'Golden Rules' when selling your scrap gold

CLEVELAND -- From shopping mall kiosks and hotel conference rooms to your neighbor's dining room, the gold rush is on to buy and sell scrap gold.

With gold market prices approaching $1,200 per ounce, people like Linda House, of Westlake, have rummaged through jewelry boxes, searching for buried treasures.

"I had four (rings) that have just been sitting in a drawer for about 10 years," House said. "So I thought, why not see what they're worth, if they are worth anything.

"And I ended up with a wonderful check, $265," House said. "So it was great."

House sold her rings at a gold party at a private home in Westlake. But had House shopped around, she probably would have received more money for her gold rings.

Competition between gold buyers also hoping to strike it rich has exploded. In the past two years, the number of licensed precious metals dealers in Ohio had quadrupled from 17 to 71.

And with pawn brokers, jewelers and precious metals dealers all promising "top dollar" for gold, how do you know where you can get the best deal?

Well, there are some golden rules you should know before you sell your scrap gold.

Licensed precious metals dealer Jim Mataich told Channel 3 News it pays to be a smart seller. Otherwise, Mataich, owner of 650 Gold, said, "You're bringing this gold to them, asking somebody, 'Here's a pile of change. Count it up for me.'"

The most important rule in learning the value of your gold, is to determine the type of gold that you own and how much it weighs.

Gold is graded according to its purity or karat fineness. Pure gold is 24-karat and is usually found in coins or bars. The market price is based on 24-karat gold.

Most gold jewelry has other metals mixed in with the gold to strengthen the piece. So jewelry is worth less than pure gold.

Most jewelry will have a karat number inscribed on it. You may have to use a magnifying glass to find the number. Gold buyers may also run acid or electronic tests, which confirm the purity of the gold.

The lower the karat fineness, the lower the amount of gold in a piece.

* 18-karat gold is 75 percent gold, 25 percent other materials.

* 14-karat gold is 58.3 percent gold

* 12-karat gold is 50 percent gold

* 10-karat gold is 41.7 percent gold

Remember, buyers are paying you only for the gold.

For example, if you own 14-karat gold and the market price per ounce is $1,000, the top market price for that 14-karat gold is $417 per ounce.

But don't expect a buyer to pay 100 percent of the market price.

Refining costs to make pure gold, the risk of a falling market and profit margin add up to smaller payout for your gold.

Those in the gold industry use different measurements to weigh gold.

Most licensed precious metals dealers and jewelers measure gold in pennyweights. There are 20 pennyweights in a troy ounce of gold.

Some buyers use scales, which are set to grams. There are 31.1 grams in a troy ounce.

Once you know the type of gold you own and its weight, you have a starting point to negotiate a price.

Another golden rule for selling your gold is that the potential buyer should test and weigh your gold in front of you.  

Cher Miller, of Parma, accompanied her mother as they shopped for the best deal on her mother's scrap jewelry.

"Previously, we had gone to a jeweler," Miller said. They didn't weigh it in front of us. When we left there, we did not accept the offer."

In a few days, that decision to walk away paid off for them.

When Miller and her mother took the same gold jewelry to a hotel in Independence, where buyers for National Redemption, a licensed precious metals dealer had set up shop, they got an offer of 50 percent more for the same gold.

"They did explain (the grading and weighing process) very well to us," Miller said. "So we were very happy with it."

Golden rule number three for selling your gold is: do your homework on the company with whom you are making a deal.

Melissa, a regional manager for National Redemption, which buys gold in more than a dozen states, said that it took the company 14 months to become a licensed precious metals dealer in Ohio.

Criminal background checks, along with a financial background check by the Ohio Department of Commerce, were done prior to license approval.

"The prices that are getting from different vendors can vary," said Melissa, who didn't want her last name used for security reasons.

"The more regulation and the more rules that (precious metals dealers) have to adhere to, of course it's in the benefit of the customer coming in and selling their articles.

"People are entitled to get what it's worth and not sell it for less," Melissa said.

And that brings up the final golden rule: the gold buyer's market is a barter system, so shop around for the best deal.

Gold parties held in private homes typically pay the host a commission, based on the total party sales. So the payout at such parties may be less than what a jeweler or precious metals dealer may offer.

"Absolutely shop around," said Mataich, who has been in the jewelry and coin business for decades. "See who you are comfortable with."

And Mataich said common sense will make you more dollars, too.

"When you have people working out of their houses and just open up overnight, I mean they don't follow any set rules or regulations," Mataich said.