UK gold buyer paid €25 per gram for 18-karat jewellery

Selling 18-karat gold: €25 per gram at a gold buyer

Selling jewellery gold is almost always a bad deal. The case that opens the thread illustrates it with numbers: €25 per gram for rings, bracelets and chains of 18 karats inherited from family and bought years ago at a low price, at a time when, according to his version, the metal was trading at €43 per gram. Beforehand he had been assured that his gold was "of very low quality". He was paid little more than half of what he calculated it was worth, and he himself sums it up: I was ripped off.

The underlying question is different: do pawnshops pay well or should you be wary? And by the way, how much of the money left on the counter is really the value of the metal?

How much is a gram of 18-karat gold worth?

The arithmetic doesn't allow much discussion: 18-karat gold is 75% pure gold and the rest, alloys. According to the calculation made in the thread, if the metal trades at €43 per gram, the real content of an 18-karat piece is around €32. Paying €25 leaves a margin of seven euros for the buyer, which is where the gold buyer's business lives: buying at scrap price with a discount and selling the metal at market price.

The actual karat is another matter. In quality jewellery the fineness —the percentage of gold— is engraved in small print, and a participant noted that the piece in the case could be 16 or 14 karats. When someone claims they've been paid a pittance, the first sensible question is whether what they brought was what they thought they were bringing.

What does a pawnshop pay for a pawned jewel?

Here enters the other classic channel, that of pawning. A user claims that a pawnshop pays around 20% below the value of the piece, with a substantial difference compared to the gold buyer: the jewel is not sold, it is left as collateral and can be recovered by returning the money. If it is not returned, the entity keeps it and sells it.

That is the boundary that many people do not distinguish. Selling is a closed and irreversible operation. Pawning is a loan with collateral. That is why this route has been pointed out as the safest for those who do not want to part with the object.

Buying with a buy-back guarantee: 25% each month

Apart from pawnshops, some gold buyers and second-hand shops offer a mixed system that deserves a warning, according to one participant's account. They value the piece and pay cash on the spot; a month later the customer can recover it by paying an additional 25%, or pay that 25% and wait another month to try again. Some say they know cases of people who have been paying the surcharge for months waiting to gather the 125% of the initial amount.

That monthly surcharge is, in practice, equivalent to very expensive financing. As that same user points out, it only makes sense with pieces of great sentimental value. If in the end it is not recovered, it is melted down or resold as used.

Gold at highs and jewellery that is not an investment

The context doesn't help decide either. A participant claims that gold is trading at highs of the last twenty years, with a good part of the money taking refuge in the metal given distrust in currencies and the real economy. That pushes people to buy. But jewellery gold carries a manufacturing cost that is not recovered when melted, and that is why those seeking exposure to the metal usually end up in investment coins and not in bracelets.

Some point out that the return to pawning has less to do with nostalgia than with the deterioration of purchasing power, and some propose skipping intermediaries by selling between individuals, although there any buy-back guarantee disappears.

Can a jewel be valued for free?

Another little-discussed utility of these establishments would be appraisal. A user wonders if taking the piece, asking for a valuation and returning home with it costs nothing and if it serves to know if an inherited coin is real gold. It also remains to be resolved whether that procedure obliges you to give personal data —and what is done with them— and whether you have to document the ownership of old pieces for which no invoice exists.