OLR Research Report

October 1, 2008




By: Kristin Sullivan, Associate Analyst

You asked whether, like pawnbrokers, precious metal and stone dealers must keep goods they purchase for a specified time period before selling them. If not, you want to know of possible opposition to establishing a retention period.


State law does not require precious metal and stone dealers to keep goods they purchase for a specified time period before selling them. However, they must keep records of purchases and allow access to the police upon request. Pawnbrokers, on the other hand, must retain pledged property for at least two months before disposing of it (CGS 21-45). In addition, the law prohibits anyone, including precious metal and stone dealers and pawnbrokers, from knowingly receiving and selling stolen property (CGS 53a-119(8)). This form of larceny is punishable by up to 20 years in prison, or a fine of up to $15,000, or both. The actual penalty depends on the value of the property.

To determine possible opposition to establishing a retention period for precious metal and stone dealers, we reviewed public hearing testimony from past bills that have proposed doing so: SB 961 (1995) and HB 5584 (2001). Several dealers opposed the change, testifying it could affect the value of their merchandise. One police officer supported the change, testifying it would give law enforcement time to track down and retrieve valuable stolen goods such as jewelry. From this we can probably surmise that dealers would oppose a retention period. It is less clear how law enforcement or others would react.


Under CGS 21-100, a “precious metal and stone dealer” is anyone who is in the business of buying gold; silver; items plated with gold, silver, or platinum; watches; jewelry; precious stones; or coins. Manufacturers are exempt. The law requires that these dealers be licensed by the chief of police, or if there is none, the first selectman of the municipality in which they do business. Licenses may be revoked for cause and licensing authorities may not issue them to anyone convicted of a felony. The licensing authority may require an applicant to submit to state and national criminal history records checks.

Unlike pawnbrokers, precious metal and stone dealers are not required to retain purchased good for a specified period. One reason for the difference may be that pawnbrokers lend money on deposits or pledges of personal property (e.g., jewelry or household goods), or buy the property with the agreement to sell it back to the owner at a later date. Precious metal and stone dealers purchase goods like gold, silver, and jewelry without any agreement to sell them back.

But precious metal and stone dealers must safeguard against receiving and disposing of stolen goods, a form of larceny. Specifically, they must demand positive identification from sellers. They must also keep records of each transaction, including a description of the goods, the price paid, the seller's name and address, the type of identification presented, and the day and time the goods were received. The information must be written down at the time the transaction takes place. Any state or municipal police officer may have access to the required records and inspect the business establishment and the goods purchased or received.

Precious metal and stone dealers cannot purchase goods from a minor who is not accompanied by a parent or guardian. They must pay for goods by check, draft, or money order. Cash may not be transferred to either party in the course of a transaction. They must give sellers receipts containing the same information they are required to keep, the amount paid for the goods, and the business's name and address.

The licensing authority may require dealers to make a weekly sworn statement describing the goods received during the week. These statements are not subject to disclosure under the Freedom of Information Act.


During the February 6, 2001 public hearing on HB 5584, one law enforcement representative testified in support of the bill's 10-day retention period and several precious metal and stone dealers testified against it. Several dealers testified in opposition to the 14-day retention period in SB 961 during its April 7, 1995 public hearing.

Based on this testimony, it appears that dealers would likely oppose the establishment of a holding period. It is less clear whether any particular group (e.g., law enforcement) would support the change.

Testimony in Support

During the 2001 public hearing, Lt. Morrissey from Manchester, together with Rep. David Blackwell, testified in favor of HB 5584. Lt. Morrissey favored the bill's 10-day retention period, testifying that it would give police time to attempt to recover stolen property. He testified that the law's record-keeping requirements enable police to obtain a description of a stolen item (from a dealer), but they do not go far enough because the item may have been sold or sent to a smelter by the time they track it to a dealer.

But Lt. Morrissey implied that he would support an exemption from the holding period for jewelry and antique stores stating, “The jewelry stores are very good… in reporting. And very rarely do we find that the criminal element goes there to dispose of property. It's usually to the second hand shops, the pawn shops, etcetera.” When asked specifically by Sen. Cappiello whether he would oppose an exemption, Lt. Morrissey replied, “Full time jewelry shops, like I said, Kay jewelers all these chain stores that we deal with that they are legitimate businesses up front. That's their full time business. Very rarely does a criminal element go there.”

Rep. Blackwell focused most of his testimony on pawnbrokers. He said that, “The purpose of this bill is to strengthen the licensure laws regarding secondhand property dealers,” but also that, “The intent of this legislation is not to target antique dealers, coin dealers, secondhand clothing and sporting goods shops, video game swap shops, or the like.” When asked, it appeared he did not oppose deleting the retention provision for precious metal and stone dealers.

Testimony in Opposition

During the 1995 and 2001 public hearings, several precious metal and stone dealers expressed opposition to any sort of holding period. Most were small business owners, especially coin dealers, who testified that such a period would subject them to a loss in profits due to gold and silver markets volatility. For example, in 1995 the president of Sam Sloat Coins, Inc. said:

Section 8(b), says we shall hold any purchases for 14 days and…bullion items are quoted by us with a 3% spread between our bid and ask. And quite frequently the change in gold and silver coins far exceeds 3% within a matter of a couple of days and will subject us to tremendous possibilities for loss.

Alan Berman, a numismatic writer and editor, testified at the same hearing to ask for an exemption from the retention period for professional numismatics (coin collectors). He said:

This bill requires a 14-day holding period. Typical turn over on bullion coins, the most common ones, is one day. The profit is often 1% to 4%, hence the public would receive discounted prices for their coins. This will be necessary considering the fluctuation of bullion prices over one day can exceed the entire profit margin. Collectors and multi-investors will go out of state, the poor and middle class will suffer. Local shops will be forced out of business by out-of-state competition.

During the 2001 public hearing on HB 5584, the owners of Olde Towne Coin Company in Newington testified against that bill's 10-day retention period. Harold Kritzman echoed the testimony from 1995 saying:

We often purchase large quantities of, for example, the one ounce American gold eagle, the one ounce Canadian gold maple leaf, $1,000 face bags of U.S. silver coins that were made prior to 1965 for our investors and customers. We would be put out of business if we were required to tie up thousands of odd dollars of our working capital for a period of 10 days. It's like asking a brokerage house to purchase a client's stock certificates at market, but not be able to resell them for ten days.

A 10-day holding period would change us from being business people into being gamblers. With a holding period, dealers like us would be forced to pay the public much less than the value for their bullion coins. Understand that the gold, silver, platinum markets are an ever-changing daily market, as volatile as I guess some shares of IBM and Cisco have been as of late.

Jan Kritzman emphasized logistical issues. Her testimony included the following:

Just for technical explanation. A ten day holding period, this is what it would do to us. We ship almost daily by common carrier. It would be a huge storage problem for us. We only have 750 square feet of space in our store.

Where would we store safely, for example, multiple bags of $1000 face value silver coins for a period of ten days. This would present a major security risk for us. Each bag weighs approximately sixty pounds.