Whether you are looking to sell your gold or silver for the best price, or just value it for insurance purposes, you can easily get an accurate estimate of how much you should reasonably be able to expect for it.
Gold and silver are constantly priced on the open market according to the forces of supply and demand, setting what it costs to buy or what you can expect to receive for selling a pure troy ounce (or gram, depending on your market) of metal, and thus anything derived from it… much the same way changes in the global market for oil drives constantly changing gasoline/petrol prices at the pump.
Whether you are talking gold and silver bullion like coins and bars, jewelry, true silverware or anything with precious metals content, you can determine a baseline price by multiplying this “spot market” price by the weight and purity of your metal to get a rough estimate of how much you will likely be able to sell it for — minus a small margin for the buyer, of course, to process it and resell it.
This base price is often referred to as the melt value, and is most applicable to precious metals bullion, like coins and bars, or jewelry that’s just going to be melted. Certain forms of coins (especially numismatics and collectibles), or jewelry and fine silver antiques, might be worth more than melt based on other pricing factors, such as condition, year of mintage, rarity, collectible market demand, etc. But, they are never worth less than the melt.
Read on for more details on determining the right price of your specific precious metals.
In a free market, of course, any tangible good you have is worth precisely what someone else will pay for it. This includes gold and silver coins and bars, jewelry, and sterling silverware. But the precious metals are different from collectibles like Picassos, rare stamps, Mickey Mantle cards and Shelby Cobras.
Collectibles have their own subcultures, complete with magazines and websites that will provide a rough evaluation of what you own. In the end, these things are priced at the whim of sellers and the level of determination among buyers, as you know if you’ve ever watched a Sotheby’s auction of fine art.
However, gold and silver bullion coins, rounds, and bars are more than collectibles. They’re money. They have an intrinsic value that has been recognized, worldwide, for thousands of years. And their prices are determined by an apparatus that stretches beyond the individual opinions of buyers and sellers.
The following information applies to gold or silver. But for simplicity’s sake, let’s say that you have a one-ounce American Gold Eagle for sale. Let’s go sell it.
You have options.
To begin at the beginning, there is an “official,” per-ounce price called spot. This is set at the beginning of each trading day with the “London fix.” From there, gold is traded somewhere in the world nearly 24/7, with the price rising and falling according to the forces of supply and demand in the moment.
Where spot is at the time you wish to sell your Eagle determines the base price of what someone will pay for it. You won’t actually pocket that amount because there is the matter of premium. Premium is the amount (usually expressed not as a fixed dollar figure, but as a percentage of spot) that a dealer tacks onto the price when you buy, and deducts when you sell the coin back to him.
Premiums are hardly set in stone. They vary along with the going price of gold and silver. In general, when coins are in short supply relative to the number of people clamoring for them, the premium goes up. And vice versa.
But that is not an ironclad rule. It’s more complicated. And lots of elements could factor in.
To list just a few examples:
Dealers may raise the premium even when the spot price is declining, if they need to recoup some of the money they themselves originally paid when they stocked up on Eagles.
The dealer may be aware of a potential arbitrage — whereby a speculator can buy gold in one currency and sell it for a profit in another — and adjust his premium accordingly.
The additional cost the US Mint charges for an American Eagle (the world’s most popular gold coin) that accounts for their production costs and profit margin above and beyond the cost of the coin’s metal content — known as seigniorage — is usually higher than other sovereign coins. This cost is passed along in the base purchase price of gold dealers. So if the US Mint charges seigniorage of $2 on a Silver American Eagle and silver’s spot price is $15, coin dealers have to pay at least $17 per coin. This is the primary reason your purchase price will be higher than the spot price.
The dealer must take into account whether his own inventory is higher or lower than he’d like.
You could walk into your local coin shop, plunk down your Eagle, and accept however much you’re offered. But you’re unlikely to get the best price for your coin. The lesson here is that it pays to shop around. Variations in premiums can be substantial, and local dealers tend to charge the highest.
Online transactions ought to net you a better deal.
A good rule of thumb is that it’s usually better to purchase from a dealer with a solid sellback policy. Obviously (and especially if you originally bought from him), that dealer has an incentive to treat you well because he wants you as a repeat customer. In addition, an online dealer who does large-volume business should be able to give you more of a premium break than a local coin shop that might trade a few coins a day.
Trying to time the market is almost always a bad idea, though. You may be able to squeeze a few more dollars out of your sale if you wait for a market turn in your favor. But there’s at least an equal probability you’d be wrong.
Sell when you want to sell.
The X-factor here is eBay. The online auction site has had a wide-ranging impact on the trade in gold coins. Many dealers have an eBay presence. But this mainly affects buyers rather than sellers, because if you want to sell to a dealer, you’ll just do it more simply through their website, not eBay.
That leaves peer-to-peer transactions. Yes, it is possible for you to sell your Eagle on eBay, and it is possible that you may ultimately realize a better price. But you’ll have plenty of hoops to jump through in the meantime:
You have to register as an eBay seller and abide by their rules and regulations.
You will have to factor in shipping costs, plus the fees eBay charges on every auction.
You may be required to collect tax money and provide it to your state government.
Your potential buyers are almost all bargain hunters, which reduces the likelihood that you’ll get the price you want.
If you auction your coin, the spot price could easily drop during the auction period, netting you less than you would have gotten at the start.
And of course you could get ripped off. To be sure, eBay has protections against this, but they’re far from failsafe.
In short, it’s probably not worth your while to try to sell your Eagle on eBay. Leave that to the pros or the people who derive pleasure from the auction process.
Now, besides gold and silver coins and bullion, there are jewelry and silverware. These also follow the spot price of the metals.
The price of a piece of jewelry is largely determined by how the buyer views it. Some of the questions might be: Is it aesthetically pleasing? Does it have historical value? Who is the designer? Who were the previous owners? What is the current demand for that kind of jewelry? And perhaps others. These kinds of considerations will necessarily have a powerful effect on how the piece is valued.
If the item generates no interest other than for its precious metal content, then its price is determined by its melt value. And that, in turn, is dependent on its purity. For example, 24-karat gold is pure gold. So your 24K gold jewelry should have a per-ounce melt value close to gold’s spot price. But there are many other purities — 10K, 14K, 18K and 22K are common. Thus a 1 oz., 18K jewelry piece will only be worth about 18/24 (or ¾) of the spot price. And so on.
Sterling silverware is treated similarly. Sterling is an alloy of 92.5% silver and 7.5% other metals. Thus its melt value is around the spot price of silver multiplied by .925. “Silverware” that is only silver-plated, rather than being primarily comprised of sterling silver by weight, has no real silver value.
And there is also so-called “junk silver,” i.e. US coins minted before 1965. These typically contain 90% silver. But you don’t have to weigh them. Assuming they are not collectibles, then each $1 of face value contains .715 ounces of silver, and their market value can be computed from that.
A final question some people ask is whether you can somehow lock in a future price for your Gold Eagle. The short answer is no. The gold market is always in flux and it is volatile. The only way to fix that price is to find a buyer in the here and now, and enter into a sales contract.
These guidelines should help.