If you need to sell off gold quickly, you don't want to find yourself haggling over the value of dental fixtures. Nevertheless, deciding when it makes sense to melt down extra gold pieces is a very personal decision.
It can become a necessity if you've lost your job, have serious medical problems, or if some other crisis arises ... the point comes where we have to start selling off assets. If that's the case, be grateful that you have the gold to sell.
Gold is gold, whether it's in a coin with a recognized value, jewelry, or the gold bridge my dentist handed me when he replaced it. However, on a practical level, some gold is more easily recognized for what it is. In some forms, like a one-ounce Gold Eagle, gold's value is never questioned. In certain circ*mstances, that can sure make our lives a lot easier.
Dealing with gold dealers
So, if you do decide to melt down your gold odds and ends, where should you go? You’ve probably seen a few storefront signs stating, “We Buy Gold.” These gold dealers are a good place to start, but it’s important to understand how they value gold pieces.
First, they start with weight. Most dealers weigh gold items in “pennyweight,” not ounces. One pennyweight is 1/20 of a Troy ounce. A Troy ounce is not the same unit of measurement as the “ounce” on a postal scale or the scale you weigh yourself on at home. When you see the price of gold quoted in the paper, it’s in Troy ounces. Some dealers also weigh gold in grams. There are 31.1 grams in a Troy ounce.
Next, a dealer will determine the karat weight of the gold. “Karat” is the term used for purity; 24K gold is 99% pure.
After that, it’s a matter of math. It’s not particularly complicated, but I’ve included my gold conversion worksheets here to walk you through the process.
On average, gold dealers pay about 76% of the spot price to sellers for their gold. However, it’s worth taking a little time to shop around and get two or three quotes. Always ask the dealer for the weight and the karat of your item. They will probably quote the weight in pennyweight, knowing full well that most folks cannot convert it to Troy ounces. Write it down so you can easily compare dealers’ offers. And, if the jewelry has a karat mark and the dealer tells you it’s inaccurate, ask why — and get a second opinion.
When you melt down your gold, the dealer will pay you cash, which you can then use to buy gold in a form with an internationally recognized value.
Fair value price
Many experts have written about currency being divisible, recognizable, and having a universally recognized value around the world. The biggest advantage of melting down personal items (assuming it's not for an immediate emergency) is to convert it into a form that's recognized in any place you might find yourself.
A one-ounce Philharmonic, Gold Eagle, or Krugerrand is good money almost anywhere. They can all be quickly converted or exchanged with a lot less hassle than jewelry or a gold bridge.
Practicality
When you melt a gold item to sell, some sort of discount and negotiation is going to be involved. That's true no matter when you sell it. Is it worth it to you to pay that cost now? If you're selling your gold in an emergency, there's less opportunity to shop around for the best deal. Your bargaining power is limited in an emergency, so it's usually not the best time to sell anything.
If you're concerned about confiscation and portability, there are many options available, like the Hard Assets Alliance, that allow you to convert cash back into metal for top dollar and store it in any number of places throughout the world.
Gold portability
One advantage to keeping gold jewelry is that it's easily portable. If you want to take it out of the country, you don't have to worry about it being legal tender and possibly subject to government confiscation.
I've heard conflicting reports on what happens when you try to take a large number of gold coins out of the country. Personally, it's not something I want to attempt. If you're interested in reading more about moving gold overseas, Robert E. Bauman's article from International Man is a great resource.
Sometimes gold is more than gold
My wife Jo and I recently decided to melt down some of our gold. Some gold — like the fixtures we've accumulated from our dentist over the last 20 years — just doesn't have any emotional value. We also melted some damaged jewelry, like a necklace with a major kink that would be difficult to repair.
Other jewelry has emotional value, and like many people, we want to pass it on. We're keeping the jewelry with great sentimental value intact for our children and grandchildren. Of course, Jo still gets to enjoy those pieces in the meantime.
