once tried to sell Siddiqi several gold fillings still embedded in their teeth. Siddiqi asked the man to pry the gold out before accepting them.

"I don't want to play the role of the dentist," Siddiqi says, looking disgusted.

Once the gold is obtained, the next step for gold buyers is to cash it in by melting it down. Many Valley buyers take their stash to NTR Metals at 20830 North 25th Place in Phoenix. The company has 32 locations in the United States.

Compared to professional buyers, who deal with both the public and police inspectors, melters have a straightforward job, says David Williams, the company's regional managing partner. A buyer dumps off a load of jewelry or other items, which are soon turned into hot soup. A glass pipette gets inserted into the soup, and the mix is analyzed for the percentages of gold, silver, and other metals. NTR then cuts a check for 98 percent of the day's spot price for the weight of the metals.

"You don't get much better than that," Williams says firmly.

The whole process takes about 20 minutes. But as with the U.S. Mint, NTR prefers to operate as a wholesale business, which prevents the public from getting that same 98 percent.

For some gold-buying storeowners, though, this stage of the business can be frustrating. It's not just the customers of gold-buying shops who might get ripped off.

"The buck stops with NTR," says Williams. "In many cases, things aren't what they thought they were."

The "sad fact," he says, is that the mints, jewelers, and manufacturers of the world "have been screwing people for years — centuries."

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