As gold is reaching record highs- $1500 an ounce- more and more people are selling their unwanted gold items and pawning other gold possessions. The temptation to reap some of this record price is great.
But, all ways of selling your gold for profit or using it to cover hard times are not equal. Our goal behind the writing of the Road out of Debt was to make sure that you make the best use of their money and do not make decisions that will cause you problems later. We believe that with all debt and money issues, the more you know, the better off you are.
What you do with your gold is a perfect example.
First off. DON”T PAWN. Pawning anything is a bad business deal and a bad idea. As we discuss in the book, here’s a typical scenario with a pawnbroker: You have a nice watch worth $600 that you don’t want to sell. But you need a couple hundred dollars, so you go to the pawnbroker who knows the value of the watch and gives you $200. You are given the option of redeeming it within 60 days for around $225. After 60 days passes, you can’t pull that money together and so the pawnbroker takes possession of it.
His options are to sell it for $600, keep the $225, and return the $375 to you, or sell it to a friend or friendly business for $250 and call it even with you. The friend or friendly business will sell it for the $600 and will split the $175 difference with the pawnbroker. Guess what he does? Yes, sells it for $250 and you’ve lost your watch for $200.You are much better off selling it in the first place because that is likely what will happen in the end if you pawn it- only at a much worse price.
Second, know something about what you are selling. If you sell you gold without having any idea what it’s worth, you are guaranteed to get ripped off. Here’s what happens. There are many varying degrees in quality and value of gold so the jeweler will likely ask you how much you think it’s worth. If you say you don’t know, you will definitely get a low ball offer as the jeweler will tell you about its low quality or flaws. You can then negotiate the price up which the jeweler will definitely give some ground on (although he’ll say you’re ripping him off”). The actual fact will be that the jeweler stands to make a huge profit off you.
Third, not all sellers are the same. For instance, watch out for the mail-in gold shops. The television show “Good Morning America” tested this in an episode that aired March 20, 2009. They mailed $350 worth of gold jewelry to three different mail order jewelers. The prices they were initially offered: $206.00, $89.71, and 66.05! Take it to a reputable, walk-in jewelry store.
It is a good time to sell gold- just be careful about how you do it.