Why to Scrap Your Gold Jewelry Now

Yesterday, gold closed at $1,709 per ounce after peaking at $1,722. With the current price of gold remaining near record level and still $349 above what it was a year ago, many are finding that it is an opportune time to scrap old gold. With the weakened U.S. dollar spurring investors to hedge in gold and pundits recommending its purchase, how could it be prudent to even consider scrapping your gold?

Much of the gold found in American households is in the form of jewelry that is simply not investment quality. This includes necklaces, pendants, earrings, bracelets, charms, and settings for low quality and semi-precious stones that are valuable only by virtue of the amount of precious metal that they contain. Such jewelry lacks the prestigious manufacture, quality gemstones, provenance, and historical significance that provides the valuations for genuine fine jewelry, collectibles, and antiques.

Those who own jewelry that contains precious metals but lacks other distinctive qualities have typically purchased it from retail jewelers who acquire it at wholesale and mark it up as much as 200% to 400%. Such jewelry is not pure because gold within itself is soft and will not hold up to regular wear. The most popular alloy for jewelry, by virtue of both strength and cost, is 14 karat gold which is an alloy that is at best 58.5% pure (it is not unusual for 14k gold to actually test at 12k).

When gold prices were low and relatively stable, those who had acquired such jewelry were unlikely to be able to sell it at a rate that would allow them to recoup their initial investment. Now, with gold prices elevated, it is quite possible to sell 14k gold jewelry at a rate that once reflected that of pure gold. Thus, a prudent owner of gold jewelry can not only recoup the initial investment but profit from gold jewelry purchased at retail prices three to five years ago. This can provide a sensible conversion of resources that will facilitate better investments for the current economic climate.