This article teaches you about Cash for Gold services. Specifically, a brief history on cash for gold and how it works; how to calculate how much your gold is worth; how to negotiate the best price; and much more; courtesy of Valencia Jewellery; your premier cash for gold provider.
Table of Contents
- A Brief History
- What is Cash for Gold/ Loans on Gold
- How do I know I'm getting the most cash for my gold?
A Brief History
Historically, prior to the wide spread access to banks, the civilian relied on collecting gold and other precious metals like silver as a store of value upon which cash could be traded for that gold.
Jewelers required this gold to create new jewelry or for repair purposes and would be the most involved in buying this gold for cash.
In the same light, jewelers would also give the option for the gold to be bought back for a monthly holding fee.
What is Cash for Gold/ Loans on Gold?
Cash for gold is exactly what it sounds like; depending on the weight of the gold you bring in, the service provider offers you cash based on the price of gold during that time.
Loans on gold is a part of this service. If the seller wants the option to buy their gold back, there are 30 to 90 day buy back options where monthly holding fees are charged on the principle cash amount.
When Should I Sell my Gold?
Typically people will sell their gold when they are looking to purchase another asset (for example selling your gold to buy a home) or when they need the cash for what ever reason on the spot.
When should I get a loan on my gold?
- People get loans on their gold when they need cash quickly for an investment that will have a quick turnover:
example; a friend tells you that if you give them 1000$, he can turn it into 1400$ by the end of the week. So you get a loan on your gold, acquire the 1000$ and at the end of the week you get your 1400$...
Now you can pay off the principle of the loan then pay the holding fee to reacquire your gold and stay with the profit made that week.
2. Another scenario is when people require the cash and do not want to lose their gold, either because it is of sentimental value or because the customer does not want to lose their asset.
3. You just feel like it !
How do I know I am Getting the Most Cash for My Gold?
One will go to several different shops in the area to compare prices, or one can search on the internet what is the current gold price of the day.
One source is Kitco.com which gives you a live look at gold prices for the day...
Depending on the Karat of gold you are trying to sell, you can calculate the general range of cash you can expect.
How do I calculate the amount of cash I should be getting for my gold?
- Figure out the Karat of your gold
- Eg. 18K Gold
- Divide the karat of your gold by 24 to find out the percentage of pure gold your jewelry has
- Eg. 18/24 = 0.75 = 75%
- Weigh your piece of jewelry
- Eg. 18K 10 Gram chain
- Then find the price of pure gold per ounce (31.1 grams) for the day
- Eg. 2300$ per ounce of 24K gold
- Divide the price for an ounce of pure gold by 31.1 grams
- 2300$ / 31.1 grams = 73.95$ / gram of 24K
- Now take the percentage calculated above and multiply it by the price of one gram of 24K calculated in the last step
- 73.95 $ x 75% = ~55$ / gram of 18K
- Now that we know one gram of 18K gold costs ~55$ / gram we multiply 55 by the weight of your jewelry.
- Eg. a 10 grams x 55 $ = 550$
In this example we can expect to negotiate our 10 gram 18K gold chain if the price of gold for the day is 2300$/ ounch of 24K to be about 550$.
How do I negotiate my price with the cash for gold service provider?
Given the above calculation, if we are to continue the example, we should expect something around 555.63 $. But don't expect that exact cash value.
Why do cash for gold providers rarely give the spot price calculated above?
The provider tends to have costs of running a business. Not only this, but the provider also incurs the risk of if the spot price falls within the days that they give you cash for your gold.
Lets say the price per gram of 24K gold is 73.95$ today, and the provider gives you that price. but tomorrow the gold goes down to 70 $ per gram. Then the provider loses 3.95$ per gram... on 20 grams this is almost 80$ loss in one day.
With that in mind, the negotiation must be a fair negotiation for both the provider and the consumer.
For this reason the 18K 10 gram chain worth 555.63 $ above may only get between 400$ and 550$. This is where you have the option to shop around.
This information is given in the hopes of making negotiations easier for you in the future if you are looking to sell your gold. Hope you consider Valencia Jewellery if you happen to be in the greater Toronto area !