Gold Diggers

Gold DiggersThe Bohemian has a mostly forgettable article about the gold buying business by Joe Rosen. But Rosen does do a little investigative reporting by testing some of the local (Santa Rosa area) gold buyers. He used a gold ring weighing 2.95 grams that was purchased for $200 in 1999 to test the widely made claim by gold buyers that they pay anywhere from 70%-92% of the current selling price of gold. This claim is ridiculous on its face. No gold buyer would pay more than the wholesale price of gold and that would be roughly half the selling price of gold. But no matter, it is a good thing to check.

A local jeweler, who offered $81 for the ring, said that he would sell it for $400. That sounds about right. And it isn’t jewelers who are making the outrageous claims mentioned above. Nor are pawn shops. The one pawn shop The Bohemian approached offered $45. (This is entirely in keeping with general pawn shop philosophy: 10%-20% of the selling price of an item. This isn’t a good deal, but at least pawn shops are clear about what they offer.)

Currently, gold is selling for roughly $1600 per ounce. That’s roughly $56.50 per gram. So the ring should be worth $166.50, just based upon its gold content. Thus, if these gold buyers were really offering 70%-92% of the selling price of gold, they would offer between $116.50 and $153.00. So how did they do? One offered $75 (45%) and the other $39 (23%).

There are two lessons in this exercise. First, these gold buyers are liars. Second, you should shop around if you are selling gold. And don’t pass up jewelry stores, or even pawn shops (the pawn shop here out-bid one of the gold buyers).

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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