The Inside and Out of Gold for Cash Programs

The commercials and advertisements are seemingly endless and almost impossible to resist. More and more companies are offering to buy your gold for cash, giving you a little extra money to pay bills or put in a savings account. You are probably wondering just how honest these businesses are and why there are so many handling the same transactions. How can you trust that they aren’t going to take your gold and run? Will they really send you a check back or will you lose your gold forever? The truth of the matter is that these companies are not fraudulent. The high price of gold has created many legitimate businesses that buy junk gold, and then sell it for higher prices.

How to Weight Your Gold

Most gold sales transactions are done by the pennyweight. To appraisers, 20 pennyweights are equal to one troy ounce and 1.5 grams equal one pennyweight. To find out the true weight of your gold, you will first need to separate it by the karat. Have one pile for 18k, another for 14k and so on. Weigh each pile and record the gram weight. Multiply the weights by the actual gold percentage. Gold jewelry is very seldom 100 percent gold because it would be too soft and would lose its shape quickly. A 24k gold piece is considered to be 100 percent gold, 22k is 91.7 percent, down to 8k at 33.3 percent actual gold content.

What the Buyers Consider

The buyers will offer you a specific price for your gold based on the weight and content of your jewelry. The price will not be the same as the current rate of gold because they want to make a profit. They may also look at the quality of the coins or pieces, particularly because they are going to be selling them to customers. A local buyer cannot simply turn around and resell your pieces right away; he has to wait for someone to come purchase them. If the clasps on your gold necklaces are broken or your rings are dinged up or are of poor quality, these items could be sitting on the shelves in the shop for months before someone buys them. This is a huge risk for pawnshops, and it’s something to consider before dealing with a local buyer.

Who Buys What

The people that are buying gold locally are not usually the ones melting it down to sell in bulk. Instead, what they are doing is buying your junk gold, then turning around and selling it to someone that is melting it down to sell in bulk, typically these cash for gold companies that you hear so much about.

Most gold refiners are aiming for at least a 25 percent profit. This means they will offer you 25 percent less than what they expect to receive for your gold. Local buyers are also looking to make the same percentage of profit. The difference between the two purchasers is that local buyers sell the gold to the refiners, who get to keep the 25 percent.

How to Get the Most for Your Gold

The best way to get the most money for your junk gold is to go directly to the people who will be refining it instead of using a "middle man." Think of it as buying wholesale instead of retail. Most companies that are buying items like broken bracelets and earrings through the mail are doing the refining. They are buying gold in such large quantities from people all over the world, so they can afford to offer higher prices than local dealers can.

When you send your unwanted gold jewelry and coins off to a company in the mail, be sure you understand the sales agreement. While you are given a chance to decline any offer they give you and have your gold returned, there may be a time limit on how long you have to do so. Some of the less-than-reputable companies will start the time limit from the day they receive your gold, so be careful. This means by the time you get their offer you may have only one or two days to reject it. They may require that you send them a signed statement stating your decision to decline their offer.

Other than the actual gold price on the market, nothing is set in stone. If you feel the offer you receive is too low, even if you know you will never wear your gold jewelry again, by all means, make them a counter offer. Even companies that are buying your gold through the mail may come up with a better offer. It certainly will not hurt to try to get the most you can. It is important to do your research thoroughly to avoid a less-than-reputable business.