We Buy Gold

October 8, 2014 Posted by admin

A five-step guide to selling precious metal, and one piece of advice to people buying it.

I recently sold some scrap gold. I came away from the experience with five simple rules for people who want to dispose of unwanted jewelry.

I was on Manhattan’s 47th Street, which is packed with firms that buy and sell diamonds and precious metals. In my pocket: a watch fob (with ornament), some widowed earrings and a tie clip.

My first intended stop was a gold buying firm on the second floor of a run-down building. Signs on it: “Paying 98.5%” and “Dealers Only.”

On my way up the stairs a runner for another firm stopped to warn me away. “They say they pay 98.5% but they never do. Come to this other place.”

The other place was even seedier. No name on the door. “What’s going on?” I asked. “We’re redecorating,” I was told.

(Bloomberg/Bloomberg via Getty Images)

A man behind a desk whisked through my pile. “This is junk. This is not gold,” he said about item after item—accurately, as it turned out. The fob was maybe gold, he said. He’d give me $100 for the whole lot, provided that a test proved the fob was for real.

Next stop was a metal trading firm that, to judge from its brochure, does business mostly with professionals. It has a furnace, elaborate assaying equipment used on big purchases and ways to recover gold from the dust off jewelers’ benches. It also has a sideline lending cash, at stiff interest, against pawned gold jewelry.

One clerk was at the counter, busy with a customer making loan payments. When she was done with that she tore into my collection of trinkets, using metal nippers to cut away base-metal fillers and to slice into hollow pieces. She tested each scrap with a touchstone and acid.

She rejected many pieces as gold-plated silver, which is close to worthless. (Teaspoon per teaspoon, silver is worth not even one-hundredth as much as gold.) She declared that the fob ornament was made of 18-karat gold and the rest of the items she wanted were 14-karat metal.

She calculated that I had the equivalent (adjusting for the one better piece) of 23 grams of 14-karat gold and that $491 was a fair price. A phone call from the business owner interrupted her. He scolded her for wasting time on a small transaction when she had some real-estate related work to do for him. He owned the building across the street, she explained.

Was this phone call a charade to induce me to settle for a much smaller amount? I doubt it. She shooed me out, apologizing. “At least you got a free testing,” she said.

I went back to the dealers-only shop. At this point I was no longer the rube who couldn’t tell plate from bullion. I handed over a fistful of pieces that I said were 14K and one item I said was 18K. A man threw them on a scale and offered $510. After I accepted, he did his own tests and handed back a fragment of chain that seemed questionable. He adjusted the price down to $486, counting out crisp $100 bills.

I’m pretty sure the value of the gold that he kept was close to $503. The payout was a bit less than the 98.5% advertised but was still generous, considering the size of the purchase and the fact that buyer was taking a (small) risk. I could have been a con artist with elaborately debased pieces whose corners would test well.

It’s curious how close the two honest bids were, and how far away the third. But then, any industry is going to have some players whose business model is to make few transactions but make them on extremely advantageous terms.

I knew this already. As I kid I asked a coin dealer to say what he could pay for my U.S. Mint proof sets, which were old enough to have silver in them. The number he came up was less than their face value. Once my mother brought a piece of art from India to an antiquities dealer, who said it was nothing special and he was being generous in offering her $500. She walked out. Sotheby’s auctioned it for $25,000.

Article source: http://www.forbes.com/sites/baldwin/2014/10/06/we-buy-gold/

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