Posted on 08/15/2011 5:28:21 AM PDT by Kaslin
A few weeks ago I went over some of the issues to consider when purchasing physical gold. This week I’d like to look at the other end of the transaction: What to do when it’s time to turn your gold into cash.
This is also where I need to remind my readers that I write for a company in the business of precious metals and while I hope you consider them when you’re shopping for a precious metals partner and to consult them for advice, I also encourage you shop around and compare.
In a strange quirk of how the precious metal trade works, it’s going to take a little more effort to sell gold than buy it. Even though you’ll have for more options on where to sell gold, having more choices isn’t necessarily a good thing if more of those choices are bad.
Like when buying gold, when you sell you’re going to be paying a margin off the spot price. In case you don’t know what the spot price is, it’s basically the cash price physical gold is trading for on a particular day. You can find the spot price on almost any precious metals site on the internet including National Gold Group, 24hgold.com, or kitco.com. The spot price as of this writing is $1,740.70 an ounce.
You won’t get the spot price when selling gold and silver. Your friendly gold and silver dealer has to make a living, and the way they do that is buying at a discount on the spot price and selling on a premium. Your goal is to minimize the difference between the cash price you get for your gold and the spot price.
This is right about the place someone asks me about all those sign spinners they see out on the street saying they buy gold. I’d really like to find some creative places to put those signs as many of those places are giving the precious metals trade a bad name. Many of them are trading on a 30 or 40 percent discount on the spot price, counting on selling to people who don’t understand the business.
What you’re selling will make a huge difference on what price you get for your gold, but the process will be very similar.
Jewelry
This will likely be widest discount on the spot price for gold. Jewelry is frequently lower purity gold that’s been mixed with other metals for durability and color. You’ll have to take it somewhere or mail it in to an online store to get an appraisal. No one is going to be able to give you a jewelry quote over the phone.
Collectible Gold Coins
Like jewelry, coins with numismatic value to collectors will have to be appraised individually. Rare and collectible gold coins are evaluated for factors other than the cost of the gold in them.
There are several price guides available, like The Official Redbook for coin collectors.
Mint-Issued Gold Coins
Coins such as the gold Canadian Maple Leaf, Krugerrands, and the Chinese Panda. These will usually be priced for their value in gold, which will vary with the purity, though some will also have a small mint premium.
Not all mint coins are created equal in gold content or weight. Krugerrands, for instance, are 22 carat gold, or .917 purity, but weigh 1.0909 troy ounces so you’re still getting 1 troy ounce of gold. Compare that to the American Buffalo and Canadian Maple Leaf are 24 carat, or .999 purity, and weigh 1.0000 troy ounces.
You should be able to get a fairly close estimate on the phone for mint-issued coins, though they’ll first need to be inspected for damage. Every ding, dent, scratch and fingerprint effects the price. Don’t clean gold coins, even if they’re dirty, and avoid handling them.
Gold Bars
Gold bars are usually just a gold round or small bar with a mint stamp and purity. Some come with a control number and certificate of authenticity.
With gold bars you should be able to get a fairly accurate quote over the phone, which will save you a lot of driving.
Where To Sell
There are going to be many options for selling your gold, so shop competitively. Local dealers will likely be your fastest cash, but their discount from the spot price is usually steeper. Make sure they weigh the gold in your presence and, if you want to check their scale, a nickel always weighs 5 grams.
Online dealers will get you closer to the spot price, but with them you’ll be paying to ship your gold to them for appraisal and paying to ship it back if you don’t like the quote
If gold is such a great investment, why do all these people want to sell it?.............................
The secret to selling GOLD? You must must find a greater fool to buy it from you.
Because the local Kroger won’t take grandma’s old broken ugly gold bracelet in exchange for dinner....
Bought mine at $980 an ounce. It’s now over $1700. Not a bad investment in my mind.
Not yet, anyway....................
Here in Birmingham UK the best resell price is currently 98% of spot if the buyer was the original seller.
BullionVault (the online PM bailment site) has a market-driven sale price of about 98% of current purchase price (which is higher than spot).
So 98% seems to be a best-case whenever assay is not an issue.
Word of caution: when Gold and especially Silver prices start to ramp up, the price of paper metal (ETFs, certificates etc) and the price of physical metal will sharply diverge. The price of physical will go to the moon: the price of paper will crash and burn.
So: when that happens be very careful that you are looking at the right price. Spot might become “spot” (in scare quotes) and drop like a stone, while the metals become realistically expensive.
Pre-Sell it in UAE, HK, Jakarta, Manila, Mumbai or Mexico City or use it as collateral for stocks and borrow against the stock.
We had a build up of old broken jewelery around the house...sold it when gold hit %1500.....got $3400 at just 5% under spot from a local reputable well established Pawn shop....
Nice little boost.....I didn’t sell at the top of the market but that OK...no-one knows what that point is and when gold goes down (and it will), we will probably shop for some new jewelery....
I have found this website to be a very useful source of information on the economy, gold, and silver.
http://goldismoney.info/forums/
Bought silver at $17 an ounce in 2009 and now at $39 an ounce.
The requirement for a coincidence of wants in a transaction is why barter doesn't work: you need money.
We currently use fiat currency in place of money: but we are starting to realize why this is unworkable. Fiat currency does not act as a store of value: money - true money - does.
Given free market conditions we would probably end up moving to a hybrid system where savings are in Gold/Silver and where paper/electrons based off those savings are used for trade.
Pure fiat currencies (I hope) will become a warning from history: - at least until we collectively forget why fiat currencies are always doomed to failure.
Because they know its just a bubble that will soon collapse. The dollar is the way to go.
Right now it's about 7 or 8 oz of Gold to the DOW index.
But in 2000-2001 the DOW cost about 48 oz of Gold. That would have been a terrible time to sell Gold. So - sure enough - that's when Gordon Brown sold 200 tons of it. So you did at least five times better than him!
We should invest in copper.
Thieves are ripping out AC and electrical wiring out of all these foreclosed homes......................
Make sure you have records so you can report the capital gains to the IRS.
The game seems to be rigged. Capital gains on the sale of collectables is still 28%? I could be wrong.
I bought mine in the low 200’s. I am thinking it is time to collect profit, if I can remember where I put them.
Ping for later review
If you managed to catch the very best price (just as the Gold price hit a blow-off top) you would get $15000/oz - but realistically $8000 is more like it.
Caveat: these prices are based on a 1 to 1 Gold to DOW ratio as a trigger point. If the DOW went down to 1800 (!) then now would be the time to think about selling your Gold.
If the DOW went to 100,000 then 100,000/oz would be a good target price for your Gold. You get the picture.
I'll certainly be hanging onto my PMs for a few years yet.
On what do you base that statement? The dollar has been on a steady decreasing line since 1913, having lost 98% of it's value. Or did you forget the /sarcasm tag?
The dollar has depreciated about 4%/year, gold has appreciated about 4%/year over the last 100 years.
A bet on gold now is a bet that the politicians won't find any way to actually cut the budget, but will continue to fund the government by inflation. It seems a safe bet to me. Buy the F'ing dips.
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