Hello All,
Does anyone mind to share how much they pay for gold at a retail
location to the customer? What is the proper calculation? What are
the tricks of buying it with no harm?
Thanks,
Alex
Omega Designs
I’m not sure what you really mean about ‘harm’. But right now in
turbulent markets the harm may come to you. Buy it today for $100 and
by next month you could loose $50. We just don’t know for certain
what prices are going to do.
So these days the prudent thing would be to buy low, sell fast.
Hedge your bets on karat.
Just like the rest of our business think keystone.
Does anyone mind to share how much they pay for gold at a retail location to the customer? What is the proper calculation? What are the tricks of buying it with no harm?
There is no right answer to this question. The traditional approach
is to charge some amount above the spot price (price determined
daily on London exchange). What ever that amount is, depends on what
do you do with gold, and your position in supply chain. The only
thing that can be said is that the larger the amount is the more
profitable your business is. By reducing this amount, you increasing
your competitiveness, but decreasing profitability. Every business
determines where on that line, the business wants to be. The trick
is to know the proper ratio in your particular market.
Leonid Surpin
I had a deputy sherif from the local police department come to my
store and warn me to be carefull buying any kind jewelry or scrap
gold. He said even though the market and economy is good to buy gold
there are many legal issues that could follow later. I am not quite
sure what that means.
Does anyone have their customers fill out any kind of document that
would legally transfer a piece of jewelry (or scrap) to the store
owner?
Also, I had a customer come in and say that he got paid $15 per dwt
for scrap gold in NJ? Is it possible?
Thanks,
Alex
Omega Designs
Also, I had a customer come in and say that he got paid $15 per dwt for scrap gold in NJ? Is it possible?
You did not mention what the daily spot price was when your customer
sold her gold. Let’s say the daily spot price of 24kt gold is $750,
divide $750 by 24= $31.25. Multiply $31.25 times the karat of the
item you are going to buy, let’s say 14kt, $31.25 x 14 =$437.50.
Divide $437.50 by 20 for pennyweight, or 31.1 for grams. $437.50
divided by 20 = $21.88. The people I know pay out 20% of $21.88
which is $17.50. Multiply $17.50 times the weight of the item gives
you what you might pay out to a customer. If you are having to wait a
while to send in your gold to get it refined, you might want to pay
out less because of your risk in case the market goes down. You will
make $78.50 on one ounce of 14kt gold IF the market stays the same
between when you buy the gold and when you have it refined. My
refiner requires a minimum quantity to refine, there are refining
charges so you have to figure out if it is worth it and what the
risk is. Refining takes about a week and a half. I bought gold at
$950, and had it refined when it dropped to $744. The refining charge
was about $200 for a recovery of 6.6 ounces of pure gold.
Richard Hart G.G.
Jewelers Gallery
Denver, Co.
Richard, are you saying that these ‘people’ pay out 80% of spot? I
don’t see how that could be considered a good business decision,
unless they are uncommonly skilled at culling out undercarated pieces
and counting on an ever-increasing spot market to pad their take. To
get top dollar for scrap can require up to a few weeks for a
reputable, top-tier refiner to melt, assay, and report to you. The
assay on used gold will always be below the marked karat, sometimes
substantially so, due to cheating by manufacturers, hidden dirt or
other adulterations in hollow areas, underkarated solder, or non-gold
clasp pieces. Of course, they will pay the gold price on the assay
date, which is recently very likely to be below the price when you
purchased it from the consumer. If you sell to one of the hundreds of
itinerant scrap dealers that make the rounds of the shops, most will
not pay you more than 80% of their estimation of the spot value, so
you would have to pay significantly below that figure to break even,
including your overhead costs. I think Neil is right with his
keystone idea, especially when you take into account refining costs
(including shipping and insurance), overhead costs, and the very real
possibility of a group of bought gold being claimed as ‘stolen’ and
confiscated by the local police without payment. This possibility is
not limited to ‘gangstas’; ANYONE could sell a lot of scrap that is
not rightfully theirs, either through ignorance, desperation, or
criminal intent.
Of course, I am not talking about sizing scrap or other pieces left
over from repairs, or gold taken in trade for merchandise sold at
the going rate. That can be treated more like cash and paid out near
the spot rate, minus expected expenses.
Lee Cornelius
Vegas Jewelers
You should check with your local law enforcement to see what kind of
documentation you need to maintain when accepting gold and other
jewelry items whether for scrap or resale. They may require you to
hold the item for a specific time period, or take the name & address
of the seller, along with a description of the items they sold. This
is primarily to protect you from a charge of receiving stolen items.
Ask your local pawn brokers what requirements they must use to
protect themselves, and go from there.
Melissa Veres, engraver
there are many legal issues that could follow later. I am not quite sure what that means.
He may have been referring to the situation wherein you might
innocently buy stolen goods but once discovered they must be returned
to the legal owner. Most likely you’d be out whatever you paid for
the goods, as title survives any illegal activity, even innocent
purchase. I don’t know what happens if you have already disposed of
the goods… does the sum you received become the property of the
rightful owner? Good question for an attorney.
This is why you are usually required to keep records of sellers. In
some places you might also need to record to whom and when and for
how much, you sold the items. In such a case you should be careful
co-mingling your purchased scrap if you use more than one refiner or
jewelry buyer.
You should be able to find the statutes for your jurisdiction
online. If not, well, just talk to that cop again.
This is one part of the business where you really need to CYA.
Does anyone have their customers fill out any kind of document that would legally transfer a piece of jewelry (or scrap) to the store owner?
This will not wholly protect you in the event of stolen goods, even
if you are totally and innocently unaware of the theft, even if they
provide some sort of proof of ownership. Like I said above, legal
title survives an illegal sale. Hopefully this would help to show
you’re not knowingly receiving stolen goods but you may still be out
what you paid.
are you saying that these 'people' pay out 80% of spot?
The coin dealer I know pays 80% of spot. Yes, I believe he takes
chances but I know he takes in large quantities and has it refined by
a local refiner that pays 98% of spot. There is no shipping involved
and the turn around is 8-10days. I am aware that when I started out
many years ago, it was common for manufacturers to use 13 1/2 karat
to make 14kt gold. I know because when I ordered 14 kt. they asked if
I wanted 13.5…and I know when I buy off the street if I get 30
year old 14 kt I suspect it to be 13.5. That translates to a
difference of a gram price at $750 spot of $14.06 for 14kt and and
$13.57 for 13.5 kt.
On under-karated gold I would lose about 3.7%. My refiner will
holdthe gold after it has been refined, so I can set the price it
will be sold for.
Richard Hart G.G.
Jewelers Gallery
Denver, Co
Richard,
Can you share with us who the local refiner is and what their
contact is?
Thanks
Greg DeMark
Can you share with us who the local refiner is and what their contact is?
Harris & Libbey Refining (Refining/Assay). Parker, CO 80134.
303-841-3040
Richard Hart G.G.
Jewelers Gallery
Denver Co.