Dubai Gold Souk – Photo Courtesy: Theodore Scott
Buying and selling gold can be a highly profitable but competitive business. Because of the media attention around the high price of gold, many people are aware of its value. However, it is still possible to make money in this lucrative trade, if you know where to look.
In this guide you will learn first how to value gold correctly so that you don’t overpay. Then we will look at places that you can find undervalued gold. Finally we will detail where you can sell gold for the best possible price.
Learn to Value Gold Correctly
Before you can start to buy and sell gold, you must be able to accurately determine its value. The easiest way to determine gold jewellery’s value is to look at the karat rating. You will need a magnifying glass for this as the inscription is usually very small. One thing to be aware of is that the purity of gold differs before 1980. Generally gold will be worth between ½ – 1 karat less than its post 1980 value.
The next step is to determine its weight. The best way to weigh gold is to use a jeweller’s digital scale. If this is not available, you can use a digital kitchen scale. In order to accurately determine the value of the gold, you need to measure to one tenth of a gram.
Once you have the weight and the purity, the easiest way to determine its current value is to use an online calculator. Simply Google “gold calculator” to find a list of calculators you can use. If you have a smart phone, take this with you when determining when to purchase gold, so that you can use the gold calculator app.
How to Buy Gold
Once you have an understanding of how to value gold, you next need to find undervalued gold that is for sale. There are a number of different places where you can purchase gold under its current scrap value:
Hosting a gold party is one of the fastest ways to purchase a lot of gold under the scrap price. Hosting a gold party involves inviting friends and acquaintances over for drinks, entertainment and an opportunity to sell to you any gold that they might have.
Looking for gold at yard sales can be like a treasure hunt. You may have to visit quite a few to find the right one, but it can be highly lucrative when you do. At these yard sales, you are looking for junk jewellery. That is jewellery which may look ugly, but still contains gold. Make sure to bring your magnifying glass, so that you can check for the karat rating.
One of the most effective ways to find gold is to simply advertise. Have people come to you by appealing to their greed and need for instant gratification. Explain that you will pay with cash immediately. Remember that in some states, you will need to be licensed to purchase gold.
How to Sell Gold
Now that we have purchased gold under its current market value, we now need to sell it for a profit. In order to do that, we are going to need to get the best possible price for our gold. If you believe that gold will rise in the future, then it may make sense to hold onto it and sell later. This can increase your potential profit margins. However, it is also more risky because, of course, the price of gold could also fall.
Get an Estimate
Before you sell your gold, it is a good idea to get a second opinion of its value. While you should have valued the gold yourself before buying, this will help you to establish a baseline for what your gold is worth. Do not sell your gold until you have performed this step, or you risk not receiving what your gold is really worth.
To find out how much your gold is worth, take it to 2 -3 jewellers or pawnshops and ask for an estimate. You want to go to at least two different stores to ensure that you are actually receiving a reasonable estimate.
Getting the Best Price
Generally the best price you will receive for gold will be from jewellery and gold stores in major metropolitan areas. The reason for this is that the competition for gold pushes the price up to near to its true value.
Another option is gold postal websites. These all work essentially the same way. The site will provide you with a quote for the value of your gold. You then send your gold to them, and reconfirm the price that they have offered after analysis. You can then choose to accept the price that they quoted. Most postal gold websites underpay, but there are some good ones. If you are located in a large city, it is usually best to go with a local jeweller, but if you are in a rural area or a small town then a postal site may be your best option.
A final option is to sell it yourself online. eBay has an active market for gold and gold jewellery. Because of the number of astute buyers, this is generally not a good place to try and find gold to buy. But it is a good place to sell gold, as it will often get bid up to close to its true value.
Julia is a passionate blogger and works as a financial consultant for mining investment companies.