Getting the Most for Your Precious Metals: Sell Your Gold and Silver Without Getting Ripped Off

by on July 29th, 2014
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The good news is that you just sold your scrap gold for $500. The bad news is that if you had done a little research, you could have received $1,000. Is this scenario common? Is there really such a large disparity between what buyers pay? Unfortunately, the answer is “yes”. Getting the most for your precious metals is not difficult. However, you must learn a little about precious metals and “comparison shop” to find the best buyer.

The high price of precious metals has led to a modern day gold rush of sorts. Buyers are everywhere. They set up shop in malls and strip malls, or they operate by buying through the mail. Some companies even travel and buy at hotels or other large venues. More traditional buyers include jewelry stores, coin dealers, and precious metal companies. Not surprisingly, they each claim to pay the “highest price”. Unfortunately for the consumer, the amount that you receive for your precious metals is completely dependent upon where you choose to sell.

Understand That Values Change Daily

The first thing you need to understand about precious metals is that their values change daily. The price reported in your local newspaper or on television is the “closing spot price”. In this manner, precious metals are similar to stocks. The closing spot price is based on a “troy ounce”. These prices can be extremely volatile, changing significantly from day to day. Because of this volatility, when you sell affects how much you receive. Should you wait to sell until the price goes higher? Only you can make that decision.

Understand Weight

You should understand a little about how precious metals are measured in terms of weight. As mentioned previously, precious metal prices are quoted per troy ounce. You should know that there are twelve troy ounces in a troy pound, not sixteen ounces we’re accustomed to in the avoirdupois system. Unless you are selling bullion, which is a bar or round that is sold in an increment of troy ounces (typically 100, 10, 1, ½, ¼, and 1/10 ounce units), the gold or silver that you sell will be measured in something other than troy ounces. The value of your metal depends on the weight (and purity, discussed shortly). Common weights for precious metals are grams, grains, and pennyweights. Find a conversion chart online to see how these measurements relate to one another. This is important because one buyer may quote their buy prices in terms of grams, while another uses pennyweights. Unless you know how these two units of measure compare, you will be unable to determine which pays more. Of course, if you ask two buyers how much they are paying for gold and they both quote a price using the same unit of measure, then no conversion is necessary. You will be able to make an informed decision because you can make an “apples to apples” comparison.

Understand Purity

Gold is a soft metal and is typically combined with more durable metals when making jewelry. Gold purity rating is measured by karat (abbreviated by K). Pure gold is said to be 24K, while gold that has been combined with other metals is less pure. The higher the karat number, the higher the purity. For jewelry, 14K is probably the most common, followed by 10K. 14K gold contains approximately 58.3% pure gold. Silver is also combined with other metals to make it more durable. If you are selling silver coins, those are typically 90% silver or 40% silver. The 90% silver coins are significantly more valuable than the 40% ones.

Distinguish Between “Scrap” and “Collector” Value

Before you sell anything, you should determine whether your items are worth more than “scrap” value. “Scrap” value means the item is valuable primarily for its precious metal content. Such items are eventually melted to make other items. Examples of “scrap” items are gold jewelry that is damaged beyond repair, or common date silver coins. “Collector” value means that the item has value that exceeds the “scrap” value. For example, you may have a watch that contains $400 worth of gold. However, to a watch collector your watch may be worth much more. The same holds true for coins. If your coin is well worn and considered a “common date” coin, it may be valuable only because of its metal content. Such a coin is referred to as “junk” or “scrap” silver. However, if your coin is in good condition and is scarce, it may be worth much more than “scrap” value to a coin collector. When you sell your items, can you count on the buyer telling you that your item is worth more than “scrap” value? It depends. Some reputable buyers who understand rare coins and jewelry will know if your items are worth more than “scrap” and will tell you so. If you sell to a teenager that is working at a “Buy Your Gold” booth at the mall, they may be unaware of the items true value. In some cases, unscrupulous buyers are fully aware that items they are buying are more valuable, yet they pay “scrap” value. They then sell the items for their true value. Because most people are not experts in rare coins and jewelry, they are extremely vulnerable to getting ripped off.

When You Are Ready to Sell

When you have decided that you are ready to sell, here are some suggestions for getting the most for your items:

Determine if your items are “scrap” or if they have “collector” value. If you have jewelry, take it to a reputable jeweler and ask. If you have coins, go to a reputable coin shop and ask if your items have “collector” value. Research your items by checking eBay to see if you can determine the selling price of your items. That will at least give you a general idea. Shop around for the best buyer. If you have an old ring that is 14K gold but badly damaged, it likely only has “scrap” value. Call multiple places and tell them what you have and ask what they are paying for 14K gold. As outlined above, they should quote you a price per some unit of weight, such as grams. If they are unwilling to give you a quote, they are not someone with whom you should do business. Your question is a simple one that any reputable buyer should easily answer. After calling several places, you should be able to tell quite easily who is paying the most. Unless a mail order place is willing to give you this information, you should steer clear of them. When selling silver coins, the buy price is typically quoted as a multiple of face value. Face value is simply the actual value of the coins. For example, if you are quoted 10x face value, for every $1 in silver coins you have, they will pay $10 ($1 x 10 = $10). Coin World magazine, which can be found at coin shops and large bookstores, typically has multiple ads that advertise buy prices for coins. See which buyer offers the most and call them for current prices. Generally, you will get the most for your items from coin dealers, jewelers, or precious metals brokers. Once again, shop around.

Taking your items to the first place you see and assuming you are getting a good deal is not a wise decision. With a little research and effort, you can sell your items with confidence and receive a fair offer for your valuables. Every “gold rush” has plenty of “suckers.” Don’t be one of them!


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