Gold has always been a symbol of prestige -- something that people want. But lately, some are scrambling to sell. And plenty of businesses are more than willing to buy.
Pawn shops, jewelry stores and precious metals dealers are vying for customers who are interested in selling their old jewelry.
"It's very competitive now," says Joe Beasy, co-owner of The Gold Guys, a business at the Mall of America that opened last year and is solely dedicated to buying gold, silver and platinum. "[Customers] know now that the junk that's laying in their jewelry box is really worth something."
This modern-day gold rush can be attributed to the record price of gold, which has soared in the past year. Gold is currently worth more than $1000 per troy ounce.
What customers should know about selling gold
Customers certainly won't get $1000 for every ounce of their old gold. They'll be getting the scrap price, also known as the melt price.
First, potential buyers will look closely to see if the pieces are actually gold. The karat, which is a measure of gold purity, is often stamped in tiny letters on the jewelry.
Businesses might also use a magnet. If the item sticks to the magnet, then it's not gold. That means it's gold-plated.
They might also pour some acid on a small sample of jewelry. If there's no reaction, that means it's gold.
The gold is then weighed in either pennyweights (abbreviated "dwt") or grams, and that's used to calculate an offer.
After businesses buy from customers, they eventually sell the scrap gold to refineries. The gold is melted and turned into pure gold, which is used to make new products. Refineries often pay more for larger quantities of gold.
"Every business uses a different refiner," says David Friedell of Twin Cities Gold and Silver Exchange. "Quantity makes a difference when we're sending our gold in for refining. The huge operations get a better deal."
Some refineries, like W.E. Mowrey in St. Paul, will also buy scrap gold directly from customers.
KARE 11 survey
In October, KARE 11 took six pieces of 14-karat jewelry (necklaces and bracelets) to American Rare Coin in Bloomington. The price of gold was just above $1,050 a troy ounce that day.
Based on what the company was offering per pennyweight that day, it would've paid $916 for all six pieces. (American Rare Coin also tacks on ten percent to deals above $500, bringing the total to $1,008.)
KARE 11 had an undercover employee take those same pieces to seven different stores on the same day to get quotes. The offers ranged from $670 to $950.
"That is quite a range," said Kathryn McCarthy of American Rare Coin.
The highest quote, $950, came from Uptown Pawn on Lake Street in Minneapolis.
"I pride myself on knowing the market and trying to elevate the price to make us the highest paid," says owner Michael Strauss.
Strauss didn't know the employee was from KARE 11, but he could tell she was shopping around, so he admittedly bumped up the quote a little.
"I didn't want to lose the business," he said. "I only make money if I do business with people."
Pawn America in St. Louis Park offered $915. (The clerk added that he would've considered reselling a couple of pieces, which would've upped the offer.) A company spokesman was pleased with the survey results and says customers can expect the same results at all of the company's 22 locations.
Wedding Day Diamonds in Maple Grove offered nearly $837, but bumped it up to $1,045 if our employee took an in-store credit, instead of a check.
"We give a good price up front," says Wedding Day Diamonds co-owner Umit Nasifoglu. "Our prices are right within the top range."
Wixon Jewelers in Bloomington offered $830. KARE's messages to Wixon's owner were not returned.
The Gold Guys' initial quote was $745, but they guaranteed to pay the highest price. When KARE's undercover employee called back later to say another business offered $950, The Gold Guys promised to beat it.
"The problem is we can't guarantee the highest quote everyday," said Beasy, co-owner of The Gold Guys. "There are guys out there who are offering a little higher here and a little higher there because they're willing to take a risk or they want to make a sale."
Beasy says his company can make that guarantee because it deals with large quantities of gold and gets a great deal from refiners. "We will always pay you the highest price," he says.
MaXit Pawn on University Ave. in St. Paul quoted $715 but also guarantees to pay the highest price for gold. The chain promotes that it is the "Home of the Gold Guarantee."
Mark Smith, owner of MaXit Pawn and CashNPawn, says his store usually doesn't give quotes, so KARE's experience was not typical. He feels the final deal is what matters.
"This is a pawn shop and there's some discourse going back and forth," Smith says. "You need to challenge that person and say, 'Oh, by the way, I was offered this and will you meet or beat that?'"
Some experts and businesses question whether that's the best approach. "The problem with topping other prices is, why aren't you giving your best price up front?" says Nasifoglu, of Wedding Day Diamonds. To stay competitive though, his company also guarantees to pay the highest price.
Many places, like Pawn America, don't offer high-price guarantees. Pawn America feels it consistently offers high quotes, so a guarantee isn't necessary.
The lowest quote came from EverGreene Jewelers in Minnetonka. The jeweler offered $670 or an in-store credit of $870. Owner Jerry Greene later told KARE 11 that he gives 20 percent of profits from buying gold back to the community.
"It appears that if we were the low man on the totem pole, I'm not ashamed of that because we've given back to the community in other ways," Greene says.
Expert advice: Shop around
"This is where we encourage you to price shop," says McCarthy, of American Rare Coin.
She says our survey shows that it's important to take your gold to a few different places, especially if you have a large quantity.
McCarthy says you should also ask businesses what they're offering per pennyweight or gram, then compare. Some businesses, like American Rare Coin and W.E. Mowrey, post what they're paying on the wall and/or online.
"You should be able to call and ask anytime, what are they paying for their precious metals?" McCarthy says. "And they should be able to tell you that."
Experts also say if you have an antique or designer piece, you may want to find someone who will resell it, rather than scrap it.
"If I get a piece I know I can resell, I will for sure give them more money than if I was going to scrap it," says Strauss, of Uptown Pawn on Lake Street.
If you're selling gold in Minnesota, state law says businesses must weigh the gold in plain sight of the prospective seller on a scale approved by the state. That scale should have a special seal from the Department of Commerce. Every gold buyer must also register with the state and prominently post its licence.
If you do decide to sell your gold to a business, you will need to present a driver's license or state ID.
If you are shopping around, remember that prices are always changing. If you get a quote from a business one day and return on a different day, the price of gold may have increased or decreased, which means the offer might go up or down.
Customers might also want to ask businesses about referral programs. For example, if an existing customer convinces a new customer to sell some gold, The Gold Guys and MaXit Pawn will give that existing customer ten percent of the transaction price.
KARE 11 did not send any of its jewelry to national companies that ask customers to mail in their gold. Those companies boast convenience. We did call Cash4Gold.com to ask how much it offers per pennyweight for 14-karat gold. The company said it could not give out that information because it doesn't do pricing over the phone.
*KARE 11 would like to thank John Saffert with American Rare Coin, David Friedell with Twin Cities Gold and Silver Exchange and Richard Claypool with Minneapolis Community and Technical College for their assistance with the story and appraisal process.
(Copyright 2009 by KARE 11. All Rights Reserved.)