Back to Ganoksin | FAQ | Contact

Confused by appraisal certificates

I am confused by appraisal certificates. I am looking online at
sites like Craigslist etc, at jewelery people are selling and often
come across ads like this:

Brand new still in original box and has never been worn… bla, bla

On the appraisal certificate it reads: “Lady’s citrine and 14kt
white gold bracelet. The bracelet is 8” in length with (27) stones
bezel set and weighing approximately 5 and 1/2 cttw. The mounting
weighs 6.75 grams." Valued at $1000.00

Asking $300.00 OBO

Ok, this is Craigslist and it is buyer beware. But, what is with the
seemingly high appraisal certificate amount? Is this normal to value
something that has a gold content value of $110.00 +/- at ten times
the gold value? Certainly the citrines are worth something but
$800.00 plus seems a stretch

Please explain to me the way something is appraised to reflect a
valuation like this.

Canadian Student

Please explain to me the way something is appraised to reflect a
valuation like this. 

Most appraisals like that are intended to reflect an average/typical
normal retail price for the item, purchased new. There is about the
same sort of relationship between the cost of the raw materials,
(gold, silver, gemstones in the wholesale market) and the final
retail price, as there is for other types of products, such as the
difference between the cost of that nice new dining table, and the
cost of the lumber to make it. Or the cost of a bunch of steel, and
the cost of an automobile made from it.

The raw material is only the starting point. Appraisals are seldom
just a multiple of the cost of the material, or if some items can be
valued that way, the multiplier to use would differ a lot from item
to item.

Consider that bracelet. Yes, the gold is only worth a hundred bucks
or so as scrap metal. But if you’ve looked, you’ll find that new,
ready to cast or fabricate, white gold costs more than the scrap
value. Depending on the alloy, sometimes a significant percentage
more. That reflects the profit margin and costs the refiner incurs in
producing that precision alloy.

Then, some manufacturer has to turn that raw metal into a bracelet.
That takes facilities, employees, time, equipment, and what all. The
resulting bracelet, from the manufacturer, has a wholesale value
based on the cost of the metal, plus the cost to make it, and then a
multiplier to allow for a profit margin. Often, for larger scale
manufacturing operations, the end wholesale cost can end up double or
triple the cost of the basic raw materials. And that’s wholesale.
That wholesale now sells a bunch of those bracelets to your local
retail jewelry store, or internet seller, or catalog seller,
department store, or whatever. That retailer has to maintain an
entire business, with all it’s expenses, with the profit margin
generated by the sales of that jewelry. Often, their actual cost of
the jewelry is only a minor percentage of the operating costs.
Often, in order to remain even modestly profitable, the markup will
be anywhere from two to four times the wholesale cost. More
(sometimes much more) for the most inexpensive items, like the rack
of cheap costume jewelry earrings by the door selling for 5 bucks a
pair. Those, bought by the gross, might have cost a tenth of that,
but to make the space taken up by that display pay it’s way, that
markup is needed.

No, these markups are not obscene, or highway robbery, or anything
of the sort. It’s what’s needed for the business to survive. Consider
the grocery store. Items are often marked up somewhere between 30 and
50 percent. Pretty low. But then most of it sells within weeks, and
there’s a steady line of people constantly keeping the cash registers
busy. The big box club stores like Sams Club or Costco make their
name by being low priced discount sources. Guess what. Most of that
merchandise has at least a 100 percent markup on it. (sell price
double the cost of the item) That too, is low, considering that the
store needs to make a profit. Their merchandise costs more than the
groceries, and selling costs may be higher too. Now compare that to
clothing stores, jewelry stores, furniture stores, and the like. Such
shops do NOT have a line at the registers. A jewelry store might have
to remain profitable on the profit from just a limited number of
sales per day, and the costly merchandise might only get sold/turned
around once or if lucky, twice a year. A three time markup is often
the least that such a store can charge and still keep the doors open.

Do the math here, dude. A ten times ratio between the materials cost
and the final retail value is not at all unusual for many types of
item. Exceptions might be the things that turn (sell) more
frequently, or are unusually inexpensive to manufacture (like machine
made chains, for example) Those, in addition to often being highly
competative in the market, can be sold for a lower end markup simply
because they’re cheaper to make, inventory, and sell. But that’s not
the norm for most items. And you’ll find this same sort of math
throughout the retail marketplace. Jewelry often has a somewhat
lower markup than some retail goods. Fashion clothing, for example,
is often substantially higher. Furnature too, sometimes. And many
other items. And before just assuming this is outrageous, just
consider what’s involved, financially, to open a store (pay for the
real estate or mortgage, rent, utilities, etc) staff it with a bunch
of sales people, managers, buyers, and the boss (all of whom want a
paycheck. and remember the sale doesn’t just pay the commision of
the sales person. it pays the salaries of all the other folks, from
stock people to accountants to security guards), stock it with a
million dollars or two in inventory (and paying both the insurance
and the security costs for that stuff). Now consider the typical
frequency of sales in such luxury goods stores. Walk by a mall
jewelry store some time. You see shoppers, sure. But do you see a
steady stream of people lining up to put money in the register? No.
Sales can range from boringly slow, to moderately good, but it’s
seldom a constant stream, like you see in the grocery store. And all
those above costs have to come from somewhere or there’s no incentive
for the owner to even open a store.

Still confused about why the appraised value of a piece of jewelry
seems like more than the gold? Wake up. Think about it. Oh, and still
think the wise retail buyer can go on the net and get stuff for a
little over the materials cost? Again. wake up. do the math. The
internet stores may not have all the costs of a retail store, but the
merchandise still costs them the usual wholesale value, and they’re
not in business just to be nice. They too, are at least doubling
their money on most typical merchandise. They have to, or it’s not
worth doing.

Peter Rowe

1 Like
On the appraisal certificate it reads: "Lady's citrine and 14kt
white gold bracelet. The bracelet is 8" in length with (27) stones
bezel set and weighing approximately 5 and 1/2 cttw. The mounting
weighs 6.75 grams." Valued at $1000.00 

My wife is a GG of many years and still does appraisals. I have been
involved in some of these events. What everyone seems to want to know
is “How much is it worth?”. they are not interested in the
particulars. I think most appraisers would agree that putting a price
on these things is the most difficult and questionable aspect. The
value is always an auction value : what is someone willing to pay.

Diamonds are the exception since so many are sold on a daily basis.
Price lists are easier to come by. And the exception there is : Is
the person appraising competent to grade color as well as clarity. In
other words. It’s surprising, or at least it was surprising to me,
how many diamonds are passed along that depend on the grading of
someone unknown.

The final point for your query is how did this valuation come about?
The question for you is on what basis did this person come up that

"cui bono"

Unfortunately there are a lot of bad appraisals produced out there.
And there are a lot that wouldn’t really qualify as appraisals at
all. You have no way of knowing, for the most part, anything at all
about the people actually writing them since there are no enforceable
regulations regarding jewelry appraisals (at least in the US). That
being said, most appraisals that are written are insurance
replacement value appraisals and reflect the cost, at a typical
jewelry store, to replace the item as a new piece. That has
absolutely nothing to do with the resale value of an item (which is
what you are dealing with on Craig’s List or Ebay). Jewelry, unless
it’s some of the more exceptional things (D Flawless diamonds, large
high quality ruby or sapphire), tends to be a little bit like cars.
As soon as you drive a car off the dealer’s lot it loses about 50% of
its value. As soon as jewelry leaves the store it becomes a used
piece (even if it isn’t worn much) and its value goes down somewhat
(not as much as a car usually—although this depends on the quality
of the jewelry as well). Designs that are dated, poorly made, mass
produced, etc. will be worth significantly less at resale (regardless
of whether they’ve been worn) than some other items.

On top of all this you have the issue that there are some bad apples
and that some of these appraisers/jewelers routinely write overvalued
appraisals to either make their customers feel like they got a deal,
to help them resell something they know isn’t worth that much. So my
suggestion is that you ignore all of the appraisals on these kinds of
sites. If you like something, and it’s in your budget, buy it. Just
don’t expect much.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC

Who, and for what purpose, did the appraisal? Anyone can make up a
sheet of paper and write on it that it is an appraisal of a piece of
jewelry. There are no regulations/laws governing jewelry appraisal.

As you said, buyer beware!

John Atwell Rasmussen, Ph.D.
Geologist and Gemologist
Rasmussen Gems and Jewelry

Anyone can write an appraisal certificate in a word document.

An appraisal can be trusted only by a professional jewelry
appraiser. Registered MasterValuerT, American Gem Society, Accredited
Gemologist Association or ASA. There are also some in established
businesses who do have the knowledge to appraise jewelry.

The scam in jewelry and gemstone appraisal will continues unless the
buyer checks on the credentials and references of the appraiser.

Ask the seller for name and credential of appraiser and check them
out if you want the item. And also, find out if the appraisal is fair
market value.

Warm Regards, Dee Rouse Huth
California Institute of Jewelry Training

Well Peter, its the internet. For some strange reason people will
believe what they read online, and other people know this and exploit
the human weakness of wishful thinking.

I had this guy come in once for an appraisal. I tell him its not a
genuine sapphire its synthetic. It was so obvious you could tell at
arm’s length. He tells me he paid $7K based on the appraisal in the
ad and it serves him right for buying on the web. I followed up on my
own, after the fact, and discovered this ‘appraiser’ had a reputation
for inflated numbers.

An appraisal is an opinion. Who’s opinion and why is what you have
to ask yourself. Never put great weight on an app tendered by the
seller, its suspect by the very nature of its origination.

Dear Canadian

You are not the first person to misunderstand or to be confused or
misled by “appraisal” certificates. Here are several things about
appraisals you should be know.

First, consider the source. If a jeweler/professional seller is
selling a new item where the appraised value is substantially
greater than the asking/selling price, almost always that is what we
call a “feel good” appraisal, not really an appraisal at all, but
rather a bogus attempt to convince you that you’re getting the great
deal. This “appraisal” is an obvious case of conflict of interest, in
the same league with the phony markup sellers who price their
merchandise at big multiples of cost and then offer huge discounts
off these phony prices–their merchandise is alway “50% off”. Buyer

Then, regarding your question about the gold content-- real
appraisals are ultimately based on costs to bring a product to
market, so we include materials, labor and other production costs
plus markups. The jewelry manufacturer totals his costs to produce
the item, adds a markup for profit, sells to a retailer who also
marks up the item based on his cost, then sells to the end user. For
some items, the gold content can be a modest part of the final price.
That’s just the way it works.

Consider the credentials of the appraiser. While there are little or
no government regulations regarding jewelry appraisal (we do have
FTC Guidelines but not much enforcement), there are a number of
professional organizations that attempt to regulate jewelry
appraising thru screening and education of their members and
enforcement and standardization of appraisal practices. The American
Gem Society (AGS), the National Association of Jewelry
Appraisers(NAJA), and others are such organizations. Appraisals from
members of these organizations are likely to state realistic values
based on market research and legitimate methodology.

Legitimate appraisals are made by qualified appraisers for specific
function and purposes, and will clearly state the function and
purpose. In the case you cite, the function could be a “Retail
Replacement Value” where the appraiser based his/her valuation on
market data showing a modal or average value of similar items
selling in the retail environment in which they would most likely be
sold. RRV is generally for the purpose of buying insurance for the
items and is usually the highest appraised value. Lower appraisal
valuations are made for Fair Market Value, Auction and Liquidation
Value, etc. FMV can be usually around 1/2 of RRV, and LV can be as
low as 10% of RRV. The market in which the item is being sold is the

If the seller is a private party, not a professional, then it’s
understandable how the offering price could be so much lower than an
appraisal–seller needs the money and is willing to take less. If
it’s a new item from a professional seller, take another look.
Legitimate documents from a professional seller should generally
reflect the actual sales price of the item in a “Statement of
Replacement Value”, which is not an appraisal, just a statement of
fact. At a later date, that same seller may legitimately appraise
the item at a higher value if market data and research supports the
higher valuation.

Just as you would consider the quality of the item, you should also
consider the quality of the seller!

Jim Sweaney, CGA, FGA, GG

Hi Gang,

There are at least different types of appraisals that can be done by
the same person… The valuation of the same peace can/will be
different for each

There is the insurance appraisal. This is an appraisal that
indicates the replacement value the insurance company will pay the
item if it is lost or damaged beyond repair.

Then there is the ‘tax’ appraisal. This appraisal is usually done on
pieces in an ‘estate’ to arrive at a value for distribution of the
estate & the amount of tax that has to be paid on the item.

The other appraisal is the ‘fair market value’ appraisal that
defines the appraised value of the item being transferred between two
people knowledgeable about the item in question.

All 3 assume an appraiser that’s experienced & knowledgeable about
the item being appraised

There may be other types of appraisals, but those are the 3 I’m
familiar with.


So far no one has mentioned one of the most important purposes of
having an appraisal. It is not about what it is worth. It is about
what would it would cost to replace an item with another of similar

A gold chain bought at Tiffany’s would cost more than the same thing
at a mall jewelry store. So how is value determined? If Daniel Spirer
makes a custom piece, the replacement value is determined by what he
would charge to remake the piece as he is the only one that can
replace the item.

The purpose of an insurance replacement appraisal is to have all the
about what metals, how many grams, quality of gems, a
picture of the item in order to replace with a like item of similar
quality if it was lost or stolen. If it has a Tiffany stamp, you get
a Tiffany replacement if you have proper documentation.

The value of an appraisal in selling an item would be to have an
appraisal based on insurance replacement value (done by an outside
appraiser) and show the customer that the price you are selling the
item for is less than the insurance appraisal value, less than
another retailer would sell the item for at suggested retail.
Qualified appraisers have formulas that insurance companies use for
retail mark up of gold and diamonds, they use these values to figure
out the replacement price. Let’s say one company puts out a catalog
and every item is listed at a triple key suggested retail. If the
appraiser gives an insurance replacement value that is the same
value as the suggested retail and that item is the same price all
over town, if I tell the customer than I can give them a 15% discount
on the item, I can use the appraisal as a sales tool. However, if I
mark the same item up 4 times, appraise it at that price myself, and
tell the customer I will sell it for 25% off, I am making a sale by
misleading my customer. Custom made jewelry has a different criteria
for valuation than mass produced jewelry.

Richard Hart G.G.
Jewelers Gallery
Denver, Co.

Mervyn L. Cohn ASA
Senior Appraiser
American Society of Appraisers
home to eCS (e-praise CUT SCORE)

Mervyn is an appraiser with unquestioned ethics. You can see his
website, and/or check out the American Society of Appraisers to see
what the appraisal process is and how it works. I am not an
appraiser, an appraiser is not a jeweler or gemologist (necessarily).

John Atwell Rasmussen, Ph.D.
Geologist and Gemologist