The Ethics of Gold Buying
In recent years the industry has seen an unprecedented number of gold buying companies emerge as a result of soaring gold prices. Those wanting to sell their gold and take advantage of the record gold price, now have a myriad of choices in choosing a company. This begs the question, how do you know if the company you’re dealing with is trustworthy and ethical?
1) Ethical gold companies will quote the REAL price they pay
Smart sellers should certainly shop around to find the best price for their gold bracelets, gold rings, necklaces etc, but it is important to seek genuine quotes on your actual items, either by visiting gold companies in person or sending your items to a gold company that will advise you of the value prior to processing the gold. Too often, gold buyers will quote inflated prices on their website or over the phone to bait you into believing that they will pay you the most. Once you make the trip to see them or send your gold jewellery away, the price actually offered is significantly less than the price quoted. Sellers should be cautious of gold buyers quoting prices equal to or even higher than the spot gold price for unrefined items.
2) Ethical gold companies offer fair prices and are transparent with their gold valuations
Determining the value of your gold coins, gold watches, gold rings, etc is actually a much simpler process than many gold buyers would have you believe. In fact, all gold buyers that are purchasing your gold for its gold content use the same formula, incorporating the following factors:
• The US Dollar gold price of the day
The gold price is always based on the US Dollar, and must be converted into Australian Dollars.
• The US-Australian Dollar exchange rate of the day
Since the gold price is always quoted in US Dollar, it is sensitive to changes in currency exchange rates.
For example, let’s say that the gold price in USD remains the same from Monday to Tuesday, but the Australian dollar strengthens in relation to the USD – this would mean that you would be offered less for your gold on Tuesday, even though the actual gold price would not have changed.
• The weight of your gold items
While the daily gold price is listed in troy ounces, gold prices are normally quoted according to gram weight. There are 31.1 grams in a troy ounce of gold.
• The purity of your gold items & the refining factor
Most gold you sell to gold buying companies needs to be refined, which means that the gold item must be melted down, the non-gold components removed, and the pure gold extracted. 9K gold is 9/24 parts gold, or 37.5% gold and 62.5% other metals. 18K gold is 18/24 parts gold, or 75% gold and 25% other metals. Clearly, the higher the gold content in your items the higher the value of your gold. When calculating value, gold buyers take into consideration the amount of pure gold that may be extracted, the costs of refining gold, and the unavoidable loss of gold weight during the gold refining process.
• Margins
Also included in the gold price offer is a profit for the gold buyers to make – this margin will vary among gold buying companies, and is the reason that you receive different offers from different gold buyers.
So what is the bottom line when it comes to gold value? When you shop around for prices, ensure you ask gold buyers how they arrive at the amount they offer you – trustworthy gold companies are happy to explain how they arrive at your gold valuation. To determine your gold’s worth and calculate the value of your gold, the following general formula applies:
Value of your Gold = Daily gold price in USD ÷ AUD currency exchange rate ÷ 31.1 grams in a troy ounce × purity of gold × gram weight of gold – refining weight loss and fees – profit margin
The GoldCompany pays 80% of the daily gold price for gold jewellery that needs to be refined, and up to 98% of the daily gold price for pure gold already refined in bullion form (gold coins, gold bullion bars, etc).
3) Ethical gold buyers state clearly whether they are purchasing your gold for REFINING or RE-SALE
Recently a number of gold buyers have been under heavy scrutiny in the press over allegations that items purchased at melt value were turned around and sold as second-hand jewellery. Jewellery pricing is different to gold pricing – jewellery pricing takes into account the condition of the gold piece, design, quality, workmanship etc. Sellers that have rare antique and designer-brand pieces should first try to sell these gold items as second-hand jewellery, as the potential sale value may be greater than melt value. For more options on selling your gold, please see Understanding Gold Valuations when Buying & Selling Gold Jewellery.
4) Ethical gold buying companies CONSULT you first
Be wary of gold buyers that simply send you payment without first advising you of the value and gold content in your items. As the seller, you should have the right to refuse an offer that you are not happy with, and have your items returned to you.
Some gold buyers make it obligatory to sell your gold pieces to them once you mail your gold to them. This allows them to buy your gold bracelets, chains, watches, and other gold jewellery for an unreasonably low price.
