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How to Make a Killing in Gold Disposal
Without Killing Your Conscience or Your Customers

By Donald Miller, owner of Long Ago & Far Away, Syracuse, NY

When times are tough and people need money fast,
all that glitters is gold.

As a former stock broker with a soft spot for gold bullion, I find gold puts jewelers in a rather advantageous situation during the current meltdown of the global banking system. Please believe me when I say that I am not salivating with glee or greed as I write this. The suffering is real and it will only intensify in the months ahead.

But I also believe that people who did not make this crisis have a right to survive it and even thrive in it. What’s more, I believe they can help their customers to survive and maybe even thrive.

Gold is the key to survival. And gold is the life blood of the jewelry industry. Hence jewelers who pride themselves on making people happy in good times have a chance to pride themselves on helping those same people stay whole, if not happy, in hard times.

From Gelt to Melt—And Back to Gelt

I am an antiques dealer who buys lots of old jewelry and so I consider myself a member of the industry. I’m always used to a fairly steady number of people coming to sell old trinkets to me; as you can guess, that number is multiplying. As you can also guess, most of these people have no idea what to expect for their pieces. They are at my mercy.

Temple Tree Cuff Bracelet by Eva Martin, 2008 Jewelry Arts Awards Winner. Oxidized sterling silver, 18K yellow gold, 2.1 carats orange sapphires. Cast, soldered, engraved, and oxidized branches. Hand fabricated and soldered leaves. Bezel set sapphire flowers. Photo by the artist.

I try wherever possible to give at least 70%, often 80%, of the melt price of any piece I am interested in buying. Some may object to this and complain that I should pay far closer to the spot price of gold on the day of sale. But mine is a small business and I have employees to pay and overhead to meet. I am not a refiner who deals in large volumes of cash-in goods. I explain this fact of life to the customer. Since I know that they will only be offered around 50% of melt price by the local pawn shop, I feel I am being equitable.

I would love to close the 20% to 30% spread between what I offer and the daily gold price, but to do so would involve creating a cooperative of dealers such as myself with greatly expanded purchasing power. Perhaps we will see the emergence of such buying groups in the near future as gold liquidation becomes an even more popular means to raise cash.

When members of the public see the instant high cash-reserve power of their gold, they begin to want to own it—but not as jewelry. They want to own it as gold bullion with ready, built-in liquidity. So I offer consumers replicas of famous gold coins in small-denomination forms in either gram or ounce form. The idea is to have rainy-day purchasing power. Although gold is no longer legal tender, recessions always force its unofficial remonetization. (I cannot say the same for silver, platinum or palladium.)

Diamonds—Who Needs Diamonds?

Message ring, by Daniel M. Nagy & Agnes Kertesz, 18K white gold 10.8g, Tahitian pearl AAA round 1pc 9.4mm, brilliant cut diamonds. 20mm x 15mm. 2007 Jewelry Arts Awards Winner.

Much of the jewelry I am offered contains gemstones—usually diamonds but also colored stones. Since I am not a gemologist and do not have an on-site gem lab, I am naturally wary of buying gems. If the customer has an identification report from a reputable lab, I feel much more confident about what I’m buying—but that is rarely the case. So I explain that I am not in a position to offer anything resembling fair value for their gems.

Further, I do not have access to pricing information that is as reliable as that I am used to for precious metals. I know there are price lists, but I just don’t trust them. So I tell the customer to take gems to a buyer who is a gemologist or has one on his staff—not, I add, that that is any guarantee of receiving a fair price.

American consumers do not, as a rule, know the degree to which gems and precious metal jewelry are sold on an honor system that is rarely, if ever, enforced. If they knew the ‘legal’ leeway some manufacturers feel they are entitled to take regarding alloy purity and carat content, they would probably stop buying jewelry. I hate that they have to learn these facts of life when they are desperate for money. But I am just as much in the dark as they are regarding the integrity of their jewelry. So I have to take the precautions they should have when they originally bought the pieces they are selling to me.

The American jewelry industry should use the current recession to make long-needed reforms in marking jewelry. I would love it if we would adopt the British system that makes passing an assay a requirement for the sale of all gold and silver jewelry. Let’s extend that requirement to complete gemological scrutiny of any and all gems sold to the public. That will facilitate greater public trust in jewelers and greater consumer confidence in jewelry. Until that unlikely day, however, I’m only interested in gold.

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