Yes, all these bloggers, reporters, articles, pawn companies, the list goes on and on; trashing the gold buying party, while the gold buying party trashes the pawn company, the jeweler, etcetera. The truth of the matter is that in every business there is good and bad, and in every profession there are people with higher ethical standards than others.
The Gold Party, a new and unique practice whereby friends, family, co-workers and acquaintances get together to have some food, drinks and just enjoy each others’ company by laughing and relaxing. They all bring their unwanted gold, silver, platinum and diamonds to sell.
It is sort of like Tupperware party, except every one walks away with money, which is a great thing.
Fortunately in many cases, the professional precious metal professional is transparent, totally up-front with the host and guests and in many cases they bring with them a scale legal for trade, which is sealed by the Department of Agriculture. Unfortunately there is a problem where some gold buyers and their lower ethical standards and in some cases guests are getting skinned in the process without even realizing it.
While professional Precious Metal Purchasing companies make a decent living while helping people, others just make huge profits by offering horrible prices to their unsuspecting party vendors.
It is important to choose your gold buyer because there are a series of little tricks used to hide the facts underneath the fun of a party; here are some red lights and ideas of what to ask.
A Commission for the Host
This is a win-win situation when done the right and transparent way. In many cases the gold buying company makes an agreement with the host of the gold buying party. Just like any other business, there always are overhead expenses, in fact, jewelry stores or pawnshops have huge overhead expenses, so when they buy gold they have to, first and foremost, cover overhead expenses and make a profit.
Honest Gold Buyers explain the entire process to the host and guests while others hide the commission paid to the host. Most people know and understand that the gold buyer and the host make a profit; it is a business after all.
Without the hostess putting together the party, the gold buying professional would not have had the opportunity to buy all that precious metal, so the commission to the host is an absolutely fair practice and it is a legitimate overhead, business expense.
The Pricing Formula Secret – Fairness
Nobody in the gold buying industry pays 100% of the value of precious metal. It is, after all, a business. The highest price paid in the market, anywhere in the world, is 98.5% of the spot market price. In order to get that 98.5% one must, first of all, be certified and regulated by the government and they have to meet huge weekly quotas.
Every gold buyer, including jewelers, pawn shops, gold buying parties and independent gold buyers, pay a percentage below the spot price of the day. Most professionals pay a fair 70% for unwanted gold, while others pay around 40% to 50% of the actual price. This is not a unique characteristic of gold buying companies. In fact, in many gold buying parties, the professional, in some cases jewelry appraisers, show the guests the price of metals online and explain exactly what percentage they are paying.
Price Publishing – Transparency
In the United States, the standard unit for gold weigh is the penny weigh abbreviated dwt which is a very easy to understand 1/20 of 1 Oz. It is also 1.555 grams. An easy but dishonest practice of some gold buyers is to pay customers the price of the gram but for each pennyweight, thus getting .555 grams for every pennyweight of gold that they buy, an unfair practice that the savvy consumer must be aware of.
It is also important to understand that there are 28 grams in 1 ounce, that is a normal ounce, but there are 31.1 grams in a Troy Ounce. This complexity allows for deception and obscure pricing.
Gold Karats – Value of Gold
Many gold buyers, including pawnshops and dishonest jewelers, have a slick move and that is to tell their clients that their gold pieces are a different karat than it actually is. They may even give a convincing explanation blaming different measuring instruments and different world markings.
The fact of the matter is that scams happen all over. Many dishonest jewelers stamp pieces with a karat but in the moment of alloy creation they add less gold, hence pieces resulting of a lesser karat. Other scammers in the market create special alloys containing no gold at all, they alloy it in ways in which it passes all traditional testing methods and stamp it with very high karat stamps.
The honest and professional gold buyer, regarding whether they are from a gold party, independent gold buyer, jeweler, pawn shop, check cashing store, will return such pieces to the client and advise them to go get them appraised elsewhere.
Some sophisticated tricks are to group together gold pieces of different karats, but then pay based on the lowest karat gold in the group. One must be aware of those practices. If you would like to learn more about how to test for gold, visit our Education Section where you will learn more about precious metal testing.
Low Balling – The good and the Bad
Precious metal professionals with high ethical standards, including experts at gold parties, have respect for the people they deal with. Other gold buyers, including jewelers, low ball their clients, which consists of a numbers game, the game of a haggle. They make a low offer and while some people refuse to take that offer and negotiate others just take it with the lure of immediate cash, which might outweigh the fact that they are getting skinned. Especially if everybody at the party has had a few drink.
A good advice for the consumer is to negotiate and shop around before committing to selling their jewelry.
Gold for Charity
A gold buying party for a cause can be great philanthropy. Some gold parties offer a section of the profits to a charitable organization, which is a beautiful thing. One must be very careful; again there are some gold buyers with low ethical standards. In any case there is always money going to the cause but in some cases less money than it should.
There should always be transparency between the gold buyer, the gold buying party and the host as well as the institution that is going to get charity funds, explain how to find gold prices and what fair percentage is going to go to the philanthropy and how much for the person selling their gold, silver or platinum. In order to avoid people taking advantage of your good intentions, as a way to make you knowingly accept below-market values for your gold.
Some Jewelry is worth more as Jewelry
At a gold buying party, at a jewelers’ or any other gold purchasing business one must sell out-dated pieces, broken and unwanted jewelry with no commercial value other than the weight of gold. Some jewelry is worth more than the sum of its parts due to a combination of aesthetic value and the workmanship that takes to create the piece.
It is a fact that one is probably better off selling their jewelry rather than selling it based on the weight of the metal, selling it as jewelry. However, trying to sell a small lot of jewelry or even a piece of jewelry may result a lot more complicated than one might think. There are several elements which need to be inspected such as the condition of the piece, its market value, competition, taking good pictures and a lot of work that you might not want to engage in.
It is a fact that many gold buyers, including jewelers, pawn shops, gold buying parties and individual gold buyers set aside nice jewelry, which they buy below the market and sell it for huge profits. That is because they are professionals. If you think you would benefit from this trade, please visit our Education section to find out more on how to buy Precious Metals.
The value of Precious Stones
One must really understand precious stones. Professional and honest gold buyers will educate their customer about their stones, especially diamonds. One must understand the value of diamonds and other precious stones. Most diamonds in the world are of less than half (1/2) a carat, which diminishes their commercial value significantly.
It is also very important to understand how stones are mounted. Often times, removing stones is more expensive than what they are worth. Small stones are a bonus and when they actually are worth something, the professional and hones gold buyer will offer a fair price for stones with value.
Technology – The wow factor
Many gold buying experts, including pawn shops, jewelers, independents or at a gold buying party test and weigh gold in front of you while explaining how sophisticated their equipment is. They even explain and teach you how to test and weigh gold yourself.
That adds great value to the experience but never forget to learn about the price and mathematical formula. To learn more about the difference between wondering and knowing click here
All of these methods are used by themselves or in combination by some gold buyers with low ethical standards, including gold parties, pawnshops, jewelers, check cashing stores, gold buying places, etcetera.
As marketing campaigns, and because competition for gold is so fierce, some professionals try to bash their competition by writing, advertizing and posting negative facts about their competition. The truth is that every industry engages in such practices, just look at politicians near election times. The truth is that there is good and bad everywhere, some gold buying parties are a reap-off but most pay very nice, fair prices and beat the competition in a unique and fun environment, it is quite an experience.
I was invited to a gold buying party last week; I didn’t have much gold jewelry but brought whatever I had. I was not expecting to get much for the small amount that I had, I only attended as an act of support for my friend. WOW! I could not believe how much I got and other guests as well!
I can’t wait to host mu own gold buying party and get paid just like my friend did! She made a couple of hundred bucks and so did the person who referred her.