Monday, March 22, 2010

Lure of gold and selling your old unwanted jewelleries

I read an interesting article from the SMH (author Lesley Parker) about steps you should take first before selling your unwanted gold jewelleries in order to obtain the best price for yourself.

"1. Make your own estimate of the value of the gold jewellery you're thinking of selling
2. Obtain at least three quotes.
3. Check that the buyer has a second hand dealer's licence and calibrated scales
4. Consider whether you'd get more selling jewellery intact rather than as "scrap" metal
... consumers should expect about 80 per cent of the spot price for gold per gram according to its carat value..."

Step one is the most complicated because it requires you to weigh and value your own jewellery yourself. First, the confusion of gold terminologies need to be cleared up:

Troy ounce = 31.1 grams and is the unit used for measuring gold
Avoirdupois ounce = 28.4 grams is the standard ounce that we typically use
24 carats = pure gold
22 carats = 916 = 91.6% pure gold (22/24=91.6%)
18-carats = 750 = 75% pure gold (18/24=75%)
14-carats = 585 = 58.5% pure gold (14/24=58.5%)
9-carats = 375 = 37.5% pure gold (9/24=37.5%)

Parker writes that using grams will simplify things and you can ask the buyer (second hand dealer) to to put their offer to you as a price per gram.

i) Separate your gold jewelleries into piles of the same purity and weigh those piles separately
ii) The amount of gold you actually have is achieved by multiplying the weight of the piles by the purity. Eg 300g of 9-carat gold jewellery would melt down to 112.5g in pure gold (300g x 0.375 purity).
iii) Now you can roughly estimate the value by multiplying the pure gold weight by the prevailing gold price. Using the example from above: 112.5g x $40/gram = $4,500 for the pure "gold" in your jelleweries.

Although gold prices are usually listed in troy ounces, Parker wrote that you can find the price per gram (instead of troy ounce) in Australian dollars at which would be useful if you're not great at converting grams into troy ounces.

Using the example from above, 112.5g is 3.62 troy ounces (ie 112.5/31.1).

Gold buyers usually do not want the stones and if they do, ask for an additional quote for the stone that is separate from the quote for the gold. If you're in Australia, then you can check the guide for Jewellers Association of Australia for additional information.

If you're interested in buying gold as an investment then you can buy gold coins or bullions from or buy gold investments through the ASX.

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