- Personal Finance
Selling and Investing in Gold
Have Realistic Expectations
Metals, Gems, and Craftsmanship
We are in a recession, and a lot of people need money to pay the bills until they can get rolling again with some steady income. It's crossed the minds of many people to sell off some old gold jewelry they don't really need anymore.
Before you sell, make sure you won't mind parting with it. If you want to give it to your kids or grandchildren, it will be too late after it's gone.
The perfect scenario for selling would be inheriting gold jewelry having no sentimental value, so why not sell it for cash?
There are many gold buyers offering cash. Even though gold may be worth $1,300 an ounce or more, the buyers only pay according to content. They won't pay by the weight of the jewelry because it's not pure gold. Also, be careful of criminals. Gold is like cash, it can disappear.
It's not a good idea to go to a pawn shop in an unsafe neighborhood. Also, there's a tremendous discount factor in selling to a jeweler because they sell new jewelry to us at 4 times what they pay wholesale for new items, and they'll offer us only about one-eighth of retail for our used gold jewelry.
An extremely reputable online dealer that is highly accredited by the Better Business Bureau can be a good choice. Or you can do it yourself and sell on an online auction website like eBay, after you get some appraisals or estimates so that you know what to expect to receive.
When you're ready to sell, divide the carats by the number 24 (that gives you your purity). For example, if you have fairly low gold content, it's 10K (10 carat gold), therefore only 42% gold (24 into 10 is point 42). Incidentally, if you don't see little stamped markings like 10K or 10ct, then it's not real gold anyway.
If gold is $1,300 an ounce, and you have an ounce of 10K gold, it's worth 42% or a little less than half that amount of money. That's what it's worth to the buyer, but because your buyer most likely is in business and has business expenses, you as seller will receive less than that. Some buyers give you a better break than others.
It would help to get a good appraisal first. You may have to pay for this, but it would take a lot of guesswork and anxiety out of the process. Or, you can go around to several local places that buy gold and see what each one offers you, until you have a good idea of a fair deal.
To get your best arrangement for selling, ask around, post questions on blogs, and check out Yelp responses to questions about selling gold where you live.
Therefore, selling the gold takes a little research and work. But if you can make $1,300 for 10 hours work, that's a lot more than 99% of us make.
Like money, gold has emotional value. Whatever you do, don't sell without knowing what you should be getting in return. Also, using the money wisely once you get it is a good idea because you will have sold off an investment, which 10 more years from now, probably will be worth even more.
When selling gold, it's almost impossible to get the full price per ounce that is currently published on the Internet because, unless the artistic quality of the jewelry is exceptional, the business that buys it will want the gold metal to be melted down and refined to take away anything except the gold itself. This job has to be done by a second business. Both the buying business and the second business will have to make money off the piece of gold jewelry.
People mainly sell jewelry they got for free, either by finding it or inheriting it. But they just don't like the look of it enough to want to keep it or wear it themselves. Of course, the jewelry also might represent bad memories, such as stuff left over from an ex-spouse after a divorce. But sellers never come close to getting what someone might have paid for the jewelry when it was new.
If a seller likes jewelry and wants to raise cash by selling old jewelry so that good jewelry, more to his or her liking, can be afforded, then this seller is in a good position to get a fair price for the old jewelry because the jeweler will want to make a sale of a new, more expensive, piece of jewelry. He or she will give a good trade-in value for the old jewelry.
Some people have had good luck using consignment. This involves leaving the jewelry at a jewelry store and setting a minimum price you will accept. When the jeweler sells your jewelry, he or she might take 25% or so and give the rest to you. But of course this takes time.
As for appraisals, which are a good idea so that you know what to expect, a buyer will not give a perfectly honest appraisal because he or she wants to buy for the lowest price possible. It's best to pay a professional appraiser, who is not a buyer of jewelry, for a trustworthy opinion of what your jewelry is worth.
An insurance company also will not give an accurate appraisal because they have to keep in mind the cost of replacing the jewelry, if it's stolen or becomes an insured loss. Buying new replacements would be expensive, so the appraisal will be too high.
If someone pays for a good unbiased appraisal and it shows that the jewelry is worth $100 as a fair retail price in the community, that appraisal might mean you will get only $25 for it because a buyer will try to stock his or her store at one-fourth of the expected retail sale price as a business decision to cover all overhead costs. But the buyer's world isn't perfect either. So if he or she thinks your jewelry could be sold easily for $100, the buyer might settle for giving you $40 just to make a quick profit.
The artistic value of good jewelry can not be overlooked. That's what jewelry is all about. Making jewelry is a creative art. Therefore, there may be great value in the workmanship of your jewelry that will appeal to many retail customers. The value is not simply in the type or quality of metal and stones that were used to create the jewelry. There is a strong subjective, human factor that needs to be appreciated as well.
But sometimes, for example, people will have an old gold chain that is bulky and ugly to wear. The best bet then is to find a "refiner" who is in the business of melting down the metal to extract the gold. This person will give the best price for the jewelry because there is little artistic value to it and no sense keeping it on display in a jewelry store.
Gold Has Been with Mankind for Centuries
What's the Matter with Gold Today?
Most investors prefer a diversified stock and investment portfolio, but do not include gold in their investments. Only when gold rose in price by tripling its value recently did investors turn to it as a viable addition to their portfolios. This is despite the fact that gold may be the oldest currency known to mankind and has been a medium of exchange throughout ancient history to the present day.
But investors have known this for centuries. Still, in modern times, most do not invest in gold, or if they do, it's only a slight percentage of their portfolios. One thing they see wrong with gold is actually owning the metal and having to pay fees to store it, to worry about it being stolen, and to fuss with transporting it.
Although there's a choice now that eliminates all that and makes possible a documentary transaction that assures the presence of real gold bars to back up the words on paper, investors still are very restricted in their plans for developing a golden future.
Unlike most investments, gold is not tied to the economic security of any one country. The United States generally has been the one with the most secure currency, attracting the majority of investors over recent history, despite brief spells recently when European or Chinese currency has become spectacular temporarily.
Will the world ever return to the "gold standard" to back up national currencies? If it did, investment in gold logically would increase. Due to the recent Great Recession, there's been some talk of this, causing many long-term investors to carve out a portion, say 10%, of their total portfolio and have it dedicated to gold, especially with the advent of the new paper or electronic transaction making actual, physical ownership of gold bars unnecessary.
The prospect of the world going back onto the gold standard is not realistic. It would spell economic doom to many countries that are economically weak.
The increase in the price of gold recently has been because of the demand for it, brought on by the near panic of what happened to investors from 2007 to 2009. Many scrambled for gold, driving the demand up and up, because they lost faith in traditional securities.
Of course inflation, in and of itself, can account for a tremendous increase in the value of gold. But what good is that to an investor when the buying power of the dollar is less and less due to the same inflation that has increased the value of the gold as measured by the same dollar? Actually, the same theory could be applied to any investment, but gold is more like dollars than specific corporate shares of stock, which could rise or fall independently of inflationary trends.
The value of, and demand for gold, rise when there are frightening times leaving people insecure and losing faith in governments. Many nations now are printing money much faster than they ever did. So far, it's deemed justified by economic growth. But if the world loses faith in that sustainable economic drive, and in the governments that keep printing the money, then gold will be the refuge to which many people will run for safety.