Cash for gold services take gold jewelry and scrap gold and pay by the "melt value," or the value of each piece by weight. Some companies even offer a buy-by-mail service, where sellers can mail their pieces in for evaluation and purchase. These services can be a quick way to generate money in an emergency, but patrons risk giving away potentially valuable jewelry for a fraction of the true value to unscrupulous buyers.
The chief risk of selling gold jewelry to a cash for gold service is that a piece with historical or aesthetic value may be worth far more than its weight in gold. Once these pieces are melted down, their value is lost for good.
The cash for gold industry is also infamous for predatory business practices. Mail-in services often offer prepaid or low-cost shipping to send gold in, but demand high fees for returning pieces as a way to push sellers to accept sub-standard offers. Prices can also be manipulated, with some companies offering as little as 20 percent of the true value of the piece to sellers. Many of the people utilizing these services are in need of quick cash and are not up-to-date on the current value of gold.