July 30, 2014

COVER STORY

Cash4Gold's Rush

A Pompano Beach company has emerged as one of the country's highest-volume gold dealers by capitalizing on many consumers' desire to turn their jewelry into cash.

Mike Vogel | 5/1/2009
In the Bag
IN THE BAG: The company says it receives 15,000 to 20,000 packages each week and has 3 million pieces of jewelry on its processing floor.
[Photo: Newscom/Palm Beach Post]

Jeff Aronson’s Cash4Gold has filled the airwaves over the past two years with TV commercials exhorting people to mail their jewelry to his company in Pompano Beach and receive “cold hard cash.” In the ads, excited customers — or, in recent ads, actors hired to stand in for customers — offered testimonials, while graphics proclaimed “Get TOP DOLLAR for your gold!”


“My customer is there for convenience, for service, for a confidential transaction and to be able to do it from the comfort of their home. There’s a massive segment of society that doesn’t have time to be running around.” — Jeff Aronson, CEO, Cash4Gold [Photo: Newscom/Palm Beach Post]
The crowning moment came in this year’s Super Bowl broadcast, with a $3-million Cash4Gold ad starring two financially strapped pitchmen, rapper MC Hammer and former “Tonight Show” sidekick Ed McMahon. In the ad, Hammer shows off bling; McMahon talks of selling his gold toilet to Cash4Gold. The spot generated buzz everywhere from the Wall Street Journal to “Live with Regis and Kelly.”

All the ads have paid off in the volume of business that Cash4Gold needs to justify the millions it has spent on promotion in the two years since Aronson founded it. Jewelry continues to pour in. And the company melts between 3,000 to 4,000 fine ounces of gold and 800 pounds of silver a week, Aronson says. At 2008’s average prices, that works out — he won’t disclose revenue or say whether the privately held company is profitable — to $7.5 million in silver and between $136 million and $181 million in gold in a year. The company bills itself today as the nation’s largest buyer of gold from the public.

As it has grown, however, Cash4Gold also has generated a different kind of volume: More than 300 complaints from consumers to the Better Business Bureau and dozens to the state Attorney General and Department of Agriculture and Consumer Services, alleging problems with Cash4Gold’s service or complaining of low payouts. Along with the formal complaints, internet postings devoted to disparaging the company have sprung up as well.



VIDEO

Championship Ring Saved

Days after Cash4Gold's Super Bowl TV ad, a 1995 AFC Championship ring was pulled out of a volume of gold.

Complaints about Cash4Gold to the Better Business Bureau
Complaints Response
9 Making a full refund,as the consumerrequested
2 Making a partial refund
310 Agreeing to performaccording to theircontract
4 Refusing to make anadjustment
1 Refuse to adjust,relying on termsof agreement
6 Unassigned
332 Total
In the Bag
Advice to consumers:
“The prudent thing to do is get more than one opinion on the value of your property,” says Better Business Bureau President Brodie White.

[Photo: Scott Wiseman]

Aronson says his company has satisfactorily resolved all but a handful of the service complaints. He makes no apologies for his payouts: He keeps from 80% to 20% of the spot price of the gold that his customers mail in — those margins, he says, are dictated by his business model and the high costs of advertising, mailers and processing. Aronson acknowledges his customers may get more elsewhere if they go to the trouble of shopping.

Cash 4 Gold on TV
AS SEEN ON TV: The company bills itself today as the nation’s largest buyer of gold from the public. Recent ads with less emphasis on “top dollar” represent an evolution of marketing strategy, the company says.
“My customer is there for convenience, for service, for a confidential transaction and to be able to do it from the comfort of their own home,” he says. “There’s a massive segment of society that doesn’t have time to be running around.”

Whether Aronson’s expensive model continues to thrive in a commodity business could depend on how it faces up to several challenges, including how the evolution of the recession impacts the price of gold and consumers’ need to part with their jewelry for cash. The company believes its business model “will endure in a strong or weak economy.”

In addition, the company and the state have to resolve how it fits into the state’s regulatory scheme for “secondhand dealers” in precious metals; the company could face additional regulation. There’s also the question of how additional competition — Aronson’s proud of having “spawned an industry” — will affect the company.

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