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Law needed to monitor mushrooming number of gold dealers
WHETHER they advertise with big yellow signs reading ‘Cash for Gold’ or simply a small, laminated piece of paper pinned onto a lamp post with a mobile number on it, gold dealers have mushroomed in recent years as the high price of gold and the effects of the recession force increasing numbers of people to flog their gold jewellery and coins.
Not only are these establishments replacing the traditional jewellery and pawn shops but they are also operating in a legally gray area.
“Over the last two years it’s become chaotic,” said Christos Kiayias, head of the Cyprus Assay Office in charge of certifying jewellers, of the growing numbers of shops buying gold.
“There are plenty who open and actually do other things as well. He might be an electrician or sandwich maker, as well as buying and selling gold on the side,” he said.
These shops that offer to buy gold for the going rate for cash are currently not regulated by the law, he said. “You can’t say that they’re illegal because at the moment there’s nothing in the law,” he added, explaining that the need to regulate this has only arisen over the last few years.
A bill regulating the activity is currently before the House which Kiayias hopes will be passed by the end of the year.
“In the future more than likely we would give them a licence...they would need to have a screen with the daily price of gold, weighing scales and chemicals that would detect how many carats are in the item,” said Kiayias.
At the moment the Assay Office can only certify a jeweller to buy gold, and establishments not run by jewellers are not strictly speaking legitimate. However the other gold buyers can function without checks simply because there is no law.
Police spokesman Andreas Angelides admitted that this lack of regulation has become a problem particularly over the last 18 months, but the police are doing their best to monitor non-certified outlets.
“We’ve made suggestions for the law such as these premises have to hang on to the goods for ten days before selling them on and they have to keep a photo archive for a year,” he said, adding that this would minimise the sale of stolen goods from the increased numbers of break-ins and robberies.
Questioned on whether the majority of these people running a gold buying shop were in fact professional jewellers, Angelides said whether they know the business or not, “they’re taking advantage of the gap in the market”.
One owner of a chain of jewellery stores who is certified to buy and sell gold said that the unregulated outlets were definitely affecting his business.
“The problem is that a lot of the people that want to sell their gold are women, and they are embarrassed to be seen at places like ours so they avoid us and end up doing deals with illegal establishments where they get ripped off too,” said the jeweller who did not wish to be named.
These illegal ones are hiding behind signs that only have their phone number on them not even a name, he added.
He said that many of the people who come wanting to sell their gold are quite desperate and cited the examples of parents who need money for their child’s tuition fees or someone recently divorced wanting to sell their ring. They often ask for the blinds in the shop to be shut when they come in, he added.
“We agree on a price. The customer then signs a form. We note down their ID, address and we take a photo if they accept, many don’t, and then we issue a receipt,” he said
Apart from buying and selling gold he also operates a pawn shop that does not apply an interest rate like a conventional pawn shop but imposes added sum to cover their costs.
The transaction involves the pawnbroker offering slightly less than the value of the item, an agreement is then signed by both parties that outlines that the item cannot be sold before two months is up or before the customer gives their permission. To get the item back the customer returns the money plus a small sum.
“For example if the customer was given €90 then they would give back €98 plus VAT,” he said.
However he added that 90 per cent of his customers simply want to sell the items.
One pawnbroker who has been in the business for many years and runs a pawn shop in Nicosia, said that he too has been affected by the sudden rise in shops offering to buy and sell gold.
“I don’t have more customers now because of the increase in cost of gold and there are some unscrupulous people, apart from jewellers, who buy gold,” he said.
He explained however the convenience of pawning items instead of selling them and that is simply that you can get them back. “Pawning something gives a time limit to come back in say six to eight months. With our system we give you the chance to get it back,” he said.
He said he safeguards against getting stolen goods by noting down everyone’s details which he can offer the police at any time if they need information.