Selling Gold? Don't get ripped off!

[retiredkper]

Every where I look now-a-days there is someone wanting to buy my gold. Finally I e-mailed a question to one of the would be buyers (who e-mailed me) asking them what percentage of melt value would they pay me for my gold? I didn’t expect them to answer and they didn’t. There is an old German saying that applies here, “no answer is an answer”. Recently a local TV station ran a report on gold buyers due to all the complaints that they were getting but they missed the boat entirely. They justified the low gold buyer payments by comparing them to the high department store jewelry prices. The high marked up prices for new jewelry they explained was for the design and art work, marketing costs etc. etc. etc. and that the scrap value doesn’t even come close to the high dealer mark ups. All that the TV station did was to stay on the good side of their advertisers. However they did not help their viewers one iota. So let me help those of you who read this. When you want to sell your gold this is what you must know before you contact any potential buyer.

Gold fineness is divided into 1000 parts, .999 fine is considered pure gold (and silver).

Old US gold coins are usually .900 fine which is 90% pure gold.

Gold and silver are weighed using the troy weight system in which 1 ounce is 31.1035 grams or 20 pennyweights. Most jewelry is marked in karat weights like 10k, 14k or 18k.

Pure gold is 24k therefore 10k = .4166 fine, 14k = .5833 fine, 18k = .750 fine in other words divide the karat weight by 24 to get the actual fine weight. Many pieces of old European gold are marked with just the fineness numbers like .333. Also with older gold jewelry from the early 1900’s to the 1960’s there was a legal 1 karat margin of error allowed which most jewelry manufacturers took advantage of so you can safely assume that grandpa’s wedding ring which is marked 14k is really only 13k. Next weigh the gold item and multiply the weight by the fineness number and divide the result by 31.1035. The number you get will be the fraction of an ounce that the pure gold content of the item weighs. Multiply that by the price of gold per ounce and that is your gold melt value. Now the only question remaining is what will the gold buyer pay you for the item. If the buyer offers less than 75% of the actual gold melt value it is time to find another buyer. How do you find out the gold price for that day? Google the name MONEX and go to their site where they are constantly displaying the current market price for gold and other precious metals. Do your homework and keep the buyers honest and by the way you can use the same method the next time you are buying jewelry to avoid the needless mark up sellers. Live long and prosper.

[Art]

Very nice writeup. I'm sure that many people have no idea about this.

[retiredkper]

Very nice writeup. I'm sure that many people have no idea about this.

Thanks Art, I hope it helps keep our readers from getting ripped off. I just saw a news report on tv the other day were one of the "Big" buyers was only paying 10-20% of melt! It is no wonder they can give you and extra 50.00 bonus if you call today! When ever anyone wants to sell gold or silver items they should always ask the buyer what percentage of melt they pay. If you don't get an answer to that question or an answer of less than 75% it is time to move on.

[jtryka]

I remember reading an article in the New York Times I think, about this same issue, and they shopped some items from their office around to a bunch of jewelry buyers in Manhattan and there was a huge spread of between like $700 and $950, and they calculated the value at like $900, so it's really buyer beware.

[Rhino]

There was a segment on CNN I believe about a guy who might be suing Cash4Gold because he sent them a bunch of gold, they sent him a check for 16 CENTS, and they melted it down without giving him time to respond to their offer of 16 Cents.

 

An article I found:

 

http://www.jckonline.com/article/453978-Ca...nvestigated.php

[retiredkper]

There was a segment on CNN I believe about a guy who might be suing Cash4Gold because he sent them a bunch of gold, they sent him a check for 16 CENTS, and they melted it down without giving him time to respond to their offer of 16 Cents.

 

An article I found:

 

http://www.jckonline.com/article/453978-Ca...nvestigated.php

These guys are much worse than the motel buyers that used to ravage the country during the late 70's

[thedeadpoint]

Fred, you sound like you've got a little journalistic hound dog in you. Do you have a background like that? Thanks for the writeup!

[retiredkper]

Fred, you sound like you've got a little journalistic hound dog in you. Do you have a background like that? Thanks for the writeup!

I was never actually a journalist but I have spent most of my life as a coin cataloger and I have done a bit of gold buying and selling. I have always found that the more you know the better the price you get for what ever you are selling.

[clembo]

I know I'm new here but this is an interesting thread.

We buy gold where I work and here is a site that can take a lot of guesswork out of calculating your golds worth BEFORE you start shopping it around.

 

http://www.dendritics.com/scales/metal-calc.asp

 

So assuming one has done the homework with a decent scale and gets a full spot melt price what is next"

For starters most buyers use pennyweight (dwt) so use that as a calculation.

 

I don't really agree with calling people unless you are telling them straight up what YOU have it figured at and what you want for it. Knock 20% off the true melt value and you just might get a deal.

Ask "what are you paying?" and you generally WILL hear crickets chirping. Why? - because buyers don't know if it's a legit caller or another buyer "shopping" them. In my neck of the woods there are a lot of people buying gold. We don't just "hand out" our prices and realistically they vary.

 

If one wants to run around and "shop" their gold we tell you straight out to go to all the other places first and get their offers. We want it but we don't want to spend a bunch of time looking at it so you can go somewhere else. It's also a way to weed out those that are just trying to dupe us. I've seen many a time when someone "quotes" a price they were offered and it's well above melt.

 

In short selling gold is another "do your homework" scenario. Look for the marks, get a decent scale and allow for less if stones are involved.

The majority of what we buy goes to the refiners. Yes, we DO, put some up for resale at a fraction of the original cost to the buyer but as my boss says "refiners don't argue". They melt it down, take a precentage and if we time it right everyone makes money except the people that sold it to us. Just hard facts there.

 

We had a lady come into the store today with several pieces of jewelry. One ring had several stones in it. She asked if we removed the stones and then melted it. I replied yes. I do it with a hammer. Seriously. Most stones are worthless. I throw them away. She decided to keep the ring but we bought the necklaces.

 

Now, when selling gold realize that it takes quantity to send it to a refiner. We take ours to Chicago. In the time it takes us to amass enough prices fluctuate a lot. We need to have a cushion. It's very risky. One can be held holding a lot of idle inventory if the price takes a sudden drop.

 

Finally, the motel buyers, TV buyers and Gold parties. A no brainer. These people really DO prey on those with no brains.

[retiredkper]

Ah yes the ancient English pennyweight system still in wide spread use today. Don't let it over awe you. If you need to use the Dwt system but only have a normal scale just remember that 1 Dwt = 1.5552 grams or 24 grains. Ioz = 20 Dwt. Gold buyers normally use Dwt when buying as follows: they sort the gold by k weight and then weigh all the 10 k together for a total weight and then the 14k gold etc. and then make an offer like $X per Dwt of 10k, $Y per Dwt of 14k etc. This system is very fast and works well for dealers, but the seller still has to figure out the actual gold content of the items to know if they are being offered a fair price. Clembo also made some important points that sellers should keep in mind. Selling small amounts of gold in the form of jewelery that has non-gold components greatly increases the risk and costs to the buyer. Gold coins are a much easier sale since the gold content is clear and certain. He also provides a neat link which we should all save and use.

[ccg]

Interesting. Around here, everyone deals in grams and tenths of grams.

[clembo]

Selling small amounts of gold in the form of jewelery that has non-gold components greatly increases the risk and costs to the buyer. Gold coins are a much easier sale since the gold content is clear and certain. He also provides a neat link which we should all save and use.

 

A point here I really need to address further. Jewelry is the riskiest for sure. Hence the smaller percentages paid. We're basically guessing what the stones weigh. Before it goes to the refiners I knock them out with a hammer (no lie) and throw them away.

 

Gold coins and bullion coins we pay much stronger for because it is a given and easy to calculate. These are also items that go for resale NOT the refiners.

Margins vary and we tend to work on pretty tight margins. A few generalities (at least where I work) include.

World gold coins generally bring less for us as sellers so a lot of it is based on bullion value alone.

U.S. gold tends to bring more and, obviously, if there is a greater numismatic value.

 

Gold Eagles and Canadian Maples tend to be more sought after so we pay more for them.

Krugerands don't do as well.

 

One must also realize that dealers do a lot of dealing amongst themselves. We belong to two "dealer only networks" at work. If we know a dealer in Florida, for example, that is paying $1650 for the one ounce Ultra High Relief in a box and you just happen to pop in with one. We'll probably offer in the $1400 range. If you bought it at $1200 you make money and we make money.

 

Bring same coin in slabbed by NGC as MS70PL and I'm immediately on the computer checking to see what they are going for on ebay as well. There's a good chance that's where a coin like that will end up so we'll pay much stronger for it depending upon realized prices.

 

Personally it's just a hunk of gold to me but paying strong gets sellers back in your store. Especiallly when you do the research right in front of them.

 

Finally, I'll add that gold bullion coins are something you can generally call and get a price quoted on. We will give you a price we'd pay if you were right there in the store. We also warn that the price could change in a very short time. We base it on spot after all and it's a very volatile market these days.

[Scottishmoney]

A point here I really need to address further. Jewelry is the riskiest for sure. Hence the smaller percentages paid. We're basically guessing what the stones weigh. Before it goes to the refiners I knock them out with a hammer (no lie) and throw them away.

 

The B&M I go to asks if he can take the stone out to weigh the gold - then he pops it into the trash and weighs the gold. I am not aware of anybody save maybe a pawn shop that will give you anything for the stone - regardless of what it is.

[hiho]

Good thread with lots of useful info. I'm glad I only buy coins, and now I know that most "precious" stones are worthless.

[retiredkper]

Good thread with lots of useful info. I'm glad I only buy coins, and now I know that most "precious" stones are worthless.

It is a shame that most refiners throw away the precious stones! They are not worthless. Their value how ever is often so low that it does not pay to handle the stones. Back during the gold boom of the late 70's a friend of mine opened a store and was sending gold and silver to his refiner twice a week. First he removed all the stones. Then he took a gemoligy class. He then sorted out his stones, had special holders made up like 2x2's on which he could catalog and grade the stones. He would then sell these to anyone who wanted to build their own rings etc. and of course would sell the stones at vastly reduced prices, much lower than the jewelers had to pay at "wholesale" from their monopolistic suppliers. He ran into two problems; first some jewelers reported him to the police saying he had to be selling stolen property. That was a minor problem since he could prove how he got the items. The second problem was major and could not be over come. Most jewelers would have loved to buy him out but were afraid to do so because if their suppliers found out that the jewelers bought stones from out side of the diamond monopoly the jewelers would be cut off and black balled. Never buy new jewelery! Always buy from dealers who deal in used and estate jewelry, especially the ones that actually are trained jewelers and can repair and customize to order.

[KoRnholio]

It is a shame that most refiners throw away the precious stones! They are not worthless. Their value how ever is often so low that it does not pay to handle the stones. Back during the gold boom of the late 70's a friend of mine opened a store and was sending gold and silver to his refiner twice a week. First he removed all the stones. Then he took a gemoligy class. He then sorted out his stones, had special holders made up like 2x2's on which he could catalog and grade the stones. He would then sell these to anyone who wanted to build their own rings etc. and of course would sell the stones at vastly reduced prices, much lower than the jewelers had to pay at "wholesale" from their monopolistic suppliers. He ran into two problems; first some jewelers reported him to the police saying he had to be selling stolen property. That was a minor problem since he could prove how he got the items. The second problem was major and could not be over come. Most jewelers would have loved to buy him out but were afraid to do so because if their suppliers found out that the jewelers bought stones from out side of the diamond monopoly the jewelers would be cut off and black balled. Never buy new jewelery! Always buy from dealers who deal in used and estate jewelry, especially the ones that actually are trained jewelers and can repair and customize to order.

 

Very interesting, but on the same note, not very surprising based on what I've heard in the past about the diamond market. It always reminds me of the last scene in Blood Diamond where they show the huge diamond being put away in a safe deposit box, among thousands of other safe boxes. I don't think that's really very far from the truth. The prices of diamonds are highly manipulated through artificial shortages.

 

The few scrap gold buyers I've talked to don't even take the diamond's value into account unless it's a substantial size (can't recall if it was 1/2 or a full karat).

[clembo]

It is a shame that most refiners throw away the precious stones! They are not worthless. Their value how ever is often so low that it does not pay to handle the stones. Back during the gold boom of the late 70's a friend of mine opened a store and was sending gold and silver to his refiner twice a week. First he removed all the stones. Then he took a gemoligy class. He then sorted out his stones, had special holders made up like 2x2's on which he could catalog and grade the stones. He would then sell these to anyone who wanted to build their own rings etc. and of course would sell the stones at vastly reduced prices, much lower than the jewelers had to pay at "wholesale" from their monopolistic suppliers. He ran into two problems; first some jewelers reported him to the police saying he had to be selling stolen property. That was a minor problem since he could prove how he got the items. The second problem was major and could not be over come. Most jewelers would have loved to buy him out but were afraid to do so because if their suppliers found out that the jewelers bought stones from out side of the diamond monopoly the jewelers would be cut off and black balled. Never buy new jewelery! Always buy from dealers who deal in used and estate jewelry, especially the ones that actually are trained jewelers and can repair and customize to order.

 

More good points. I suppose I could start saving stones for the boss. Actually I do on occasion if it comes out "clean" after a few hammer blows. Some we give to the guy that does repairs on jewelry for us. A two way street basically. We give him business and he gives us business.

 

The comments on the diamond monopoly are scary indeed. We do have one employee that has taken courses on grading diamonds. We WILL pay more for a diamond we feel is worthy. Yesterday we bought an 18kt gold ring with a .48ct diamond in it for example. Not the finest looking diamond (from what I understand as I have no interest) but worth paying more for.

We bought it with another ring for $200. Figure the big diamond ring was $150 of that.

That ring probably cost $1000 when originally purchased. The buyer paid for the work, the name and a diamond that was worth well under that cost.

 

We'll most likely clean it up and put it out at $295. We'll double our money and still be WAY under any big jewelers price. I look at it this way. We can offer it at half price and break even. A jeweler can routinely offer things at half price and still double the money.

 

We have regular customers that know this. They don't deal with jewelry stores but they DO know their stuff and shop with us and similar establishments. They haggle as well because they know how it works. We do good business with folks like this as they tend to have cash in hand as well.

 

I rarely buy any jewelry as my wife is very adept at losing it and that's coin money! On the rare occasion that I DO buy jewelry I buy it at work. I know how much the boss paid for it and I have no problem with him making a few bucks off of me.

I know I'm getting a much better deal than I would "at the mall".

[DEMONIK]

1 thing thats not mentioned here is that the jeweller needs to make money also.i have paid £5000 out 1 day and 2 days later the price has dropped and i lost out.the price is up and down so often that i can lose as well as gain a little.

i pay approx 60p per gramme less than spot price so not really a big margin considering v.a.t and posting costs to be taken off final total also.

but yes you do need to be carefull, i have people in every day who say they were offered say £300 for something i payed them £500 for.at the time of writing you should be looking at recieving per gramme.

9ct HM £ 7.80 - 8.00

14ct HM £ 12.80 - 12.90

18ct HM £ 16.70 - 16.80

22ct HM £ 20.60 - 20.70

also remember that certain items contain steel and alloys like bangles,lockets,watch straps etc and a jeweller will deduct this from the total weight when you take it in. i had a girl in with a large cameo broach and said it weighs 53g when i took out the cameo it actually weighed 29g so a big difference.

all i can say here is to be vigilante and in no way whatsoever send your gold away to be valued, take it to a local jeweller where you can see him weighing it and testing it in front of you.