How does gold for cash work what is the difference in price between 18k and 24k gold how do the buyers figuer out worth?

Answer 1

If you are working with pure bullion and not numismatic grade coinage, the answer is fairly easy.

First, you have to have a reference price. The price of gold many years ago was $35 per ounce, so a $5 coin contained 1/7 of an ounce of gold. With today's commodities markets, the price of gold varies on an hourly basis and is reported in the financial section of your newspaper on a daily basis. As of 9/11/2009 the price of gold reached $1006 per ounce!

Now with Jewelry exchanges. the process is much less transparent -- and you are likely to get shortchanged in a number of ways. First, pure gold is rated 24 karat. 14 karat gold is 14 parts gold out of 24 parts, with the remaining parts being made up of silver, copper, nickel or zinc. The gold needs to be alloyed because pure gold is too soft to be durable.

Now even though the dealer will only pay you for the gold weight, the other metals will have a refined value as well. For 14 karat gold, you should get approximately 14/24 the value of the weight for it. For 10 karat gold, about 10/24 the value of the weight. The dealer will deduct a commission and a "refining fee."

The refining fee is an outrageous expense. Shouldn't the dealer bear that? It deducts a lot from what you get. You also may not get the full weight of gold, as it is advantageous to undercalculate how much gold is there.

Complicating things further is the concept of "gold-filled" jewelry, where the gold overlay is only about 1/20th of the weight of the piece. A dishonest dealer would claim your 14 karat gold ring was a 14 karat "gold-filled" ring, pocketing about 95% of the value you would get from it.

Never, ever send your gold away in an envelope! If you can, take your gold to a local assayer and watch them work. An independent assayer will tell you the true metal value you have (they will charge a fee), while a dealer interested in buying your merchandise will have reasons to shortchange you. Many do, by as much as 2/3! When you have the true assay value, you can see what the dealer will offer you.

Raymond