Selling Your Scrap Jewelry

Many Baby Boomers have accumulated a good amount of jewelry over the years.  Many times, that jewelry has not been worn for years and may not have any special sentimental value.  They decide to gather up the old and broken bits of scrap jewelry they’ve got, and turn it into some cash.

We’ve all seen the ads on TV – sell your unwanted gold jewelry and get quick, easy cash. It sounds great. You call an 800 number, drop your jewelry in the mail, and you get a check.

The problem is, this process has a lot of issues with it. The biggest issue is understanding the value of what you’ve got.  If you’re going in “blind” you risk being scammed.

It is fairly easy math to figure out the price per gram of gold. Go to a site such as www.Kitco.com and get the current market price of gold. For this example, let’s say the price is $1,370 per ounce. With precious metals, a troy ounce has a little over 31 grams per ounce. That means the price for 24 karat (pure) gold is $44.05 per gram.

You won’t be paid this amount! Most gold buyers will quote a price for 14 karat gold, as that is the typical quality of much gold jewelry. 14k gold is 58.3% pure. That brings us to $25.70 per gram. This is called the “melt value“.

You’re not going to be paid this amount either, but you’re getting close.

Now, this is where you will see the difference in your buyers. The guys on TV, on the Internet or the “Road Show” guys that roll into town on weekends generally low-ball the offer price. They have been reported as paying between 18% and 22% of the melt value -sometimes much lower.

That means they would pay you between $4.62 to $5.65 per gram for your 14k gold!

These buyers have the right to make a profit – they can’t keep their business open without one!  But that seems like a lot of profit on the backs of the sellers. I guess someone has to pay for those million dollar TV advertising budgets…

Most up-and-up organizations will pay anywhere between 65% and 75% of the melt price.  That means they would pay you $16.70 to $19.28 per gram of 14k gold (with a spot gold price of $1,370).

Why the difference?  Market forces.  A local market with little competition will pay lower prices.

When comparing the prices between gold buyers, Don’t Be Fooled! Some gold buyers will quote a price based upon Pennyweight instead of grams. It is a much higher LOOKING price.  There are 20 pennyweight to an ounce, and 31 grams to an ounce.

For instance, the $16.70 price per gram would be represented as $25.97 per pennyweight. Be sure you’re quoted in grams, not pennyweight when comparing buyers.

Most jewelry is stamped with the purity of the gold – 10k, 14k, 18k being the most common. To determine the pricing, simply take the stamped purity and divide it by 24 (pure gold). Do the math as described above, then shop around for your buyers. Call them and ask what they’re paying per gram.

Insider’s Tip: Some gold buyers will ask the seemingly innocent question of,  “So, what do you think your gold is worth?” He may have tested and weighed out the gold, and saw that market prices were $400 for your jewelry. He asks the question, and the customer says, “Oh, I don’t know. Maybe $75 or $100.

He then says, “Well, you’re going to be pleasantly surprised! I’m going to pay you $250!” The customer is thrilled because they’re being paid way more than they thought it was worth. The slimy gold buyer is going to pocket an additional $150 from the customer.

In my precious metals store, we ask the same question, but we have written down the $400 price and placed it face down on the counter in front of the customer. They make their guess, then flip over the paper, and freak out! It’s very cool. I’ve told a couple of people that I’m going to take the footage off of our security cameras and make a TV commercial with their reactions!

One last point – the amount you paid for the jewelry is almost irrelevant to what it’s worth now.  I cringe every time some young lady comes into my store with a wedding set she and her (now ex-) husband had purchased just a few years back.  Most of the time, the components of the set are worth 10-15% of what they paid for them.

The jewelry stores play on the whole, “the more you pay, the more you love” scam.  Apparently, love doesn’t last forever for some couples…

The bottom line is:  Get educated so you don’t get scammed.  Knowledge is…. money!

 

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