Selling your old gold can be a confusing process, especially since everyone seems to be jumping on the gold buying bandwagon these days, from Internet companies to jewelry stores, and they all have different ways of doing business. If you have old, out-of-style, broken or unwanted gold items, where should you look to sell them? The following is a partial list of some common options, along with the possible pluses and minuses of each.
Pawnshop:The purpose of a pawnshop is to make small loans using goods (not just jewelry) as collateral. If you decide you want your goods back, you return the amount of the loan plus a fairly substantial fee (at least proportionally speaking). So a pawnshop engaged in its principal business will make you a loan on your gold jewelry and if you decide not to repay the loan, will then try to sell your item to recover the cost of the loan.
Benefits: Pawnshops are one of the few sources of quick, small loans that are commonly available. If you just need $200 to get you through to your next paycheck, a pawnshop may be the way to go, especially if you want to pay back the loan, plus fees, and recover the item later.
Drawbacks: In order to recover the loan they have made to you if you decide not to pay back the loan, the item needs to be resalable. That means that they aren't going to accept out-of-style, ugly or broken gold jewelry, since they can't resell it. Some reports claim that many pawnshops use a one-third rule of thumb - if they can sell a bike, a TV, or jewelry for $30, they'll offer you $10 for it. If you are just looking to sell your old gold outright, that isn't really the business a pawnshop is in. If a pawnshop does buy scrap gold, however, keep in mind what their general way of doing business really is.
Jewelry Store:The purpose of most jewelry stores is simply to sell jewelry. When you buy jewelry, you aren't just paying for the raw value of the materials; you are also paying for the workmanship involved in making a fine piece of jewelry. Jewelry stores often have large markups - from 100% to several hundred percent, since they have to pay for the jewelry, commissions, overhead, security, all the fancy fixtures, etc.
Benefits: If you have a nice piece of jewelry that could possibly be resold, a jewelry store may offer more for that item. Be aware, though, that it is going to compete with their existing stock. Jewelry stores may also offer more if they think they can sell you something to replace the item you want to get rid of. If you are just looking to trade-in or trade-up, a jewelry store may be a viable option.
Drawbacks: Jewelry stores have a lot of overhead, so in order to make a profit, they need to have big markups. Buying scrap gold is probably not going to be their main business; it is simply a way to make a little money during a tough economy when luxury items (i.e. jewelry) aren't selling well. Or, it could simply be a way to get you into the store to try to sell you something different. They are used to big markups, which conversely may mean a lower price offered to you.
Internet gold buyers:Internet ads and light-night TV commercials announcing Cash For Gold. You mail in your unwanted gold items and they send you back a check.
Benefits: You can do this from the comfort of your own home, with very little effort or thought involved.
Drawbacks: Most promise free shipping, but obviously the shipping isn't free, it's just deducted from the amount you receive. There is always the risk of lost or delayed shipments. Also, they many warn you that they will make you an offer after a fire assay, that is, after all of your jewelry has been melted and tested. If you don't like the offer, you will get back an unrecognizable lump of melted jewelry. You need to wait until after the value has been determined and sometimes for an additional waiting period to receive your funds. If you don't respond or reject the offer within that period, you won't get your items back.
In November of 2009, Consumer Reports found that these firms only paid from 11% to 29% of the actual value of the gold. By comparison, more traditional, local buyers paid from 30% to 70%.
Additionally, a number of these Internet firms have been the subject of numerous complaints. A major player in this market only has a "C" rating with the Better Business Bureau. You will never see a live person. If you decide to go this route, do your research. The Internet is the great equalizer - anyone can purport to be anything. It is amazing how many of these companies are "America's #1 Gold Buyer" with "The Highest Payout Available." Don't believe the hype.
Local scrap gold buyers:These are firms that specialize in buying and recycling scrap gold. They will buy scrap gold in virtually any condition. Many offer cash or check settlement on the spot.
Benefits: You get to meet with a live person whose only interest is in buying your scrap gold, so you have the opportunity to ask any questions you may have. You will generally receive an immediate offer to buy, which you may accept or decline. If you decline, your gold items have never left your possession. Depending on how their business is set up, they often have lower overhead, reducing the need for big markups. Some offer cash on the spot, eliminating the possibility of bounced checks.
Drawbacks: Depending on the size of your transaction, some may not have the funds necessary to cover the transaction. There may not be a reputable company near where you live.
Selling old, unwanted gold is not something most of us do every day. In order to feel comfortable and secure doing so, be sure to do some research and consider your options. Realize that within each and every one of these options, you will find both quality companies and bad actors. The key is trust. Not blind faith, but confidence built on accurate information. If someone is not clear and forthcoming, don't do business with them.
Disclaimer: In the interest of full disclosure, it should be stated that the author is the owner of South Kansas City Gold Buyer, a local scrap gold buyer based in Kansas City. For more information about this business you can visit sokcgoldbuyer.com.
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