Soaring gold prices mean big business for companies who buy it from struggling consumers. But after reports of deceptive practices, the House of Representatives passed a bill Wednesday cracking down on the gold-buying business.
CBS News Business and Economics Correspondent Rebecca Jarvis explained on "The Early Show" Thursday, "There are gold companies out there who offer to buy gold from consumers, and they're knowingly ripping off consumers. They are knowingly offering consumers pennies on the dollar for the value of their gold. And in many cases, they are companies we've seen them a lot on television, so people get the feeling, just because they've seen them on-air they are reputable. The reality is, a lot of companies are just taking gold from people and not paying them full value for it."
So is now a good time to sell gold if you have jewelry sitting around and need cash?
Jarvis said, "Gold is, as far as where it trades here at the New York Mercantile Exchange in New York, at all-time highs. It's near $1,400 an ounce. So, for those who need some cash, if they have gold items sitting around the home, it is not a huge mistake to sell them."
But what should you consider before you sell your gold?
Jarvis recommended consumers think about these factors:
The Gold in Your Jewelry:
She said, "First of all you are only paid for the gold in your jewelry. If you have jewelry that has another thing in it other than gold like a bauble or something like that you have to think about what you're actually giving, it has to be pure gold."
The Retail Value:
"How much would this thing, this item be worth if you sold it on the street," she said.
The Melt Value:
"(This is what) the gold vendor will take into account," Jarvis said. "What this item is worth once it's melted down and purely gold."
Jarvis added, "Is there a personal value to you? Is parting with it going to be hard and more valuable to you than the actual money?"
Jarvis also offered the gold-buying companies below, which are rated highly by the Better Business Bureau.
Jarvis said, "Finding the right vendor is key to all this. The Better Business Bureau rates a number of gold companies. If you are going to do business with one, you should go to their website and check it out first."
You can also get a good transaction in your neighborhood, Jarvis said.
"Pawn shops actually do about 35 to 70 percent of the face value of gold, generally speaking. And also the jeweler," she said. "Go to the local jeweler. Vet it with them first, before you send it to one of these gold places because then you will have a good sense for how much could you get for the gold in your neighborhood."