Gold Rush: Soaring Prices, Unscrupulous Precious-Metals Dealers, Right-Wing Paranoia -- We've Been Down This Yellow-Brick Road Before

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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."

Professional gold buyers sometimes insist that if a piece of jewelry is stamped "18-carat," for instance, that means it must be 18 carats.

"I say, 'I'm sorry, sir, I understand your concern, but somebody who made that piece of jewelry 40 years ago screwed you," Williams says.

Because of the high price of gold, people are melting down items that appear to be valuable — but difficult-to-sell — antiques.

"I've seen beautiful sets of sterling flatware, tea sets — real Americana," he says. "Nobody buys pocket watches anymore. The crap gets melted down."

If a financial meltdown occurs, or the price of gold keeps soaring upward, people may wish they had held on to their spare gold. For sure, the folks who bought gold a few years ago are happy they still own it.

Paul Thompson of Coins N Things remembers chatting with a customer in the late 1990s who had just cashed in his 401(k), sold his house, and put "every penny" into gold and silver.

"He was convinced that the world — the economy as we knew it — would be coming to an end," Thompson says. "I listened to him, but I was kind of hoping for me and my children's sake that he was wrong."

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.