How to value gold jewellery. What should you pay?

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How to value gold jewellery and what should you pay?

A short guide to valuing or pricing jewelry. This is about solid gold jewellery WITHOUT precious gems as gemstone set jewellery is a totally different story.

The first thing and most important thing about gold is that it’s like cash. Gold has a high intrinsic value and is very liquid....that is, it is easily converted to cash at very near its market value. So if you expect to buy gold in any market well below market value, think again. Those types of bargains are few and far between. Imagine….people selling a $100 note for $60. It just doesn’t happen. If it does, something is very wrong.

Manufactured jewellery has assorted costs associated with it when purchased at the shop. We all know those. Materials (gold, in this case), labour, factory costs, sales and marketing, retail margins, transport, and much more. When these item enters the secondhand market nearly all of those, except the gold value, are thrown out the window. Bear in mind, absolutely NO retailer of ANY solid gold jewellery can afford to sell below gold value AND a margin without going broke in a hurry.

It is very important to know what value gold is in a piece of jewellery as that is usually the very minimum you might have a very slim chance of paying. To calculate the value of the gold of a PARTICULAR piece of jewellery you need 3 pieces of information. The carat of the gold, the weight and the price of gold, generally quoted a US$ per ounce. (See your daily news paper for that or just google).

A SIMPLE CALCULATION……
There are 31.103 grams to a Troy Ounce which is used for precious metals.
If you divide the price of gold (usually quoted in US$ per ounce) by 31.103 you get the price for 1 gram of pure gold in US dollars. Convert that to your own currency. Again your newspaper can provide you with the info you need. Once you have a price per gram of pure gold in your own currency it’s easy to do the last bit. Multiply that number by the percentage of actual gold, according to the karat (see my guide on gold karat to know the percentages) and then multiply by the weight in grams. HEY PRESTO….you have the current gold value of the item. IT IS A LOT EASIER THAN IT LOOKS. Of course you can google “price per gram of ?ct gold” in your country and save yourself the effort.

So you have the gold value of a piece of jewellery. What’s it really worth? You will never receive full gold value when you sell to a dealer. He has to have a margin. If you sell to a bullion dealer, you will get very close to that value. From a jeweller or pawnbroker you may get more but most probably you’ll get less. I’m a pawnbroker, I should know.

The above does not consider the fact that most pieces of gold jewellery are worth more than the metal when you buy estate or secondhand. How much more?…from the buyers point of view as little above gold value as possible. But you also have to factor in…

  • Whether it is a notable piece. You have to research this. (top brand or manufacturer e.g. Tiffany’s, Faberge, etc)
  • Does it have antique, collectable or historic value. (I leave that to the Antique Dealers)
  • Condition. If it’s trashed, then it’s gold value only. If it’s like new, you might have to pay a premium.
  • The eye of the beholder. This is the hard one. You can have 2 items with absolutely the same weight and karat.
  • One sells quickly for twice gold weight and one ends up in the melting pot. The difference is that one is ugly and one is pretty. That is were the premium over gold value comes. My experience as an auctioneer and pawnbroker says ‘pretty’ is a very important factor. The prettier, the more desirable, the more bidders, the higher the price.

    When you have handled as much jewellery as I have, it becomes easier to know what’s desirable and what isn’t. Let that be your guiding light after you know the gold value. If it is very beautiful, attractive, rare, unique, raise your value. If it’s ugly don’t bother with it.

    You see all sorts of claims about the Recommended Retail Price of a piece of jewellery. Some are totally outrageous. I’ve seen somewhere between three and ten times, and more, the gold value, quoted as the RRP. To be worth 10 times metal price the piece has to be most exceptional from a famous maker. Realistically 3 to 5 times gold value is about right. The heavier the piece the less per gram as it is easier to manufacture per gram, is a good rule of thumb. Do not rely on recommended retail price very much if at all.

    Valuations are a good guide, but a guide only. They are usually done for insurance replacement price and mean the most to the insurance company. They do not take in consideration things like mass production and discounts etc. They are still very handy indication to the details of the piece, especially diamonds and other gems. The biggest thing they do is give you peace of mind when you’re looking at buying something knowing that everything is genuine. They do have to come from a Registered Certified Valuer (in Australia). Not just a piece of paper from a jeweler, making statements about a something they are selling. As a VERY simple guide if you do rely on valuations is, a 1/5 of valuation is most probably a real bargain, a 1/3 is still good, ½ is OK if you really want it. Again, I point out, that’s a very simplistic look.

    Having said all of that, the last point to make is that when you are buying gold jewellery seldom are you buying an investment. If you buy close to gold value and the price of gold goes up you could be well ahead. However, I’m sure there are better investments. Buy gold jewellery for the reason it was made, to decorate yourself. For the joy and pleasure it gives you. Maybe for security. Look good, feel good.
    ENJOY!

    LASTLY, I point out that I am not a jeweller and that the above guide is just that, a guide. I am a pawnbroker with 25 years experience. If you want professional advice go to a jeweller.
    SEE MY OTHER GUIDES FOR OTHER INFORMATION ON JEWELLERY. Vote as appropriate.
    © 2008 Edward Vabolis

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