New Challenges in Dealing Gold

Hilda Beard has a little bit of everything in her Cleveland pawn shop.

"We take gold, we take CDs, movies, guns...we have paint to sell," she says.

She's had her shop open since 1970 and for much of that time, she's had to deal with laws that restrict how pawn shops operate.

Beard says, "whenever anybody brings something in, we log it on computer, and we send it to the city and county each morning, and we have to hold stuff 30 days."

And with recent spikes in the price of gold, it's brought more dealers--dealers that haven't been held by strict regulations.

"They ought to hold it 30 days like a pawn shop does," says Beard.

And that's the idea behind a Tennessee law that Bob Gault with the Bradley County Sheriff's Department says many people don't know about.

"We feel like many people in the community, especially businesses that are dealing in scrap jewelry, since gold prices might have gone up a bit, that may not be aware of this law," says Gault.

Gault adds many businesses and even individuals are getting into the gold buying business. He says the law won't affect a gold shop taking in jewelry, but it will affect what dealers can do with it. It requires the dealers to register with city and county authorities; dealers can't recast or remold or change the form of the jewelry for 30 days; and like pawn shops, they must also keep a daily log of their activities. Gault says all that might be a burden on the gold dealer, but it keeps the customers and the businesses honest.

"We've had an increase in used jewelry," says Gault of recent thefts. "You know for thieves, it's an easy item to fence, and they can get rid of it, make some quick money off of it. We've experienced a lot of jewelry thefts in our home burglaries in the past 6 to 8 months."

And the law is leading Beard to make some changes, too.

"The only thing I might do is make a better description of the gold. Usually if it's scrap or broken gold, i put 'scrap gold'," she says.

She adds that now, she'll be labeling the jewelry that comes in more specifically.

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Tennessee Code Annotated

38-1-201
(a) Any person, firm, or corporation purchasing or otherwise dealing in antique, used or scrap jewelry and precious metals, where the purchase is for resale in its original form or as changed by remounting, melting, reforming, remolding or recasting or for resale as scrap or in bulk, shall be required to register with the chief of police and sheriff of each city and county in which the activity is carried on.

(b) The provisions of this part shall not be applicable to any person, firm, or corporation purchasing or otherwise dealing solely in coins.

c) Business activities regulated under this part shall be subject to the Business Tax Act, compiled in title 67, chapter 4, part 7.

38-1-202
(a) It is unlawful for any person or corporation engaging in the activity described in § 38-1-201 to sell, exchange, barter or remove from the place in which such business is conducted, or to change the form of any such items by remounting, melting, cutting up, or otherwise changing the form of any such items for a period of thirty (30) days from the date of purchase. The provisions of this section do not apply to persons or corporations engaged in the reclamation of precious metals through the reprocessing of used film or other similar materials that in their original form contain precious metals but were not intended to be items of jewelry, or become antiques or be marketed exclusively for the precious metals contained in the materials.

(b) No person acting as a buyer or dealer under the provisions of this section shall purchase any item covered by this section from a minor and shall exercise due care to comply with the provisions of this section.

38-1-203
Every person or corporation dealing in the items described in § 38-1-201 shall keep a log in duplicate and shall enter on the log a clear and accurate description of any items of jewelry or precious metals purchased; the date and amount of money paid for such items; and the name, race, residence and address of the seller. The seller and the purchaser shall sign the log below the description of each transaction. On each day the purchaser shall transact business of the type described within this section, the purchaser shall deliver to the sheriff and the chief of police of each county or municipality in which the business is conducted a copy of the log concerning that day's business, and the copy of the log shall be delivered by twelve o'clock (12:00) noon of the day following the date of the transaction. The book shall be carefully preserved without alteration and shall at all times be open to the inspection of the sheriff of the county and the chief of police or any deputy or police officer of the city or county.

38-1-204
A violation of this part is a Class C misdemeanor.

These laws were passed by the legislature in order to help prevent the destruction of stolen jewelry / gold prior to law enforcement having the opportunity to recover it for the true owner.