There's nothing to fear, Gold is naturally easy to value
This article is written in two sections: 1) Value of Gold 2) Gold buying and selling
Section 1: How to Value Gold
Youâll need a scale, gold is a precious metal, the value of gold is entirely contingent on mass and consistency, and unfortunately no, sentimentality is not a third factor. Amazon offers gram scales for less than $20, and they're more than adequate for your needs, choosing to forego a scale places you in a precarious situation, as one gram of difference in the weight of your gold can amount to $50 or more in price discrepancy, and unfortunately again, precious metal dealers are not typically known for their honesty.
Once you have the gram weight of your gold, youâll need to find its gold content or âkaratâ. Typically the karat is printed on all gold jewelry: the inside of a ringâs band, bracelet clasps, and earring posts are typical places to find the mark. If you canât see the mark, youâll need a jewelerâs loupe, again loupes are inexpensive, this one is fine,Â Jeweler's Loupe10x HEXAGON Gold Polished #31
American/Italian gold jewelry is typically 10k, 14k or 18k (Some cultures, specifically Asian cultures, tend to manufacture higher concentrations of Gold, usually 22k - higher concentrations of Gold are deeper in color and weigh more). All karats are out of 24, 24k is pure gold; the value of your gold is XX/24. If you have 14k gold, 14/24 equals .583, or 58.3% pure gold content.
10k gold is 41.7% pure and can be marked 417.
14k gold is 58.3% pure and can be marked 585.
18k gold is 75% pure and can be marked 750.
22k gold is 91.6% pure.
24k gold is pure.
Once you have your gram weight and purity, the calculation for the value of gold is easy.
Find the 1 troy oz trading gold price at Kitco.com, divide it by 33.1 (the number of grams in 1 troy oz), multiply it by the gram weight of your gold, and then multiply it again by its purity.
For example, if you have 5 grams of 14k gold, and the 1 oz trading gold price is $1,200, your formula looks like this:
$1,200/33.1*5*.583 = $105.68
$105.68 is the intrinsic value of gold.
But youâll never sell it for that price (Cue next section).
Buying and Selling Gold
One common misconception with the value of gold is that a dealer is purchasing your gold at market value, or out of his own good will. Gold buyers exist for a profit. Their profit equals the difference between the market value of gold and their purchase price adjusted for the costs associated with gold refining.
There are typically three costs associated with refining:
1) The overhead of the purchaser (stores, testing supplies, etc.)
2) The cost of the refinement center
3) The Plumb adjustment, or essentially the percent of gold lost in the refining process
Unfortunately there isnât much standard in gold purchase pricing, and dealers often gauge a customerâs knowledge before offering a price. It is common practice for a gold dealer to immediately double the offered price when a customer refuses to sell with the first offer.
Your best bet is to roughly know the value of your Gold and demand no less than 70% of its value.
The gold purchasing industry has very little barrier of entry, forcing a great deal of competition, and instilling both choice and bargaining power in the customer.
So hereâs a few selling tips:
Your best bet is a local shop, and theyâre everywhere.Â Honesty, however, is not everywhere, so demand at least 70% of the value of gold. If they wonât give it to you, try another shop. Again, there are plenty, and a small purse full of gold can value upwards of a couple thousand dollars. *TIP: check online purchasers for posted per gram prices, use those prices as a basis *.
If you donât have your gram weight, ask what price theyâre paying per gram. They should tell you, if they donât, get out. Without knowing anything else, you can divide the daily troy oz value of gold (again, find it at kitco.com) by 31.1 (grams in 1 troy oz), and then multiply by the karat purity (see chart above). So if todayâs gold price is $1,200 per troy oz, and you have 14k gold, the formula reads:
$1,200/31.1*.583= $22.50 per gram of 14k gold.
If youâre demanding 70%, they should pay you no less than $15.75 per gram for 14k gold.
Not all online purchasers are bad. Yes, stay away from Cash4Gold, but you have other options. Check business ratings, check posted prices, be cognizant of different pricing levels based on the amount you send in, and know how much gold youâre sending in. Donât be afraid to ask for a higher payout over the phone either, itâs very likely theyâll oblige.
Selling Gold Coins: A gold coin is not restricted by the many costs associated with gold jewelry; expect at least 95% of the value of gold.
When buying Gold, you should expect to pay a premium on market value, and you mustnât by fooled by gold imitations.
Only purchase gold bullion with a .999 engraving, or 99.9% pure gold
Certain Coins (for example, the South African Krugerrand) are less than pure, but weigh more than one troy ounce, containing a total of 1 troy oz of pure gold.
Most gold coins should be marked with the gold content on the coin.
Purchase government issued or well established refinery issued gold coins or bullion, and nothing you find on TV. Most TV infomercials offer a gold plated or essentially valueless gold item (even if theyâre calling it an investment).
The premium should be less than 5%.
I hope you find this article helpful, I have a great deal of experience in the recent inner-workings of Gold Dealers, if you have any follow-up questions, feel free to ask in the comment section, and I'll be sure to respond.