In gold they trust: Cold cash for ‘scrap’ jewelry
Adela (not her real name) waited an hour and a half on a sofa along a hotel corridor while assistants of a foreign jewelry buyer went out to withdraw cash to purchase items from another seller who came before her.
“I was told to be patient since the seller brought a lot of antique jewelry and the people inside [the rented hotel function room] ran out of cash for the purchase of all his items,” she said in Filipino.
Adela was an elderly woman who needed fast cash. Dressed in very simple clothes, she could have boarded a bus and nobody would have suspected that she carried a 3.5-carat loose diamond worth hundreds of thousands of pesos in her purse.
Waiting along with her was David (not his real name) who described the contents of his clutch bag as “conjugal jewelry” that he and his wife agreed to sell.
Adela and David were among those enticed by full-page newspaper ads that for the past several weeks appeared in the Inquirer, announcing “gold-buying” events that promised hefty returns for their antique jewelry, scrap gold like gold dental fillings and other unused, unwanted or “unfashionable” jewelry.
The organizers said people could also come in with their items for a free appraisal. This attracted the attention of a third customer, a rather impatient middle-aged woman who wanted to jump the line so her items could be examined.
Adela’s turn took less than 10 minutes. She looked satisfied as she left the function room and mumbled her thanks to a young doorman dressed as a dandy who described himself as “a half-Filipino from Cebu.”
David then entered, took a little more time and left with a look of relief and excitement on his face.
“Ayos (Done),” he told this reporter as he stepped out of the function room.
H&J Jewellers, the company behind the ads placed in the Inquirer, describes itself as “a leading UK jeweler” that returned to Manila “due to popular demand.”
One ad promised “immediate payment in cash” for gold and/or diamond jewelry and “vintage Swiss watches.”
H&J’s Samuel Parrott, who attended to Adela and David, was quoted in the ad saying that “lots of families have what I call hidden treasures in their homes, inherited jewelry from their grandparents, unfashionable jewelry they no longer wish to wear just lying around because they are reluctant to let go of these for sentimental reasons.”
Parrott added, however, that rather than let the jewelry sit unappreciated in storage, H&J professionals could appraise these items and offer spot cash for those who wish to sell.
He said there had been many cases in the past when those who went to their gold-buying events were “surprised with our estimation” and eventually “go away extremely happy, with cash” to pay children’s tuition, home luxuries “or even cars.”
In the past two months, H&J held at least three gold-buying events in five-star hotels for several days.
The half-Filipino doorman said there had also been gold-buying events in Cebu which generated a similarly warm response.
He added that the company also held gold-buying events in Malaysia and Singapore that were successful.
“We are on the lookout for higher-quality gold,” he said.
These events were tightly guarded. A male Inquirer reporter who attempted to enter one of these venues out of curiosity was turned away after doormen learned he had no jewelry to sell.
A slim and young-looking Parrott was commanding the event at the function room of a five-star hotel in Makati City when this reporter walked in after Adela and David.
Parrott described himself as a “22-year-old jewelry appraiser” who is related to H&J’s UK-based owner Andrew Harding.
He took one look at a gold-plated antique tamburin necklace meant for appraisal that this reporter—who did not identify herself as from the Inquirer—drew out from her purse.
“Oh, that’s silver,” he remarked from a distance of several feet from the item.
How could he tell? Was it the sound it made?
Parrott would not say but noted that several persons already came in with similar antique jewelry.
“Even if it’s silver, it’s not as highly priced as gold but I would suggest you hold on to it. Silver might become more valuable someday,” he said consolingly.
To prove his point, Parrott took the tamburin and rubbed one portion against a smooth black stone about the size of a paperweight that jewelry experts refer to as streak or touchstone.
Parrott then took a small plastic bottle that looked like a vessel for eye drops and gingerly put a drop of liquid on the part of the stone where he rubbed the tamburin.
“See, it’s silver. It’s not gold,” he said. Gold with a higher concentration such as those used in 14- to 18-karat fine jewelry would react differently to the liquid.
Nitric acid is used in tests like these to determine how much gold a piece of jewelry has.
Twenty-four-karat gold is considered pure gold. It may be precious but 24k jewelry, being a “soft metal,” could lose its shape. It has to be mixed with a small amount of another metal to make it more durable.
Eighteen-karat gold is 18 parts gold and six parts metal alloy. Fourteen-karat gold has 14 parts gold and 10 parts alloy.
Gold of varying mixes react differently to nitric acid.
This reporter then took out an antique white-gold solitaire diamond ring, an inheritance from her grandmother.
“Yes, it is white gold but we want 18k gold. And the diamond has to be at least 1 carat in size,” Parrott said.
Besides, the diamond has an inclusion—the term used for very fine cracks detected through powerful lenses in an otherwise flawless stone.
He then whipped out a transparent plastic chart where the diamond carat sizes can be compared to show how big a diamond must be to qualify for purchase.
Despite H&J’s announcement in its ad that it is interested in vintage luxury watches, an antique Lady Elgin watch this reporter brought did not merit any attention at all.
The company is interested primarily in Rolexes and Patek Philippes, Parrott explained.
Parrott said H&J does not resell the pieces it purchases. Rather, the company brings these to UK where the gold is sold to jewelry-makers there and refashioned into chicer pieces.
It is not surprising that H&J and other foreign-based companies in the same business are drawn to the Philippines.
Filipinos are known for their penchant for fine jewelry, not only for investment but also for social status.
Consider the early batches of overseas Filipino workers returning from the Middle East who brandished thick gold chains and pendants on their necks and chests upon arrival. Or, think customs personnel with the heavy golden chains dangling from their necks.
More Filipinos, however, would rather buy jewelry to mark special occasions like the birth of children, birthdays and anniversaries as well as to celebrate successful business deals.
As such, pawnshops also make a killing especially during enrollment period since parents are likely to pawn their jewelry when cash runs out. Gold, obviously, is a dependable commodity even in domestic concerns.
Parrott displayed the 3.5-carat diamond he paid Adela P400,000 for. In local jewelry parlance, Adela’s erstwhile diamond would be called malandi (flirty) because it disperses the light that strikes it beautifully. And given its size, any enthusiast would agree that Adela was shortchanged.
In fact, the staff of an upscale jewelry shop in Makati howled at Adela’s apparent loss when told of Parrott’s price. A 3.5-carat diamond of the same cut, size and classification sells for $11,500 per carat in their store.
“It has a slight yellowish tinge,” Parrott explained, maybe to justify the amount he paid for the diamond.
Adela did not look like she was aware of such a consideration when she left the function room less than 30 minutes ago.
In David’s case, Parrott said he paid P140,000 for the seller’s 18k yellow gold necklace of quite some heft.
This reporter asked for Parrott’s permission and lifted the necklace. By the feel of its weight, David could have gotten more if only he did more research.
A check with Gold Price Today website showed that in the afternoon of March 27, a few weeks after H&J’s event, the price for every gram of 18k gold was P1,582.82. Fourteen-karat gold was P1,231.81 per gram. The website did not indicate where a potential seller could offer his item.
Out on the street, one neighborhood “We Buy Gold” shop in Southern Metro Manila has a buyer willing to pay P1,550 for 1 gram of 18k gold and P1,100 for 1 gram of 14k gold.
Worth its weight
Gold prices in the world market have been climbing steadily for more than a year, prompting some insiders in the local jewelry business to discourage friends from selling their items in the hope that holding on to them could reap a bigger windfall in the future.
A recent wire story showed that in the United States, buyers of used jewelry (referred to as scrap gold) are making a killing especially after the recession as even wealthy families are forced to sell estate jewelry.
One local insider theorized that European-based gold dealers could be looking east as scrap gold that could be easily turned to new jewelry becomes scarcer in their area.
Vicente Aquino, Bangko Sentral ng Pilipinas (BSP) assistant governor and head of its security plant complex in Quezon City, said foreign gold buyers like H&J were not committing any illegal activity per se in buying scrap gold in the Philippines.
“If a piece is already in the form of gold jewelry, I don’t know of any law that prohibits the sale of jewelry whether the sale involves locals or foreigners,” he told the Inquirer in a phone interview.
Pure gold bars or gold bullions could be another matter, Aquino warned.
“We have to check if the source is a small-scale miner (SSM) because if that is so, that is illegal. An SSM is legally obliged to sell only to the BSP,” he explained.
“We have Republic Act No. 7076 or the People’s Small-Scale Mining Act of 1991 that legally obliges small-scale gold miners to sell the gold that they mine only to the BSP,” Aquino stressed.
“But whether the gold jewelry is newly produced or antique, our locals can sell to anyone they want to sell. They can put up stores or even sell on the bangketa (sidewalk) if a person, whether foreigner or local, is willing to buy that at their price,” Aquino said.
But what if the foreigner dictates the price he is willing to pay?
“So long as what the seller is offering belongs to him or he is authorized [by a third party] to do so,” Aquino replied.
‘Good for us’
Senate banks and financial institutions committee chair Sergio Osmeña III echoed Aquino’s opinion.
“There’s nothing illegal for anyone to come here to buy anything unless it’s contraband,” he said.
Osmeña noted that the gold-buying events could even be “good for us.” For instance, he said those who thought the gold watch their father left them 30 years ago had no more worth would find that gold would always have an intrinsic value.
If H&J is buying cheap as some observed, the senator warned it should be prepared to face competition from other parties willing to offer more cash for scrap jewelry.
However, BSP’s Aquino is not discounting the possibility of another concern—that small-scale miners are selling their harvest to jewelry-makers instead of bringing these to the central bank.
“We have no way of determining whether the gold sold to jewelers came from small-scale miners but what we noticed is that ever since July 2011 when the [Bureau of Internal Revenue] started requiring small-scale miners to pay excise and withholding tax on their gold sales, bumaba na ang binebenta sa BSP (sales have dropped in the BSP),” he noted.
Aquino said small-scale miners were now required to pay a 5-percent withholding tax and 2-percent excise tax on their sales.
“So they get big tax deductions, and this actually resulted in a very low volume of purchase by the BSP. Anyway, that is a requirement of the BIR and we cannot do anything about it,” he said.
Get Inquirer updates while on the go, add us on these apps:
Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of INQUIRER.net. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City,Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94