The truth about selling gold jewelry for cash
So you have some old jewelry that's just gather dust...
If your jewelry box is anything like mine, it's chock full of various different necklaces, pendants, bracelets and other pieces that probably have not seen the light of day in at least ten years. Matter of fact, it's hard to even identify some of them through the several millimeter thick shroud of dust that's settled over them.
While sipping my coffee patiently waiting for the arrival of spring one recent morning, a television ad happened to catch my attention. I forget now which company it was for, but I'm sure you've seen it or one just like it...
CASH FOR GOLD - send us your jewelry and we'll send you some cash.
I'm oversimplying the message of course, but in concept it sounded quite simple. I call the company, they send me a packet. I package my jewelry and send it to them and in return, I get a check based on the value of the gold contained in my items.
Having heard gold had hit a ten year high of around $1,000 an ounce I started to get excited. I grabbed my trusty old kitchen scale, raided my jewelry box and after removing what was certainly several pounds worth of dust, weighed the stuff I had no use for any more. If I could trust my scale, my gold chains, some rings, bracelets, a few pendants and a couple pins, were weighing in at just under two ounces! If I was doing my math right, this meant I could have a whopping $2,000 check in a couple of days. My heart started to race and I started to call some friends. Unfortunately, as it turned out, one of my close friends had heard the same ad a few weeks prior.
A quick phone conversation about her experiences with the same company made me pause. She had sent in around an ounce of gold jewelry only to receive a check for a whopping $120. How could this be I thought? If I had understood everything she should have received almost ten times that. It was time for some investigation.
First, I figured I needed to determine what the actual value of gold was. So how does one go about this? While, as luck would have it, Google was right there at my disposal. A quick search turned up Kitco (www.kitco.com) a company which was publishing up to the minute prices for gold. A simple chart showed me the then current price, $954 for one ounce of pure gold. Turned out it wasn't the $1,000 an ounce I had heard about, but pretty darn close.
Pure gold? Hmmmm... maybe my jewelry isn't pure gold! I had heard the terms 14K and 18K before and I figured this must have something to do with the gold content. A little investigation uncovered the answer to this one...
24K gold is pure, or at least very, very close to it. Most of my stuff was marked 14K, which as it turns out is around 58% pure. Some of it was marked 10K which is around 42% pure. Apparently gold is way to soft to make jewelry with in its pure form so its alloyed with other metals.
For simplicity sake, and for the illustrative example herein, let's assume I have exactly one ounce of all 14K gold. Pure gold was $954 so if my 14K is 58% pure then one ounce of it should be worth $553.
So why did my friend receive only $120? Maybe her items were 10K? Well, that still wouldn't explain it. One ounce of 10K gold should be worth $400.
It was time to investigate how the company was determining there payments and by this time I had heard an ad for another company so I figured why not study them all and do a little comparison shopping!
I took to Google again and performed a quick search on selling gold and turned up what appeared to be a list of national companies that all advertised cash for gold. I picked up the phone and called no less then five of them. Guess what? Not a single one could give me even an estimate of what they paid or an explanation of how they determined what they paid! I was beginning to get worried here. Was this whole cash for gold thing a scam? The truth had to be out there somewhere.
What you can really expect to receive for your jewelry
After the first five phone calls turned up little information I decided that possibly a different approach was in order. Instead of trying to contact one of the national companies advertising cash for gold programs, I'd do some research and find out if there was anyone locally I could turn too. As luck would have it, there was. A quick search turned up ASE Metal Recovery (www.asemetals.com) and resulted in a phone conversation that shed a lot of light on the entire process.
Turns out gold is not sold by the ounce in small quantities. Depending upon the dealer or buyer, it's purchased by the gram or more commonly by the DWT or pennyweight. One DWT being equal to one twentieth of an ounce. Companies in the business of buying gold, or other precious metals, are constantly checking the spot price of one ounce of pure gold and setting prices for 10K, 14K and 18K. Since the price of gold apparently fluctuates by as much as $50 or so a day, up or down, these prices can and do frequently change.
Since this phone conversation seemed to be going well and the information flowing freely, I asked why some companies seemed to pay so little when gold was worth over $950 an ounce. The answer was simple, and had I stopped to think about it, not the least bit surpising.
First, cash for gold companies are in business to make money. It's a numbers game. The more customers they can get to send in their gold, the higher their profits. How do they motivate their customers? Through advertising, which costs money. The large national companies that are paying for broad reaching television and radio advertising campaigns have to somehow pay for this advertising. There are only two options to do this. Either they can take it out of their profits or they can take it out of yours, by reducing their payouts.
In addition, it would seem that there are costs associated with turning an ounce of say, 14K gold, into pure 24K gold. The costs vary and depend on a variety of different specifics such as the equipment used to refine the gold, whether or not the equipment is on site or the gold has to be transported and whether the company itself is refining the gold or sending it out for refining.
So given all of this information. What is a fair price to expect? According to the helpful folks at ASE, figuring that out is a matter of simple math and some due diligence.
If you're looking to sell your gold here was the advice they gave me...
1. Take a look through your jewelry box and find all the items you wish to sell.
2. Grab a magnifying glass and check the marks on each item to make sure it's gold. You're looking for marks such as 10K or 14K. Marks that include fractions or GF mean that the item is not gold but is instead gold plated. A 925 mark means it's sterling silver. PLAT is platinum.
3. Separate the gold into piles based on purity. One pile for say 10K and the other pile for 14K.
4. Weigh the items in ounces and divide the result by 20, or, weigh the items in grams and multiply the result by .64301. This will give you the weight in DWTs.
5. Check the spot price for gold and then divide it by twenty. This will give you the price for one DWT of pure gold. If your gold is 14K, multiple this number by .58 for the price of one DWT of 14K. If it's 10K multiply it by .42 for the price of one DWT of 10K.
6. Do your homework. Now you have the price of a refined DWT of 14K or 10K. This price doesn't take into account the costs mentioned earlier, so you can't expect to receive this much. What you can do though, is find the buyer that will come closest to this number!
When doing my research gold was at $954. One DWT of 14K was worth around $27 after all refining costs. Of the national companies I could find numbers for, the lowest was around $10 per DWT and the highest was a little over $14. Of the local companies I called, the lowest was $12 per DWT and the highest was over $20.
One more thing worth mentioning. Most of these companies are only buying your precious metals. They do not pay for any diamonds or stones contained in the jewelry. If you have diamond rings or other natural gemstones you should do your research and make sure you're dealing with a company that pays for the stones as well!!
In the end, I sold my jewelry to the folks that were helpful in educating me and made over $500 on the stuff that had been sitting in my jewelry box for years, and, was able to learn and share some information along the way!