Selling Your Gold In The 21st Century
In recent weeks a quick look a the Gold Index shows it to be around $1300 an ounce. It was not so long ago it was less than half that and had even been much lower at times. Today, with the GFC, the Middle East, natural disasters and what have you it seems gold is the commodity of choice, so everyone should get some ounces and cash in! Of course it is not that easy. If you want to buy a gold bar or two, where are you going to get them from and where will you keep them so they are safe from thieves? Do you think you can go down to the local jewelry shop and buy some ‘raw’ gold at $1300 an ounce and hang onto it until it hits $1400 and then cash in?
The reality is that most gold is traded on the stock market and it is all done electronically, no actual gold ever physically changes hands or leaves the vault. You can buy gold bars, the standard is the London Delivery Goods Gold bar which weighs 400 ounces, about $500,000 worth at current prices. The cost of keeping that puppy safe and secure is not worth considering when you only own one of them!
You can buy into gold stocks, gold futures and other instruments that have exposure to gold but it isn’t the same as seeing something glint in the moonlight, is it? You can invest in gold mines and some of them are actually legitimate! For most of us though, gold means gold coins, jewelry and watches. When we speak of gold, think also of silver and that even more precious metal, platinum.
There are web sites online and small stands in the mall where you can send your gold jewelry to have it assayed and they will pay you cash for it. Some of these websites have a good reputation, such as Cash4GoldUSA which was found to pay three times what other sites offered when a blind test was conducted by Fox News’ Trisha Thompson. Whether you go to a stand in the mall or send your gold in via FedEx, the reality is you will only get scrap metal value for it.
Keep in mind when you bought the item you paid retail. That meant a jeweler or jewelry factory had to buy the gold and other precious metals it used, add in the labor and then sell to a retail shop, perhaps through a wholesaler or agent and the retailer needed to mark up the item to make a profit. It could be well over 100% more than what it cost to make. So for this reason alone many gold sellers are bitterly disappointed at the price they are offered for their jewelry.
Most of the web site dealers offer a money back guarantee, that is if you don’t like the price they pay for the items they will return your items if you return their check within a specified period. You have to remember that most gold jewelry is not pure to begin with. 24K or 24 Karat is pure, but it is soft so many jewelers prefer to alloy it with zinc, silver, copper and even platinum to stiffen it up. 9K gold is about 40% pure, 14K 58.3% pure and the most popular, 18K is still only 75% pure gold. The items you send need to be refined and this is a costly process that needs to be factored in. By the time they melt down your item and get the gold out of it, the bit they are paying for, there might not be much left and so the price you are paid is much less than you thought it would be.
Gold is a good investment and it is a good thing to have a stack of Krueger Rands hidden under the mattress but don’t base your entire wealth creation strategy on that or any other single thing.
