A few years ago some relatives were having a garage sale and I saw a lol (lol used to stand for little old lady) reaching for a bracelet. Just in time I snatched it up and said, “sorry this is a mistake and not for sale.” It had a 6 dollar tag on it. I asked my mom-n-law if she knew that it was gold and understood the value. She said yes. I said I’d like to have it then and pulled out 6 dollars. She told me if I wanted it, it was free. I explained that it was worth hundreds of dollars. She said that’s OK.
So, right then I realized that it would be a good idea to scout garage and estate sales for gold and precious stones. I couldn’t convince my wife that it was a good idea so she wouldn’t let me use the cash I needed.
Last night she attended a gold party. I asked her not to take her gold, but she said she wanted to help her friend. Geesh help me, damnit! So I looked at what she had in little plastic baggies and told her that professionals would not even be interested in anything, but one piece.
It was an Italian gold Christopher with a 916 marked on the back of it. I weighed it with my electronic scale at 2.7 g. Got the New York Spot price and told her not to accept less than 100 dollars, but that I would give her that much for it right now. “Well, at least let me show you how its done so you can tell if they are ripping off your friends.” “No I don’t have time.” She came back with all the jewelry except the one piece. They gave her 50 dollars. She said they waved a magnet “thingy” over it and weighed it, but didn’t test it.
Ways that you get ripped off
They tell you that they are buying your gold per pennyweight but they pay you per gram. They keep .555 grams per pennyweight cheating you out of 1/3 of your money. They may tell you that your 18kt gold is only 14kt. They may use an uncalibrated scale or lie to you about the amount weighed. They may combine 18, 14, and 22kt gold on the scale and pay you for the lowest karat value. There are ways to get to you, so seller beware. There are honest gold party folks, of course, but know your value before going to one of these parties.
Most reputable jewelers will sell to a refinery at 93-95%, and they have to pay taxes and pay their employees and still make a profit. Typically they need to make about 15%. If the gold party folks are paying 10% to the host and 5% for a referral, you can plainly see that there is no way for them to ever make money at this without skinning the party goers. So if they are being honest, they may tell you that they are paying out 75% of spot.
My advice to folks is not to sell your gold this way. Do not sell it to a pawn shop, and do not sell it to the guys that advertise “send in your unwanted gold.“ Sell it to a gold refinery. A good one will payout at 93%-95% gold value.
If you do decide to sell your gold. Here is how you estimate the value.
Don’t settle for London Fix or Spot Price if you don‘t have to. Ask for the COMEX or New York Spot price. The best gold dealers pay for the gold spot prices on a graduated scale. Gold prices are set more like a currency than a commodity and fluctuate minute by minute. London fix is set twice a day against the British pound (10:30 am and 3:00 pm) and It is done over the telephone by 5 large banks (the Central Banks). This is the beginning of the day New York time (9am EST). Experts note that the price of gold falls artificially at the start of New York trading, so it is generally best (for the US seller) to go with the New York spot price set later in the day (1:30 EST). Gold Dealers know this, of course and it is in their best interest to understand the spot price game. The bid-ask spread is a perfectly honest and legal way of covering one's costs. For a single sale, it’s not that big a deal which spot they use, but over time it will make a difference.
The bracelet I got from my mom-n-law was 14K gold. Most rings and bracelets are, because it holds up better with the silver and other metals in it. It weighed 21.5 g. Market price at that time was $920 per troy oz. 14 Karat gold is about 55-60% gold. Most honest buyers use the median value of 58.33%.
21.5g x 58.33% = 12.54
12.54g x 0.0321507466 = .4032dwt (dry weight or pennyweight)
.4032dwt x $920 = $370.9
370.9 x 95% = $352.39
I received a check from the refinery for $318. The Spot price for the day that the refinery received it was down a bit, hence the apx. 35 dollar difference. The refinery pays out 95% because of their costs to refine it and the losses during the refining process.
My wife’s medallion weighed 2.7g, was 22 Kt, and the Spot Price that day was $1640.70 :
Gold Purity: Karat, K, or kt
12K = 50%
14K = 58.33%
18K = 75%
22K = 91%
24K = 100%
2.7g x 91% = 2.457g
Convert to DWT (dry weight or pennyweight)
2.457g x .0321507466 = 0.0789942dwt
Weight times spot
.0789dwt x 1640.70 = 129.45
Refinery pays 95%
129.45 x 95% = $122.97
Gold jewelry may have other marks on it.
1/20 G.F. means 1/20th gold filled
10K G.P. means 10 Karat gold plated
I don't suggest buying gold filled or gold plated jewelry as an investment. Well, I won't even wear it. I am allergic to other metals and break out. I need at least 14K. There are still some other metals, but I don't react.
14K/24 = .58333 they bump it to 585
333 = 8K
375 = 9K
417 = 10K
585 = 14K
750 = 18K
916 or 917 = 22K
999 = 24K
But just because it has these markings doesn't mean that it is really gold. A test usually is done with a piece of known gold. Scratch it off onto a stone next to a "scratch" of that which is being tested and put an acid on both. Same reaction on both is good.
The magnetic "thingy" was just a strong magnet used to detect ferrous metals (iron, nickel, etc.) used in cheap jewelry.
The way these gold parties typically work:
I ask you to host a Gold Party. You fill your house with your friends and relatives and feed and/or get them drunk. In exchange, I may give you a set amount of money or a percentage of my profit (usually 10%). I may give you $120 for food and beverages.
If any of your friends decide to host a party for me, I give you more money (typically 5%), and give them the same deal.
There generally aren't any complaints, and no receipts are generally requested.
There were a dozen of folks at the party my wife went to and no one asked for a receipt.
I doubt anyone ever complains to the BBB because they don't know the system, don't want to alienate their friends, and there might not be a registered business involved, to complain about anyways.
I sit in a back room and you escort your friend in. I have a large stack of bills in front of me, a scale, a magnet and a jewelers loop. When you walk back into the party, everyone is excited and asks you how much you made. Excitement builds.
Meanwhile I'm having my own party in the back room and making 2 or 3 times (or more) my investment. As long as everything is done legally, it is perfectly legit. However, if you are not told how the price is arrived at, chances are you are getting ripped off, in my opinion. You definitely are getting far less than the market value.
Also, gold parties may be illegal in your state, county or city. Check the statutes covering scrap metals before attending one.
It may be illegal in Virginia, Georgia, San Diego and most cities in California, South Carolina.
Where legal, most of the time it is required that the buyer has a permanent location, such as a retail store, be licensed, and obtain a permit for each location where buying takes place.