Some weeks ago my next door neighbor Alice decided to dispose her gold trinkets that she had stored away in her drawers for years together without using them. Many of these pieces were outdated and old fashioned and quite unfit for modern day use. She thought why not sell them for whatever they were worth. Alice’s daughter and son in law were in need of some quick cash and Alice thought this was a good way to make some serious cash without hurting anybody.
At that time the price of gold was still pretty much up there and the economy was still reeling off the effects of a painful but receding recession. Without a second’s thought and without consulting anybody in particular she drove down to her nearest jewelry store to display her wares. Alice and I were living in a quite upmarket neighborhood in Orange county at that time and she used to frequently see the signs “we buy your gold-best prices” in store windows displayed prominently in quite a few places in Aliso Viejo Coronatest Drachten.
The salesman appeared absolutely delighted with her visit and calmed her fears saying “Am I glad to see you Ma’am, you’re just in the nick of time with your gold. We are offering really good prices as gold is still in huge demand”. What Alice had placed on the counter was a watch. The guy took the watch to the back of the store and gave it a seemingly thorough examination with a small magnifying glass called the goldsmith’s loupe. “Sorry, this is of no use Ma’am its only gold plated. It’s not the actual stuff”. He actually pointed out places where the gold color had peeled off through wear and tear in corners. His advice to Alice was either to retain the watch or simply donate it to the store which Alice did without a second’s thought.
The other item on sale was a longish necklace that Alice’s mother had worn in the good old days. The salesman peered at it closely and appeared to perform some tests involving rubbing and applying some solution or so on. He finally raised his head and beamed a reply “This is a good one; I’ll offer an honest price of $650 for it right away”. Alice, to tell you frankly was a bit relived after the watch episode and trusted the storekeeper enough to take his word in the matter as final and she accepted the offer straight away without contesting the price. She did not even bother to enquire what the market value for gold was that day.
As the days went by Alice came to see many enticing advertisements and offers appearing on TV and even online when she browsed the net, and gradually it dawned on her that there may have been more to selling her gold than jumping at the first offer that fate placed in front of her. To get to the bottom of the gold selling business my husband and I visited a well-known gold trader downtown who had more than thirty years’ experience trading gold, both wholesale and retail. We asked for his advice and this is what he had to tell us.
Unlike the normal customer the gold trade itself pays very little attention to advertisements and commercials that spew offers by the ton, many of which are downright dishonest. The genuine trader has no need for subterfuge and false publicity. His wares and his skills are transparently on display and so is the real market price of gold in his store. In fact the more that a firm spends on publicity the less you are likely to get while selling your gold. Billboards and TV commercials cost thousands of dollars to publicize and all that money a store pays has to be recovered from some source and that source is usually the unsuspecting public!
You must accept the genuine fact that the buying and selling of gold is a business, and every trader has to make at least 10% to 15% on each buy and every sale if he is to make a profit and to survive. How much the trader actually makes on a sale is up to each individual customer. The million dollar question would be- are you conceding much more than a trader’s minimum margin when you transact your sale? Is the trader managing a neat margin or are you unwittingly conceding a windfall profit without knowing the real value of your metal? That there is lot of foul play has come to be accepted. One such customer came to our expert dealer who offered him a closing deal of $1,500. The same customer confessed that he was lucky he did not agree to a gold party deal that quoted just $850. That’s a huge difference and that is the margin by which you can lose money if you are not careful.
Perhaps the first doubt that has to be cleared urgently is whether your metal is gold, and if it passes the test all that remains is to determine the purity or karat value of the metal- that is if its 10k, 14, 28k or 24k. When we talk of purest gold we expect a karat measure of 24k, and 18k shows that the gold is pure to the extent of 75%; and its 58.5% if you are discussing 14k, and so on. A rudimentary scratch test will reveal the karat purity. The goldsmith keeps an assortment of bottled test acid for verifying different karat purity. A small scratch is made on a black stone with the gold piece. If the acid doesn’t bleed through the scratched gold dust it indicates that the correct karat purity has been arrived at.
Assessing the karat quality through these simple tests is necessary for determining the purity and if you also measure the weight of the individual gold pieces you have sufficient information required to calculate the real value of the gold in your possession.
To know the true value of the jewelry take the price of gold as it is listed on NASDAQ, then divide that by 31.15 grams (by that we mean the grams in one ounce) then multiply that by its karat purity. When you set out to sell that gold your aim should be to get as near that price as you possibly can without expecting to get the market rate outright. Remember that the buyer has to make some money out of the deal, but don’t allow him too large a margin to play with. That’s the huge leverage you gained from the knowledge that you have directly researched.
One of the best things you could do as a seller is to approach a trader or firm that’s been in the business for a pretty long time, time enough to garner repeat business and to create a good reputation. Such people are less likely to dupe you because there is nothing to be gained over the long term from ripping off customers. Sooner or later these shenanigans catch up with the fraudster and he loses out on good business. The honest dealer sustains and grows his business from a growing clientele.
If you come armed with all the facts you can skillfully negotiate with a trader to get a better rate but it’s just the opposite when a dealer is online and anonymous. You end up spending more money on shipping, postage and insurance and bank collection charges (on the payment) besides enduring the delay and possibility of missing your gold in transit. Basically, you have little control over the gold once it leaves your hands.
If you know the math and the value of your gold you can safely negotiate quoting the dealer that the price you insist on that still leaves him a 10% margin. He is bound to abide by that logic and he knows for sure that you are not a customer to be trifled with. The sensible trader understands that give or take a few dollars ultimately he is not just there to make a sale work, he is there to get a customer for life with trust and a show of good faith.