Questions about trading in gold

[asschergirl27]

Hi everyone,

I am wanting to trade in gold, and I feel that I am at the mercy of the jewelers as I don't understand the process. I would like to be informed, so I thought I'd post here. Can you please help explain how the process works and what questions to ask? I searched for old threads and if there is one that addresses this, please someone post the link!

My questions:

- I'd love to know how the process works. i.e. how/much does the jeweler benefit?
- Do they sell it or melt it down or does it depend?
- What to ask about how much they give you? i.e How do they calculate the dollar amount? I don't understand how they price it at all. I've just been giving a total "$3500"
-I have it separated by karat. How does that factor in to the calculation?
-Anything else I should know?

Thank you!

 

[canuk-gal]

HI:

I don't know how "everyone" works, but my jeweller seperates items by gold content and tells me how much he pays per gram, per gold content/carat (based on "today's" pricing). Then he weighs the pieces, shows me the weight and calculation. For jewellery with gems in it--you have to ask how they come up with a sum....as I cannot comment on that.

I surmise they make a profit on what they pay you per gram, vs. what the refiner gives them.

cheers--Sharon

 

[diamondseeker2006]

If you want, you can always go to a couple more places and see if you can get the price higher. There is some room to negotiate but you really can't if you don't know what someone else will pay.

 

[asschergirl27]

Thanks for the replies! I have taken it to different places (3) when gold was around the same price (1700) and they are different offers. Obviously I'd go with the highest offer. But I'm wondering what to ask without having them weigh and calculate, if I want to call a few places. Would that question be - what do you pay per gram? I feel like it's always a percentage or a fraction that doesn't really make sense to me. Not an easy X$ per gram.

 

[denverappraiser]

Here's the math:

Look up the price of gold at www.kitco.com..
That's the price per troy ounce for gold being sold by the refiner (one of which is Kitco).

Jewelers can sell in quantity for abotu 95% of this amount.

There are 31.1 grams in a troy ounce.
There are 20 pennyweights (dwt) in a troy ounce.

14k is typically about 56% gold.
18k is typically about 73% gold.

Take the price of gold, divide by 31.1 and multiply by 0.56 and multiply by your weight.

Typical buyers on the street will range between 50% and about 70% of that number. The balance is their profit for doing the work, paperwork, etc. They'll pay more if you have a lot, if they just want to be aggressive or whatever and they'll pay less if they think they can or if you only have a gram or 2. As pointed out above, there are a lot of these people out there and they are easy to shop against one another.

 

[asschergirl27]

Oh Denver thank you! That is just what I needed now I get it

So the 14k portion I had weighed 51.65

By your calculation and using gold price of 1709 > the calculation is 1709/31.1 x .56 x 51.65 = 1589.42

I was offered $1840 for the 14k gold. That sounds like a good offer than, correct?

One more thing, the jeweler will buy it, but suggested I save it to melt down and make something in the future. I'm not leaning towards this, but wanted people's thoughts on this?

Thanks again!

 

[denverappraiser]

Oh Denver thank you! That is just what I needed now I get it

So the 14k portion I had weighed 51.65

By your calculation and using gold price of 1709 > the calculation is 1709/31.1 x .56 x 51.65 = 1589.42

I was offered $1840 for the 14k gold. That sounds like a good offer than, correct?

One more thing, the jeweler will buy it, but suggested I save it to melt down and make something in the future. I'm not leaning towards this, but wanted people's thoughts on this?

Thanks again!

Correct. The jeweler in this case is paying a premium over the gold value. That's either because they like the design and think can sell it at a premium as a piece of jewelry, because there are other materials like diamonds are driving up the price of the whole lot or possibly a combination of both. I suppose we can include the option that he's disagreeing with the karatage and/or the weight. Are you sure that weight is grams, not pennyweights? On a pure 'gold buy', I would expect bids more like $1200 or a little less on 51.65 grams of 14k. The buyer will accumulate it with other buys to meet the refinery minimum and sell it for 1500ish. That leaves $300 for him and $89 for the refinery. It's a decent gig, which is why so many people are getting into it.

If you melt it and make something else you will lose the 'premium' associated with the design so if you don't care for it, the best options are to take the offer, possibly sell it someone else who likes the design even more, or perhaps gift it to one of your heirs who might like it better than you. You can also just sit on it and see what gold does in the next year or 3. It's not like it's perishable after all and there are worse forms of a savings account.