How to Beat the Cash for Gold Dealers
In the last 8 years, “We Buy Gold” shops have popped up everywhere. Gold has made some steady increases over the last decade and many businesses have been taking advantage of the increase demand. It’s sad that businesses that are not a part of the gold industry are taking advantage of this trend. I have seen smoke shops, postal stores, and even a noodle shop with we buy gold in their windows. The business idea behind the “We Buy Gold” companies is to offer far below the bullion value and make a profit selling it to gold smelters for near bullion values. The problem about these places is that they take advantage of gold buyers ignorance or they are targeting people who received the gold as a gift and do not know what was paid for it. Once the smelters receive the gold, they melt it down and cast it into ingots, jewelry or whatever form is needed. Then the gold is sold at premiums above spot and the whole cycle repeats.
It is time to break the cycle. There is no reason that the common gold holder needs to sell their gold at a massive discount. Today we are going to look at popular types of companies that buy gold and how to properly sell your gold for maximum value.
The Worst Way to Sell Gold: Pawn Shop
Pawn shops are big business with even bigger margins. Most pawn shops make their money when customers pawn an item for a loan. There are huge interest payments put on that item if the customer wants to buy it back. If the customer defaults, it isn’t a big deal because the value the pawn shops places on the item is about 50% of what it sells for on eBay.
The same rules apply to gold. Most people are not foolish enough to sell gold for half of what it is worth if it is in a gold coin or bar form, so pawn shops will offer around 80% value. If it is in a jewelry form, it can be more difficult for an uneducated owner to know how much gold content the item has. Pawn shops take advantage of this ignorance and will low-ball the customer for a huge profit on the resell.
The only effective way to avoid getting taken advantage of at a pawn shop is to not sell your gold at a pawn shop.
The We Buy Gold Store Plague
As previously mentioned, in the last 8 years these stores have become increasingly popular. They use the same tactics as pawn shops. Some key points to keep in mind when dealing with these shops is to never let your gold out of your sight. People have reported that many companies have stolen gold and replaced it with fake replica of coins. Not every “We Buy Gold” company is going to steal your gold but it is always better to be safe than sorry. The best tactic you can use if you must sell your gold to one of these companies is to shop around. Most of them are going to give you a written offer and will price match other companies that come back higher. Take your gold to 3-4 of these companies and take the biggest offer. Usually the smaller companies will pay you the most because they do not have the advertising dollars that big companies can throw around. The only way to compensate is to pay more for the gold.
Craigslist: Everyone’s Creepiest Commerce Experience
There are so many bad reports of dealing with people on craigslist that I wouldn’t recommend even thinking about this strategy. There are people that make their living off ripping people off on craigslist. I had a client call me and tell me her story about craigslist.
She said that she posted two gold 1-ounce bars and a 1-ounce gold American Eagle selling each product at spot price. In less than 30 minutes her inbox was flooded with replies and offers to purchase her gold. She decided to meet one gentleman at a coffee shop. Once the buyer had seen the gold, he started making excuses about the damage of the bullion. Finally, he offered her 40% of what the gold spot value was worth. When she refused, he told her that it is going to be the best offer she is going to get from craigslist and to take the money because it is already here.
Offended, my client left with her gold. The sad part about this story was that the gentleman wasn’t far from the truth. She replied to a couple of more craigslist offers and the best offer she got was 50% of the value.
This is when she wised up and called a reputable dealer and that is how our relationship began.
Reputable Dealers are the Best Way to Go
Working with a reputable gold dealer can be hard to identify. The best way to go about this is to google your area + gold investment dealer. If you would like to see what a website of a reputable dealer looks like, check out Scottsdale Gold and Silver. Most reputable dealers market by giving away free precious metals guides. Call up the firm and tell them the product you have and get an offer. If they offer you spot price or within a couple of percentage points below spot price than you have found a good place to work with. Most precious metals investment dealers will not buy back your jewelry so this strategy will only work with gold bars and coins.
If the product that you have is rare and has value above and beyond its gold content, the best way to get the most out of the product is to first ask what the company is selling that coin or bar for. Once they tell you the sell price, ask what they buy it back for. This way they cannot low-ball you without looking like a crook.
How to Sell Your Gold Jewelry and Not Get Ripped Off
This one is tough. The jewelry business is designed to have huge mark ups and poor buy backs. The best way to go about selling that old jewelry is an auction. The only way to get a fair price is to allow people who want it to compete for the item. I recommend using eBay if you have an account. Please remember that eBay does charge around a 10% auction fee and Paypal charges around 2.5%. Whatever the product sell for you need to reduce that price by about 12.5% and shipping cost. Usually, going this route even with the fees will net you the most return value for your jewelry.