Research the Company

• Before consulting a dealer, you should research your items value (collectable vs. precious metal) in the current marketplace. Dealers are not required to disclose the possible different values before a consumer sells or buys the item.
• Thoroughly research a company first before doing business. Make sure the business has the appropriate license and/or bond.  Check the dealer’s Business Review with the Better Business Bureau at www.bbb.org.
• If possible, locate a local dealer with an established location. Unscrupulous dealers may be found on internet auction sites or online classifieds.
• Ask the dealer for references and be sure to check them before you do business.
• If possible, do business with dealers that are part of professional trade organizations. In this way, you may have more assurance you are doing business with a dealer committed to their business.
• Before making a purchase, consumers should be aware of sales and used tax sales laws that apply – MN law requires sales tax to be paid on any retail purchases.
• Multiple evaluations of an item will provide a good estimate of its worth.
• Understand specific terms used in the precious metal industry such as spot price, bullion, precious metal, or premium.  (See term definitions)
• Review local and state laws that govern the precious metal industry.
• Understand all company policies before any transaction. (returns, cancellation or delivery policy)
• If you have a dispute with the business, try to contact them first to resolve the issues.

Beware of any Business

• That pressures you to purchase or sell NOW.
• Who cannot commit to a delivery or payment time.  Make sure you are clear about the agreement.
• Without any apparent assets or references (such as a bank, legal references or past customers).
• Dealers offering to pay cash to consumers – as this is a violation of Minnesota Law.

Red Flags to Watch For

• Be careful when doing business with a company that is not established or reputable within the coins and precious metal industry, or if you cannot find license information about the dealer.
• Stay away from dealers that do not follow state and local laws and regulations. It’s also up to you to be aware of laws and regulations.
• Be cautious of dealers using words like “guaranteed profit” and “great investment”.
• Be careful of dealers willing to transact outside of their place of business, or in an unusual location. Minnesota state law requires that dealers must operate from the location designated in the license.
• Use your best judgment. As the old saying goes, “If it sounds or looks too good to be true- it probably is.”

Common Industry Terms

Precious Metal - Is a rare, naturally occurring metallic chemical element of high economic value (for example: gold, silver, platinum and palladium.)

Spot Price - The price at which the international market identifies the value of precious metals. It is also what is used by dealers to calculate what price to set for the consumers. Spot price is a reference point that can be used to calculate base value of an item.

Bullion – A precious metal, in a variety of forms, which is traded near its intrinsic value such as bars, ingots, coins, or rounds.

Numismatic - Items whose value depends more on their rarity, condition, dates, and place of mint rather than on their bullion content.

Intrinsic Value – A value of a coin's precious metal content, which may be different from its collectible value.

Collectible Value - What a collector or dealer may be willing to pay for a coin or jewelry which may be more or less than the intrinsic value of the item.

Premium - The additional value of precious metals, coins or bullion over and above the spot price. The premium includes the value of fabrication, distribution and a dealer fee.

Scrap – Industry term referring to a precious metal item which has an intrinsic value and is purchased with the purpose to be melted and refined into another form.

Locked in – When a price has been confirmed between the buyer and the seller; it becomes is a binding contract between the two parties.  Subsequent price fluctuations do not change the obligation to complete the transaction by either the buyer or the seller.

Better Business Bureau of Minnesota and North Dakota
220 S. River Ridge Cir
Burnsville, MN 55337
www.bbb.org
Ph: 651-699-1111 E-mail: ask@thefirstbbb.org
Facebook: www.facebook.com/thefirstbbb
Twitter: twitter.com/thefirstbbb

These tips were created by the Better Business Bureau, with input from representatives of the local coin and precious metal industry, to assist consumers in making educated buying decisions.

• Precious metal and coin dealers should understand and adhere to all federal, state and local laws governing the industry.
• Be prepared to explain to consumers:
  • The process for determining the rarity, value or quality of items sold.
  • That Dealers prices (both for buying and selling) are not regulated, so prices may be negotiated or vary between dealers.
  • The process used for determining the ratio of base metal to precious metal.
• Dealers will:
  • Provide good faith advice and estimates to non-professional clients.
  • Advertise their products and services in a transparent and ethical manner.
  • Grade precious metals accurately to the best of their ability and in accordance with recognized industry standards.
  • Respect all written contracts with all parties.
  • Refrain from buying and/or selling at unreasonable prices.
  • Not intentionally misrepresent the value of a precious metal.
  • Refrain from using high pressure sales techniques.
  • Refrain from disparaging competitors' business, advertising or selling practices.
  • Never knowingly buy or sell items that have been previously stolen.
  • Promptly deliver items sold to clients.
  • Do their best to educate clients or direct them to other resources.  (Ex. BBB, FTC, PNG, ANA, coin facts, handbook of US coins, etc).
  • Use mediation and/or arbitration services to resolve disputes if/when needed and abide by the mediator/arbitrator’s decision.

Minnesota requires that commercial scales and all associated equipment have an NTEP certificate of conformance and be suitable for the transaction which will be conducted on the scale. To determine suitability, the MN Department of Commerce Weights & Measures Division uses the guidelines in Table 8 of section 2.20 Scales in NIST Handbook 44, 2.2 Theory of Tolerances in Appendix A, and definitions of the same handbook.

Table 8 says that the smallest item weighed on a class II scale with a division size of 0.1 g should weigh at least 5 grams (50 divisions). The smallest item weighed on a class II scale with a division size of 0.01 g should weigh at least 0.2 grams (20 divisions).

In addition, the Theory of Tolerances states that the tolerance allowed on a commercial device should not cause economic injury to either the buyer or the seller. A class II scale with a division size 0.1 g is allowed 1 division (0.1 g) maintenance tolerance for weights between 0 and 500 grams. At the current market prices for gold, that tolerance would allow a monetary error in excess of $3 on every transaction.

Handbook 44 requires that all scales be marked with “d”(Value of Scale Division) or “e”(value of Verification scale division) if “e” is different from “d”. “d” is the smallest subdivision or the difference between two consecutively indicated or printed values expressed in terms of mass. “e” is a value, expressed in units of weight(mass) and specified by the manufacturer of a device, by which the tolerance values and accuracy class applicable to the device are determined.

For these reasons, the Weights & Measures Division requires that scales used for precious metal transactions have an “e” less than or equal to 0.01 g. If the scale is not marked with “e”, then “d” must be less than or equal to 0.01g.

In addition, some vendors sell computer software which connects to the scale and which will convert the scale reading into any unit desired. Even if the software claims to be able to convert the scale reading to 0.01 g divisions, it cannot be more accurate than the scale itself. A conversion to hundredths of a gram would be meaningless if the scale only measures in units of tenths of a gram. A scale which has a division size of 0.01 g could use such software for converting grams to pennyweights (dwt) or other units as long as the software meets the requirements of NIST Handbook 44. W&M investigators will be checking the conversions and the compliance with Handbook 44. For example: 0.01 g = 0.006 dwt, but Handbook 44 requires that all divisions be in units of 1, 2, or 5. The software should convert grams in divisions of 0.01 g to divisions of 0.005 dwt.

Precious metal dealers must also comply with the requirements of MN Statute Chapter 325F. CONSUMER PROTECTION; PRODUCTS AND SALES.

Specific requirements can be found in the sections governing precious metals 325F.73 - 325F.744 and can be found on the Legislative Revisor's website: https://www.revisor.mn.gov/statutes/?id=325F

If you have questions regarding this, contact Julie Quinn at 651-215-5823.