Gold Dealers

Understanding Precious Metals Dealers

Licensed precious metals dealers are required to record and retain additional information about property acquired from people other than wholesalers.

By law, dealers are (1) people primarily engaged in the business of purchasing gold or gold-plated ware, silver or silver-plated ware, platinum ware, watches, jewelry, precious stones, bullion, or coins and (2) licensed by the police chief, or for any city or town that does not have an organized local police department, the emergency services, and public protection commissioner.

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SELLER IDENTIFICATION

Under current law, a dealer is required to demand “positive identification” from anyone selling property.  The identification must include a photograph; an address, and an identifying number, including the date of birth.

According to federal tax laws, precious metal dealers are not only required to report certain sales by their customers, but they are also under a legal obligation to report any cash payments they may receive for a single transaction of $10,000 or more.

 

Reputable dealers will take a police report when you sell your gold, They’ll hold on to the piece for 15 days or two weeks, depending on the jurisdiction, in case it’s stolen. 

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RECORD-KEEPING

Under current law, dealers are required to keep records noting the time of each transaction, with a description of the (1) purchased property and the price paid, (2) name and address of the person selling the goods, and (3) date and hour the property was purchased.  Dealers must note the type or form of identification in the record.

> Precious Metals

The record-keeping requirements for selling gold or gold-plated ware, require dealers to maintain a consecutively numbered record-keeping system with entries recorded in English at the time of purchase.  In addition to the information described above, records in the system must contain a (1) general description of the seller, along with proof of identity and (2) a digital photograph of any item without identifiable numbers or markings. The dealer’s record must record the seller’s home address and requires them to keep the records for at least two years.

> Property Description

The record’s property description must include:

> Digital Photographs.

A digital photograph of property that does not have any identifiable numbers or markings is required.  A number corresponding to the number assigned to the property’s entry in the record-keeping system must be visible in the photograph and remain attached to the property until its disposition or sale.

> Bullion and Coins

For bullion and coin sales, in addition to the requirements under current law, dealers are required to keep the record in English, be consecutively numbered, and include the seller’s general description.

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PAYMENT RECORDS

By law, dealers may pay for acquired property only by check or money order.  The law requires dealers who pay by check to retain their electronic copy or other record issued by the financial institution that processes it.  The copy is subject to inspection as part of the dealer’s record-keeping system, and presumably includes the record-keeping applicable to bullion and coin sales.  Dealers must indicate the number or numbers associated with the property in the record-keeping system on the checks or money orders.

Existing law bars dealers from paying sellers in cash or cashing checks or money orders. A violation is a class A misdemeanor, which is punishable by up to a $2,000 fine, up to one year’s imprisonment, or both.

> Customer Receipts

By law, at the time of purchase, a dealer must provide the seller a receipt containing the required record-keeping information, the amount paid for any property sold, and the purchaser’s name and address.

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WEEKLY REPORT

Under current law, at the request of the licensing authority, dealers must submit weekly sworn reports describing the property purchased, including the seller’s name and address.  This reporting requirement is mandatory and gives dealers the option to submit them more often. It requires reports to also include a description of the person from whom the property was purchased and the nature and terms of each transaction.

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Bottom line

Understanding how your dealer runs its operations is helpful in your own record-keeping efforts.  Also, knowing your gold facts gives you confidence when making decisions of who to trust your hard-earned money to and what to expect when making transactions.

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