Taking Stock: Simon says you got stiffed

Dear Mr. Berko: I took your advice and went to three different dealers to sell some gold trinkets that had been in our jewelry box for at least 20 years. And I don't understand how the guy in a storefront shop that buys gold, silver, coins and jewelry came up with the numbers he offered me for my trinkets. For instance, he offered me $237 for a 10kt ring that weighs 1.55 ounces. Then he offers me $241 for a gold necklace that is 12kt and weighs 1.25 ounces. I asked him how he determined those prices, and he gave me some convoluted math formula that made no sense. Can you explain the calculations to me? Also, it seems that lots of people (especially teenagers) have cellphones and constantly use them without regard to minute usage. My wife and I have one cellphone that costs us about $82 a month, and it is tough to pay this bill. How can so many people, including young kids, afford this service? Someone told me that the government pays for these cellphones. Is this true? And if it is, whom can we contact? GR in Troy, Mich. Dear GR: Yep, that "someone" is as right as cheese. There may be no free lunch, but there is free cellphone service if you know how to con the system. If you don't, write your congressman (enclose some cash), and his office will graciously guide you with step-by-step instructions to obtain free cellphone service. Two companies that are making a bundle from Government Sponsored Free Phone Service (GSFPS) are Sprint (S-$5.12) and America Movil (AMX-$51.32), which is based in Mexico City, of all places. This free nationwide service accounts for 16 percent of Sprint's revenues and is growing like wildflowers. Grace Boehm, who heads the GSFPS for Sprint, says that at least 30 million households may qualify, in the 19 states where it offers quality GSFPS. Jose Fuentes, director of GSFPS at America Movil, commented: "As we see growth in the food stamp program, we tend to see an increase in the number of AMX's Safelink subscribers." GSFPS generates billions of dollars a year to providers (also including Verizon and ATT), and that profit goes right to their bottom line. This program is partially funded by a federal universal services fee that is added to your monthly cellphone bill and managed by the Universal Service Administration Company (USAC), a government-sponsored enterprise. They buy the user a cellphone and pay for 450 minutes a month, plus Caller ID, texting and voice mail. And if you run out of time, it doesn't cost a dime to fill up again. This is a wonderful idea. It helps gang members to stay in touch with friends and suppliers, and makes it easier for adults to stay in touch with employers, probation officers and bookies. Meanwhile, USAC Chairman Reed Hundt wants 70 million Americans to qualify for GSFPS. Well, Mr. Hundt, how about the 250 million other Americans? OK! Next time you want to sell gold trinkets to a shifty-eyed grafter in a grotty storefront, the following may help you get a fair deal. Gold is usually measured in grains, and one ounce of gold is equal to 437.5 grains. Therefore, each grain of gold is worth ($1,500 divided by 437.5) $3.43. Now you need to know that the purity of gold is measured in karats or kts. Gold that is 24kt is 100 percent pure gold. Pure gold (99.999 fine) is usually reserved for gold bars like those at Ft. Knox that weigh 27.5 pounds or 400 ounces. This is 24kt or 100 percent pure gold and is rarely used in jewelry. This gold is too soft, so goldsmiths mix a metal alloy into the melted gold to give the resulting ring, chain, etc., hardness. Therefore, 18kt gold is (18 divided by 24) 75 percent pure gold, 14kt gold is (14 divided by 24) 58.3 percent pure, while 12kt gold is 50 percent pure and 10kt is 41.6 percent pure gold. So if you have an 18kt gold necklace that weighs 326.2 grains, you multiply 326.2 times $3.43, and the resulting number is $1,188, which would be the value if it were pure 24kt gold. But since the necklace contains only 75 percent gold you must multiply 75 percent times $1,188, and the melt value of your necklace is $891. Now, if that 326.2-grain necklace is only 10kt gold, then again you multiply 326.2 times $3.43, which is $1,188, and that number by 42.6 percent. Therefore, the melt value of the gold in a 10kt gold necklace is $494. It's a piece of cake. Simple as Simon, and easy as pie. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2011 Creators Syndicate Inc. Published: Fri, Jul 8, 2011