Cashing in on the Gold Rush
All those “Cash for gold” and “We buy gold” signs sprouting everywhere lately may have gotten you thinking about turning old jewelry into a little extra cash.
Of course, places that buy gold are out to make a profit. They’re not doing it out of the kindness of their hearts. But how much of a profit do they hope to make?
A few calls told me that it varies a LOT — anywhere from a low of 50% of market value to a high of store credit for market value in my experience. (Now jewelry is subject to very high markups, so even store credit for market value isn’t really the same as getting market value in cash — unless you’re going to use it for repairs.)
If you just walk in to a place that buys gold and hand over a pile of jewelry, you’ll get an offer, but you’ll have no idea whether it’s worth accepting or not.
Do a little planning before you sell
Start by taking a look at the jewelry you’re planning to sell. Is it in good condition? Does it have any large gemstones? Was it expensive when you bought it? Is it especially valuable for some other reason? If any of those things are true, you probably shouldn’t sell it for the value of the gold alone. You won’t get what it’s really worth if you do. (I also wouldn’t sell gold coins to places like that, because you can probably get a much better deal from a coin dealer or maybe even on eBay.)
But what if your jewelry is like mine was? (With only a few tiny gems as accents or without any gemstones at all.) If your jewelry is without much real value beyond the gold itself, you bought it long ago and didn’t pay much for it, and you’re never going to wear it again anyway, you can get a fair deal for it if you are careful and informed.
Figure out how much gold your jewelry contains
Start by looking at the tiny numbers on your jewelry. You may need a magnifying glass to see them, but the markings will tell you whether the jewelry is 10kt, 14kt, or 18kt gold. (24kt gold is close to pure gold, so it’s not really used in jewelry.)
10kt gold is approximately 41.67% gold
14kt gold is approximately 58.33% gold
18kt gold is 75% gold
If a piece of jewelry just has a 3 digit number on it instead of a two digit number with kt after it, that’s a European marking. I have one piece that says 583 on it, which means it’s 58.3% gold, or 14kt gold. So 417 corresponds to 10kt gold, and 750 corresponds to 18kt gold.
If you have a scale that can weigh small amounts of things in grams, total up the weight of all of the jewelry containing the same amount of gold. (Weigh your 10kt gold pieces together, your 14kt, etc.)
Get a few quotes and then decipher them
If you call around for quotes, you’ll probably be given the quote in either grams or pennyweight. Google calculator says there are about 31.1 grams in a troy ounce (the unit that gold is measured in), and that there are 20 pennyweights in a troy ounce.
Say a place tells you (after a lot of qualifications) that they’re paying $28 per gram. Is that a good deal? It depends on the current spot price of gold, what you’re willing to accept, and what other places are offering.
To figure out the value of a gram of gold at spot price, you need to take the current spot price of gold per ounce and divide that by 31.1. So if gold is currently at $1200 per ounce, a gram of gold is worth approximately $38.59. To figure out the value of a pennyweight of gold in this example, divide $1200 by 20 to get $60.00.
So that offer of $28 per gram is 72.5% of market value. ($28 divided by $38.59 = .7255 or 72.5%)
But, you’re only going to get $28 per gram if you have pure gold. (Which you don’t, if you’re selling jewelry.)
So at $28 per gram, your 10kt gold ring — which we’ll say weighs 1 gram to make it simple — would bring $11.67 because it is only 41.67% gold. (28 times .4167 = 11.6676, or $11.67).
Add up your totals and choose the best place
At this point all that’s left is adding up your totals and choosing the best deal. If you don’t have a scale at home, I recommend writing down how much you could expect to get at market value organized by karat weight. So if gold were $1200 per ounce, you could make a note like this:
1 gram of 10kt = $16.08
1 gram of 14kt = $22.51
1 gram of 18kt = $28.94
Then if you’re given a quote like $135 for 6 grams of 14kt jewelry, you’ll know that you’re getting a great deal. But if your quote is something like $50 for those 6 grams? Not so much. ($135 divided by 6 = $22.50, or pretty much market value at $1200 per ounce, and $50 divided by 6 = $8.33, or only 37% of market value.)
It is confusing, so the more you plan ahead, the better prepared you’ll be to evaluate the deals you are offered.