Earlier in the publication week, Atlanta Gold & Coin spoke with a prospective customer who wanted to buy and sell gold coins much as stocks are traded. He said his online research showed that most gold coins sold at a premium of 4% – 6%, which the original article described as generally accurate, but he hoped to buy coins far below market levels. When Atlanta Gold & Coin explained that this price was unlikely, he said a friend in the jewelry trade bought coins using gold-jewelry or “we buy gold” rates. At the time of publication, stores of that kind commonly offered 50% – 60% of a gold-jewelry item’s melt value. That would mean this jeweler was paying about 50% – 60% of gold’s spot price for 1 oz gold coins, a practice the original article characterized as criminal. This article explains how gold jewelry differs from coins, why valuable coins should not receive scrap-gold pricing, and what the original article said sellers could reasonably expect.
Uncertainty
Although most gold jewelry carries a stamp showing its carat or gold purity, such as 10k, 14k, 18k, and 22k, the trade has long understood that jewelry often does not assay at its marked carat level. For example, 10k and 14k jewelry commonly assays at 38% and 54% when melted and tested, respectively, even though their stated purities should be 41.6% and 58.3%. Put simply, a few percentage points below the indicated carat can be expected. Refining also loses some metal during melting, reducing the refinery’s final payment. Counterfeiters had also become increasingly capable of making plated or fake jewelry that appeared legitimate, and even experienced gold buyers occasionally acquired counterfeit pieces. Finally, buyers were generally required to hold jewelry for 30 days before refining it, while gold prices could move substantially in a short time. These considerations explain why buyers typically paid 50% – 60% of jewelry’s melt value.
Certainty
For gold coins, industry buyers almost always know the coin’s purity or carat, particularly for the coins most often traded. With a less familiar issue, a simple online search can identify its specifications and actual gold weight, or agw. That information should be available for every government-issued gold coin and for many privately made issues as well. Coins also are seldom melted because they usually carry more value as coins than as melted gold bars, so melting-related weight loss is generally not part of the calculation. Although counterfeiters have become better at producing imitation gold coins, buyers can use steps to verify authenticity. Atlanta Gold & Coin had previously published an article explaining methods that could be used to avoid purchasing a fake gold coin. Coins also were not subject to the same holding rules as gold jewelry. Some readers may remember the media attention Pawn Stars received the prior year for allegedly purchasing $50,000 of stolen gold coins. As that article stated, gold coins are not individually identifiable and could be resold immediately after acquisition. The original article cautioned that someone claiming otherwise was likely providing misleading information.
What to Expect
As noted above, the original article viewed paying a seller 50% – 60% of a gold coin’s melt value as plainly criminal. Businesses need to earn a profit, but it described a one-day profit of 40% – 50% from someone unfamiliar with the trade as something that should be reportable. Having established that sellers should not accept 50% – 60% of a coin’s gold value, the article asked what they should expect instead. Because most gold coins are marketable, Atlanta Gold & Coin believed sellers should receive as close as possible to their items’ gold value. At the time of publication, it reported buying generic coins from private mints at 94% of gold value and government-issued coins at 95% or more. It also reported preferred rates for multiple coins and key-date, rare, and proof varieties. The original article stated that standard buy rates appeared here.
Summary
In short, gold coins are not gold jewelry and should not be handled as if they were. A coin’s actual gold weight or content is known, or can be readily confirmed with an online search, so its purity need not be uncertain. Since most gold coins are resold within the trade instead of melted, there is no loss of gold weight from the refining process. The original article also noted an increase in counterfeit coins, while maintaining that an experienced coin buyer should be able to authenticate them by using the procedures in its how-to article. Gold coins were not subject to jewelry holding periods and could be sold immediately by the purchaser, leaving comparatively little downside exposure to movements in gold prices. When this article was originally published, Atlanta Gold & Coin expressed hope that readers found it useful and invited them to contact us for additional assistance.
