It is a lot easier to buy gold than to sell it -- at least for a good price.
It isn't that there aren't plenty of opportunities to sell out there: Gold purchasers are swarming like mosquitoes after a summer shower. Local jewelers, coin shops and seemingly every other cable-television advertiser will buy your gold and maybe even your silver, too.
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The nation's largest jewelry-store chain, Kay Jewelers, last year opened an online service to buy gold jewelry, and last week, one of the largest pawn-shop chains, Cash America International (NYSE: CSH - News), launched Gold Promise, an online gold-buying service with the gold-chain-festooned Mr. T as a spokesman.
The price of gold touched an all-time high of $1,388 an ounce earlier this month, and the price of silver reached a 30-year peak of more than $24 an ounce. But the prices that buyers pay vary widely.
Some will give you as little as 10% of the meltdown value for gold jewelry and coins. Many jewelry stores, including Kay Jewelers, a unit of Signet Jewelers (NYSE: SIG - News), pay about 50% of the meltdown value. Coin shops tend to pay more: up to 80% -- assuming the coins don't have a higher collectible value -- and a few online players may offer as much as 90%.
Your first step should be to check out a potential buyer, making sure the firm has a clean record and a grade of at least A-minus with the Better Business Bureau. Through September, the BBB has received about 500 complaints about gold-buying services, up from 111 for all of 2008. Ideally, coin dealers will belong to one of the big trade groups, such as the American Numismatic Association or the Professional Numismatists Guild.
For those who like to buy low and sell high, this should be a good time to take some profits on precious metals that you have been hoarding or stored, half-forgotten, in the closet. Here are some steps for getting the best deals:
• Know what you are selling. If you are turning jewelry into cash, remember that 14-karat gold is only 58.5% pure gold and won't bring in anywhere near the daily price you hear on the news. You need to know how much pure gold content you have to estimate its value or compare offers. Gold jewelry often is measured in pennyweights, with 20 to the ounce; a buyer should provide this information.
Remove any gems before offering your pieces for sale, and be aware that some well-designed or antique jewelry may be worth more than its weight in gold.
Before selling coins, research values online or use annual printed guides to estimate your holdings' worth. You may benefit from having rare coins "graded," or formally assessed by an expert, since a few points on the quality scale can mean the difference between a $100 coin and a $1,000 coin.
No matter what you are selling, get at least two, and preferably three, bids. Getting local bids is easy enough, but online sellers typically require you to send in your stuff, and some have confusing return policies. Some buyers require you to accept an offer on the spot, while others allow you to change your mind and get your items back within 10 to 30 days.
In addition to checking out the firm's rules, let the bidders know you are comparing offers. Dealers say they will make a more-aggressive offer if they know they are competing for business.
• Ensure your insurance. Some online services will send you shipping materials, cover the shipping costs and insurance, and let you see a video of your package being opened. But relying on someone else's insurance can be tricky if the package is lost in transit and the firm disputes the value of what you sent, even if you kept a detailed list. Instead, some dealers recommend you ship your items via the U.S. Post Office, which allows you to buy up to $25,000 in insurance. [FedEx (NYSE: FDX - News), by contrast, limits coverage for jewelry and collectibles to $1,000, while United Parcel Service (NYSE: UPS - News) doesn't accept coins, gold bars or bullion for shipment.]
• Start small. If you plan to unload a large holding, sell a few valuable coins or a couple of jewelry pieces first to be sure the buyer meets your standards. "Do one transaction and make sure you're satisfied," says Jeff Garrett, a rare-coin dealer in Lexington, Ky., who has written a book on buying and selling gold.
Don't expect to get the retail price, of course. Generally, dealers say the spread between what they pay and what they sell a coin for will range between 5% and 35%, with a larger spread for rare items and for small collections.
• Don't forget the taxman. Gold, silver and coins are treated as collectibles, and gains are currently taxed at up to 28% -- a higher rate than long-term gains on stocks and bonds. If you are liquidating a large collection, you may want to check with your accountant first to understand your potential tax liability.
Write to Karen Blumenthal at email@example.com