Sell Gold Jewelry, A Real Life Story
You have probably seen their ads on TV. "Send us your scrap gold and we will send you a big fat check". As a former salesman of precious metals, I decided to put one company to the test. What I found out was surprising to say the least.
Preparing To Sell My Scrap Gold
I chose a small 10 karat ring to send in to company X. In a worst case scenario, I might never see my items again. So this was a way to limit my losses in case that happened.
How did I know the ring was 10 karats? These items will have the content marked or stamped on the item. This is usually expressed in karats but sometimes is expressed in parts per thousand. For instance, if you see 500 stamped on your jewelry, it is an alloy containing 50% gold.
You can find a basic definition of the Karatage system in my Weights & Measures article elsewhere on my site. There you will see that a pure gold item is expressed as 24karats (24K). Anything less and the item is an alloy with some other metal(s). My ring has 10K stamped on the inside so the gold content is 41.66%.
I requested my mail-in kit online and waited for it to arrive. Before sending the ring off, I weighed it to get a precious metals weight of either Troy ounces, pennyweights or grams. Since I didn’t know which of the various weights Company X would use to base their offer on, I wanted to be prepared regardless of what weight system they based their payout on.
Using my handy multi-weight pocket scale (less than $25.00), my ring weighed in at 8.2 grams. Using information in the Weights & Measures article, I calculated that 8.2 grams = .265 Troy ounces = 5.3 pennyweights. Now I was ready: 1) to see if Company X matched one of these readings after weighing my ring; and 2) to convert that weight (if necessary) to Troy ounces to figure out what percent of the ring’s value they paid out.
Results Of My Sale
On Day 1, I mailed the packet they provided back to them with the ring enclosed. After about seven days, I started checking the progress using their online tracking system. On Day 12, after getting messages they still hadn’t received it, I sent them an E-mail asking "where is my ring"? They quickly responded, apologizing for the delay and said my check would be mailed on Day 14 via 1st Class Mail. I received their check on Day 18 for a whopping $12.72. That was with a 20% special bonus.
There must be some mistake!!!!
So I started examining Company X’s figures to try to make sense of it. First of all, did their weight match any of my weights?
Their payment was based on the ring’s pennyweight which was stated as 5.3. So far, so good - it matched my pennyweight result. With 20 pennyweights in a Troy ounce, 5.3 pennyweights equals .265 Troy ounces.
Second, what was the price of spot gold when they "locked in" my price?
They didn’t provide that but checking the price from Day 1 to Day 13, the price averaged about $800 per ounce.
Third, what percent of the ring’s worth did they actually pay me?
By multiplying $800 by .265 percent, I came up with $212.00. If the ring were 24K, this would be the actual value. Since the ring is only 10K (41.66 % purity), the value is .4166 times $212 or $88.32.
The $12.72 check Company X sent me was approximately 14.4% of the ring’s value. They kept 85.6% as their processing and refining fee.
Understanding Company X’s "Logic"
Company X’s return policy states they will return a customer’s jewelry if their check is returned within 10 days. I took them up on their return policy by mailing the check the next day (Day 19). Notifying them in an E-mail that their check was being returned, I told them of my calculations. I wanted to know how accurate my calculations were and what was missing in understanding this tiny check.
Their response was my calculations were "almost accurate". Because my ring required refining, payment was based on a sliding scale. Also, because my total shipment was less than one ounce (20 pennyweight), my payment was in their lowest payout category.
It was then they made a surprise offer…
After checking with management, they offered a price based on the five ounces and higher category. They were willing to send me a check for $28.49 for the ring. That brought the percentage of the ring’s value ($88.20) to 32%. I was hoping for 50% so I thanked them for the offer but asked for the ring back. It was returned on Day 44.
Lessons Learned
If you decide to sell your scrap gold to one of the big companies advertising on TV, or to one of the local jewelry stores now accepting these items, or even attend a "precious metals party" that a friend or acquaintance is holding, consider these steps:
* Get the weight of each piece in Troy ounces, pennyweights, grams or grains.
* Get the purity of each piece which is usually expressed in karats or parts per thousand.
* Find out the current price of spot gold.
* For each piece, get the value by multiplying the weight of the piece (in Troy ounces) by the spot price. Then multiply that result by the purity of the piece.
* You are now better prepared to approach these buyers, understand their offer and negotiate the best possible deal.
Keep in mind that these companies are performing a service and deserve a fair processing fee - especially if the pieces are 24 karat and requires refining. You have to decide what is fair and if you want to part with your scrap gold based on their offer.
New CEO Mark Cutifani oversaw gold production of 4.982m ounces for the year; total cash costs for the year were $444/oz, and the irritating hedge book was partially attacked.
Singapore Has A Lot Of Cash On The Sidelines
Cash-on-the-sidelines remains exceptionally high and free liquidity is accelerating. Singapore is a growth-oriented market, while value is a runner-up. Still, the financial crisis of the past year has put a premium on low risk and high stability.
"Gold appears to be benefiting both from being the traditional hedge for inflation hawks (some of whom are now beginning to worry about the risk of hyperinflation) and from the mistrust of some investors towards cash assets.
Author: John Ausiman
John Ausiman was a salesman of gold and silver for one of the oldest, most reputable precious metals dealers inthe U.S. He no longer is actively selling precious metals but wants to share his expertise with would-be gold and silver investors. You will find a number of useful articles on gold at his web site http://goldinvestingsimplified.com
Article Source: http://EzineArticles.com/?expert=John_Ausiman
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2 comments
Sell Gold Jewelry, A Real Life Story « Ring Gold on June 5, 2009 at 10:26 am
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Erik P. on October 8, 2009 at 2:43 am
Great article! I hear good and bad things about some of the gold buyers. However, everyone should first research and THEN sell. If you sell based on impulse you could end up selling it for far less than it’s worth. Go to http://www.goldvox.com and checking out what other people have to say about the service first. Also, if you have used them before let other people know if you had a good experience! If not, tell them to run far away - fast! lol. Good luck!