Buying and selling gold

Selling your used and unwanted gold has been one of the most controversial topics of recent times and that is due to the vast difference in the price you pay when you purchase at a store to the price you get when you decide to sell your gold. But why? Well there is many factors that play a part in the cost of gold jewelry when buying and selling your gold back to a cash for gold dealer near you. 

The process of jewelry making

First lets start with why jewelry is so expensive. It comes down to the time and energy that it takes to make a single gold jewelry piece. Believe it or not many jewelers create their jewelry by hand although some equipment and machinery may be used in the process, the majority  of their work is often done by hand. That being said some gold jewelry pieces can take 2-4 weeks to complete an item depending on the details and quality of the item.

When a gold dealer calculates the prices for his prestige hand crafted  masterpieces, he considers 3 crucial aspects to determine value, Gold weight, labor cost and projected future value.

Gold weight: determines the cost of gold used to create the item which jewelers pay for upfront.

Labor cost: as mentioned before is determined by the time and effort it takes to complete the item. 

Projected future value: is determined on projected gold market prices equaling a minimum 10% of current gold spot value, most jewelry pieces sit on display for approximately 6-12 months so jewelers will give themselves a cushion to make up for any market price fluctuations.


Lets break it down

Now let me give you an example of what a an average jewelry item can cost when you purchase from a store. Lets say we have a beautiful 14k pendant that weighs 15 grams which equates to about $560 dollars of actual gold in today's market. It's important to note that the jeweler who made the pendant had to purchase the 15 grams of gold up front to be able to make the pendant. Now lets add labor costs of approximately $800 for a weeks worth of work, that now leaves us at $1,360. On top of that you account for the time it would sit on display and the probable fluctuation in market price during that time period and that will give you an approximate total price of $1,500 for your pendant. Looking at all the factors and details that it takes to create a pendant or any jewelry piece for that matter, it's easy to understand why they would come with such a hefty price tag, and to be quite honest that's still a modest price tag, many jewelers will still go up to $2000-2,500 for they're work.


Selling your gold jewelry
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Now that you understand the value of a jewelry item, lets dive into the value you will get back when you decide to sell your items. 

Why is it that we only get a fraction of what we paid when we sell gold? Well there is a few reasons, the main one being that the price you paid for your item is not the amount of gold you actually received. If we look at the example I gave prior you will see that the pendant was worth $560 in actual gold but you paid $1,500 total which is an additional $940 in extra fees. That being said, your local gold exchange shop is only concerned with the amount of gold you bring to them, unfortunately they are not interested in the time and labor that it took to shape that gold into a pendant. 

So you have $560 dollars worth of gold in your hands, well It's important to understand the gold spot price because chances are that number may have changed since the time of purchase. Depending on the demand for gold, that number may have gone up or down, when you go into a cash for gold shop to sell your items the gold dealer working behind the counter is going to immediately  pull up the gold spot price for the day to determine the value of your items. Lets say your gold has gone up in value and is now worth $650 dollars, that's great news but unfortunately you will only receive a fraction of that gold price number when you sell gold. Why? Well when a gold exchange company purchases used gold for cash they then turn around and put it through a refining process. The gold is melted down and put through a specific chemical process which in most cases is done by a third party company therefore having to pay fees, in most cases about 10% leaving us at about $585 of the original $650. Of the $585 dollar, a cash for gold exchange company will offer you about 60% because well lets not forget they are a business and they here to make money and cover their overhead costs. On occasions you can request a higher pay out where some companies may offer a 10% bonus which will be their best gold price offer. That being said you will most likely walk away with about $386 dollars at the end of your jewelry purchase.     

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I hope this article was helpful in understanding the business side of buy and selling your gold. This article was intended to educate you and give you a better understanding on the ins-and-outs of the jewelry and gold industry. Like most industries, when you dive into any of them you will learn that the cost of material is always a fraction of the cost in retail.

 Thank you for reading.






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