How to Sell Gold Without Getting Ripped Off

by Carrie Kirby on 2 September 2011 4 comments
Photo: Benimoto

The price of gold has reached heady heights — high enough to make many of us remember that tacky old bracelet or single earring at the bottom of our jewelry boxes. Gold buyers are promising "top dollar" everywhere. But selling gold is one of those situations that pits the novice — you — against the expert — the buyer. How do you make sure you're not being taken advantage of?

Since I'm no expert myself (I don't think I own any gold besides my wedding and engagement rings, and those aren't going anywhere), I turned to Helena Krodel of the Jewelry Information Center, part of the Jewelers of America trade association. She shared some helpful gold-selling tips from the jewelry industry's perspective. Before we get to her advice on how to sell gold, let me point out that although the neighborhood jewelry shop is probably the most convenient place to cash in, jewelers aren't the only ones buying. (See also: How to Insure Jewelry for Cheap)

If you are willing to do a little more legwork, you can probably get a better price by selling directly to a gold refiner. Refiners offer up to 95% of the current gold price for the gold content of your items, while jewelry stores tend to top out at 85%.

Before selling to anyone, please check out warnings such as Paul Michael's post about Cash4Gold and the Better Business Bureau's tips to avoid rip-offs.

Carrie Kirby: How can would-be sellers distinguish between reputable gold buyers and non-reputable ones?

Helena Krodel: Just as you would shop at a reputable jeweler, one should SELL to a reputable jeweler. Reputable jewelers will give you fair market value for your gold and be open and honest throughout the process of selling. We recommend shopping and selling at jewelry store that is a member of a professional trade association, like Jewelers of America. Members are asked to sign a Code of Professional Practices, thereby ensuring you are going to get what you pay for.

CK: Even among reputable businesses, will certain kinds of businesses pay more for gold? For instance, should I seek out a bulk scrap gold buyer instead of a jewelry store?

HK: There is no rule here. Different companies will pay different amounts. The best thing to do is to go to several different places and ask. If you decide to leave your gold with the company or person, be sure to get a receipt detailing the item. Also ask if they are selling it off site. This typically means they are the middle man and can be charging a surcharge for the service.

CK: What process should I go through before determining where to sell my gold? Should I get estimates from more than one place?

HK: Yes! Always shop around. Online companies are popping up everywhere. If you decide to sell online, beware! Be sure to call the company and speak to a real person. Ask the same questions you would in a store. And do not send your jewelry blindly without the option to get it back should they give you a price that is less that market value.

CK: I understand that buyers will not pay 100% of the day's price for gold, even if what I have to sell is 24 karat, because they need to melt it down and still make a profit. What percent of the day's price could I expect to get?

HK: Every (retailer) is obviously different, but you should expect to get 75 to 85% of the percent of gold in the piece. So if it is 14K gold, the amount of gold in the piece is 58.5%. The 75-85% given is based on that amount.

CK: When I called a local jeweler to ask what percent of the daily price they pay, they declined to give a price over the phone. Is this normal?

HK: Perhaps. Given that it is a competitive market, therefore some jewelry stores may not opt to disclose this information.

ARTICLE CONTINUES BELOW

CK: Is there any type of gold seller that I should completely avoid, such as mail-in or pawn shop?

HK: Mail-in companies have been known to veil very low returns when buying back gold from consumers. Not all, but many charge a premium for the convenience to you the customer. Jewelry parties are suspect as well. If you decide to partake, be sure to do some research on the company or person hosting the party to find out about their credentials as well as their policy in case you have seller’s remorse. Some like the entertainment factor, however, there are better ways to yield higher paychecks.

CK: What kinds of items should be appraised independent of their scrap gold value?

HK: Remember that jewelry is something that is typically passed down for generations. It also typically has a sentimental worth and value. A quick buck can result in seller’s remorse unless you go your homework. Never sell a piece of jewelry that has intrinsic or emotional value. Never sell a piece of jewelry without removing the gemstones. You will typically get nothing “extra” for side stones or bejeweled settings if they are small. If the piece of gold jewelry is signed or has a trademark, noting the manufacturer who made the piece, be sure to investigate. If you have any reason to think that the piece might have more value as a jewelry item than scrap, be sure to get an appraisal. They typically cost less than $100.

There you have it. Always shop around; the higher gold goes, the higher the potential cost of not doing your homework. Look at it this way — as of this writing, pure gold is selling for $1,827 an ounce. Say you have several old necklaces and rings that contain one half an ounce of 24 karat gold; this would be worth $913.50 on the market. If the first jewelry store you visit offers 75% of market value, you'll get a check for $685 and walk out feeling great. Then you find out that your cousin sold the same amount of gold to a jewelry store a few blocks away that was paying 85% and netted $776. Oh well — at least you feel better than your other cousin who handed over his jewelry to a dealer who paid 50% — she only got $457.

It all boils down to how much gold you have to sell and how much your time is worth. Going to three different stores for estimates might take an hour or two — researching reputable refiners might take longer. Would you spend a few hours to net an extra $100? What about an extra $1,000?

You make the call.

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Meg Favreau's picture

Even though it totally makes sense, it never occurred to me that they'd only pay for the part of your gold that is actually gold.

I'm more of a silver lady, so I've never done this myself. Does anybody have any stories about selling gold, good or bad?

Guest's picture
Lindy

I recently sold some gold jewelry (right before prices started climbing so high), and I got about 50% of the gold value - mostly because I couldn't find any information about what I should be aiming for. It's good to know that 85% is achievable, though there's probably some negotiating required to get there.

There are several gold calculators online that will tell you the value based on the karats of your piece, so that helps take some of the math out.

Thanks for the great resources.

Guest's picture

Very good advice. I actually like investing in Wines. They can be bought fairly cheap as futures, and properly kept skyrocket in the 5-10 year term. There are other benefits too, Undocumented cash sales, for example. It nice to have a 300% gain that only your local liquor store owner knows about.

Guest's picture
Guest

Look, we all need extra money now days. The economy has NEVER been more screwed up The MORE informed you are before you try to sell your gold and silver, the MORE you’ll get for it. Knowledge is king! I will tell you right up front; NEVER take your gold and silver to a pawn Shop.