Earlier this week we spoke with a prospective customer who was interested in purchasing and selling gold coins much like stocks. He acknowledged that through his online research that most gold coins were selling at a premium of 4% – 6%, which is about right; however, he wanted to purchase gold coins at well below the market rate. When I explained that he’s unlikely to find gold coins at the price that he desired, he went on to explain that he has a friend in the jewelry business that purchases gold coins at rates similar to gold jewelry or “we buy gold” rates. If you’ve ever had the occasion to visit one of these stores, you may know that they typically offer 50% – 60% of the melt value of your gold jewelry. That means that this jeweler has been paying roughly 50% – 60% of the spot price of gold for 1 oz gold coins, which is a crime! In this article, we’re going to address the difference between gold jewelry and coins, why you shouldn’t accept gold scrap prices for your valuable gold coins and what you should expect to receive.
Uncertainty
Even though most gold jewelry is stamped with the carat or purity of the gold, such as 10k, 14k, 18k and 22k, it’s well known within the industry that most gold jewelry doesn’t assay at the designated carat. For instance, most 10k and 14k gold jewelry actually assays at 38% and 54%, respectively when melted and analyzed; whereas, the actual purity should be 41.6% and 58.3%. In other words, you can reasonably expect to lose a few percent from the indicated carat on the jewelry. Additionally, some of the weight of the gold is lost during the melting process, which reduces the final payout from the refinery. On another note, counterfeiters have become increasing adept at producing fake or plated jewelry that passes for legitimate gold jewelry. Even the most experienced of gold buyers will occasionally purchase counterfeit items. Lastly, most gold buyers are required to hold gold jewelry for a period of 30 days before sending the gold to a refinery. The price of gold can fluctuate substantially within a short period of time All of the above factors are reasons why gold buyers typically pay 50% – 60% of the melt value for gold jewelry.
Certainty
With respect to gold coins, the purity or carat of the coin is almost always known by industry buyers; especially with respect to the most frequently traded coins. For more obscure coins, a simple online search will reveal the specifications and actual gold weight (agw) of the item. This information should be available for all government issued gold coins and many privately issued coins. Additionally, rarely are gold coins melted, as they tend to have more value in the form of a coin as opposed to a melted bar of gold, so losing gold weight through the melting process is not a factor. While counterfeiters have become more adept at producing counterfeit gold coins, steps can be taken to confirm the authenticity of gold coins. We’ve previously written an article describing some of the steps that can be taken to avoid purchasing a fake gold coin. Lastly, coins aren’t subject to the same holding requirements as gold jewelry. Some of you may recall the unwanted media attention that Pawn Stars received last year for allegedly purchasing $50,000 of stolen gold coins. As mentioned in the article, gold coins are unidentifiable and can be sold immediately upon acquiring them. Anyone that tells you otherwise is likely misleading you.
What to Expect
As mentioned above, the idea of a gold buyer paying someone 50% – 60% of the melt value of a gold coin is downright criminal! We’re all in business to operate at a profit, but a one day profit of 40% – 50% by taking advantage of someone without knowledge of the industry should be reportable. Now that we’ve established that you shouldn’t accept 50% – 60% of the gold value for your gold coins, what exactly should you expect? Because most gold coins are marketable, we believe that you should sell your coins for as close to the gold value of the items as possible. For example, we purchase generic gold coins (those produced by private mints) at 94% of the gold value of the coins and government issued gold coins at 95% or higher of the gold value. We also pay preferred rates for multiple coin purchases as well as for key date, rare and proof varieties of gold coins. Some of our standard buy rates can be found here.
Summary
In summary, gold coins aren’t gold jewelry and shouldn’t be treated as such. The actual gold weight or gold content of the coins is known or can be easily verified through an online search, so there’s no need to question the purity of the items. Additionally, since most gold coins aren’t melted, but rather sold to other industry folks, gold weight isn’t lost through the melting process. Additionally, while we’re beginning to see more counterfeit gold coins in the industry, an experienced gold coin buyer should be able to verify the authenticity of gold coins by following the helpful steps outlined in our how-to article. Lastly, gold coins aren’t subject to the same holding periods as gold jewelry and can be immediately sold by the purchasing party, so there’s little downside risk with respect to fluctuating gold prices. We hope that you found our article to be helpful and welcome you to contact us if we can be of any further assistance.
