How to Avoid Buying Stolen Precious Metals

Platinum ScrapPrecious Metal InvestmentRecycle Precious Metals
Written By Barry Lenson

One good thing about gold, silver, and platinum is that those metals are malleable and easy to reshape.

However, malleability can cause problems, because stolen items made of gold can be easily altered and sold. That neat little gold bar or pair of earrings you just bought could have been a stolen ring only a few weeks ago. Who knows? It is impossible to trace. And the same problem exists when you are buying items made of silver or platinum.

Why You Should Take Steps to Avoid Buying Stolen Goods

There are a number of reasons. One is that if you buy stolen gold, silver or platinum, you are supporting criminal activity and encouraging thieves to steal more. Why would you want to do that?

Another reason is that owning stolen property, even if you did not know it was “hot,” could expose you to legal risk. That item you just bought and paid for could be seized by law enforcement authorities, who are then under no obligation to pay you back the money you spent for it. So the best advice is to take steps to be sure you are not buying anything made of stolen precious metal. Here are some steps to take.

Think Twice Before Buying from “The Man on the Street”

That Craigslist seller, or other independent seller, is not necessarily trustworthy. In many cases, it is just as easy – and safer – to buy from someone who is doing business from a physical address. A local jeweler who has been in business for a long time is almost always honest. Even pawnshops are safer, because they take pains to avoid buying and selling stolen good.  Even a booth in an antiques mall is a location where you can contact the seller if problems later arise.

Ask these Three Questions Before You Buy

Ask any seller where he or she acquired the item you might buy, when that purchase took place, and for what price. (Chances are the seller will not want to answer the last of those three questions but ask anyway.)

In most cases, an honest seller will reply with an answer like, “I bought that ring from an estate sale last year in the next town; a man was selling the contents of a house that had belonged to his mother-in-law.”

If the seller seems flustered or refuses to answer these questions, avoid buying. Something about the item either seems fishy or could really be fishy. There is always another investment to make, so walk away.

Get Paperwork for Your Purchases

The seller should give you a receipt with a description of what you bought and when you bought it. This documentation protects you if the item turns out to be “hot.” If a seller refuses to provide paper documentation of your purchase, that is a “red flag” that something is not right about the transaction. Again, consider walking away.

Do These Considerations Apply to Buying Precious Metal Scrap?

Let’s say you walk into a building that is being demolished and negotiate to buy some old thermocouples or other scrap. Should you ask for documentation to protect yourself?

The short answer is yes, you should always get as much documentation as you can to indicate what you bought and from whom you bought it. Then if the ownership of what you bought is ever questioned, you have some recourse to show how you acquired it.

One advantage of buying precious metal scrap, however, is that it is rarer for criminals to steal and sell scrap – much rarer than the theft of jewelry or, say, silverware.

And if you recycle gold scrap, silver scrap or platinum scrap, a full set of records from the refinery you use to recycle its content can be another source of protection. It’s the kind of documentation Specialty Metals Gives to our clients to accompany every transaction. Call our precious metal consultants at 800-426-2344 to learn about how to invest in precious metals and profit from them – safely.

Barry Lenson
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