With the price of gold bouncing around the $1000 per ounce mark, consumers worldwide are sorting through their jewelry boxes for gold jewelry items they no long want. Since the metal is being sold as scrap, it does not matter if the rings, bracelets, and other items are damaged or broken.
What many consumers do not realize is that where they sell their jewelry items may have a significant impact on how much money they get for their gold items. Consumers must sell their gold items to retail business like jewelry stores, pawnshops, or coin dealers. These retailers then sell the scrap jewelry to wholesale refiners who provide that service and are often located in different cities.
Just like there are no rules dictating what price a jeweler can sell an item, there are no rules on what price the retailer must offer for buying from consumers. Prices offered by retailers can vary significantly with some retailers offering as much as double the rice as other retailers. Why is there such a big variance in prices?
- Gold jewelry is an alloy with only a part of the weight being precious gold. For example, 14-karat gold is 14/24 or about 58% gold. Therefore, a one-ounce piece of jewelry only has about 0.58 ounce of gold. When consumers bring in a bag of jewelry items, they seldom know the exact weight and composition of the metal. Likewise, some retailers are not as experienced at determining the actual gold content of jewelry.
- Gold refiners typically pay retailers for scrap at about $20 to $30 an ounce less than the current market price for gold so are getting about 97% of the current market price. However, retailers are generally offering consumers 50% to 75% of the gold’s value so are pocketing the rest. With potential profit margins of 50% or higher, it is no wonder pawnshops are posting big signs advertising they are buying gold jewelry.
It is up to the retailer to decide how much of the value they want to offer the consumer and up to the consumer to accept or go elsewhere. In fact, going elsewhere might be a worthwhile strategy if they have a significant amount of jewelry. By getting price quotes from several retailers, the consumer can avoid the low offers and perhaps make double the money. If you do not know what you have or what the true value of the gold is, getting numerous price quotes can help you maximize your gold jewelry sale.
If you do not have many options of places to sell your jewelry items, the more you know about your gold jewelry and the composition of the gold, the more advantage you will have when negotiating with the retailer. If you have an accurate scales, weighing your jewelry can help you estimate the value if you can separate the jewelry into 10-karat, 14-karat, 18-karat, or 24-karat (pure) piles. If you can get the retailer to offer you 75% of the gold’s value at current market prices, you should feel fortunate.
The more knowledgeable you are when selling your gold, the more money you will get. Be wary of impulse selling, especially if you are depending on the retailer to tell you what you have and what it is worth. On a recent trip to the diamond district in New York, there were people with “gold buying” signs about every twenty feet on the sidewalks. Do not assume that you are getting a special deal in these tourist locations. It is certainly not worth making a trip to New York or similar large city since retailers in your hometown might be willing to give you a better price. The key is being knowledgeable so you will recognize an appropriate price.