Where to Buy Gold and How to Buy Gold
Knowing how to buy gold is actually more important than knowing where to buy gold.
Would you rather buy a gold chain for $35.00 a gram or for 70% off the ticket price of $1400.00?
The smart buyer, that’s you, needs to know the weight of the chain and a little math to answer this question. You also should know if $35.00 a gram is a fair price for the chain you are buying. The answer and the calculations are below.
Knowing how to buy gold, you can buy it anywhere, or at least be able to determine if you are getting quality merchandise at fair price. You have learned the fundamentals of how to sell gold by reviewing this site and you will be glad to hear you can leverage much of your new found knowledge into the process of buying gold jewelry.
Many of the same principles will help you decide where to buy gold, what to look for when buying gold, and negotiating a good price. I will have you buying gold jewelry like a pro by the end of this short tutorial.
I am explaining the process of where to buy gold, karat gold items which are at least 10K. This process does not take into account the value of any precious stones such as diamonds, rubies, sapphires etc., which can drastically affect the price. But the mounting, or the gold part of the jewelry you are looking at, can and should be considered when shopping for gold jewelry containing precious stones.
This page will address knowing how to purchase any kind of gold chains, bracelets, earrings, charms, rings, money clips and any item made of karat gold.
Although there are hundreds of manufacturing jewelers in the USA, the vast majority of gold jewelry sold in the USA is manufactured by less than 30 major manufacturers or importers. Gold jewelry actually has brand names, which can be a huge help when deciding where to buy gold, but few people outside the jewelry industry know them. This is important to know for two reasons.
First, there is a law on the books that says that any time a manufacturer puts a purity stamp on a karat gold item, they must also put their trademark symbol on the item so that they are accountable for the purity of the item you are purchasing.
Second, it makes it easier for you to comparison shop the price of an item since it makes it easier to identify the same item from store to store.
After a while you will realize the there are differences between the different brand names in terms of workmanship, finish, design, and to a small extent, price. Knowing the brand names of gold jewelry will give you a tremendous advantage in comparing prices and helping you determine where to buy gold.
So, always ask to see the purity mark, or purity hallmark (see Glossary page) and the manufacturer’s trademark.
Make sure you can actually read the 2 marks and know what they mean. If you have trouble seeing them, ask for the use of a “loop” or magnifier to make it easier to read.
Anyone who sells gold has one readily available.
The vast majority of jewelry salespeople at the large retailers and mass markets don’t even know the brand name of the gold jewelry they are selling much less what the trademark symbol is. Places like department stores (Macys, Dillards, Sears, JCPenny) big box merchants (Kohl’s, Target, Wal-Mart) and especially wholesale clubs (Sam's, BJ’s) have especially clueless sales people, but that doesn’t matter, because you should never buy gold from a store like these for 2 reasons I will discuss in a moment. Knowing how to buy gold demands that you always nufacturer’s hallmarks and trademarks
Ask for the weight. Insist that you know the weight of the item. Even if the ticket on the item tells you the weight of the item in grams or pennyweights, you should have the weight confirmed right before your eyes. You should also be assured that the scale is accurate. Ask them to weigh 5 nickels for you. It should weigh exactly 25 grams or 5 grams per nickel. As Ronald Reagan said, “Trust, but verify”.
You will run into some salespeople who will say, "We do not sell jewelry by the weight, only by the piece.” Well, you can be absolutely certain that for the vast majority of the jewelry you will look at, when the store purchased it, it was dropped on a scale and paid for by the gram, not by the piece. You should respond to these salespeople that you will start buying gold by the piece as soon as they do. Knowing how to buy gold means knowing exactly how much gold you are buying.
Some items are only sold by the piece because they are one of a kind, or extremely rare and desirable and are in demand, or have limited distribution to enhance the brand and control the price or a combination of all of these things.
Some items sold by the piece are extremely lightweight and the “labor” cost for manufacturing these items is very high, or for whatever reason, the manufacturer just decides to sell it by the piece. Items like these are usually extremely lightweight earrings, charms, or super lightweight “carded” chains.
However, just because they are not sold by weight doesn’t mean that you can’t or shouldn’t find out what the weight of the item is. And it doesn’t mean that you can’t negotiate a better price.
The fact is you can compare the price of jewelry, because you can identify it by the brand, description, and the weight, from one store to the next. These are the rules for of truly understanding how to buy gold jewelry. Unless the item is a very unique, boutiquey, unusual, or high fashion item with very limited distribution, you might not be able to find the exact same piece anywhere else, but you damn sure can insist that if there is a karat mark, it should have a manufacturer’s mark and you should know what it weighs.
Now let’s discuss price...
- You are happy with the quality of the workmanship, design and finish, and clasp of the piece
- You have established the purity of the item
- You have identified the manufacturer of the item
- You have the weight of the item in grams
So, what is the gram price of the item you are considering to buy?
Never buy gold from someone who is unable or unwilling to negotiate price.
Would you buy a new car, or a house without negotiating a price?
You can almost always by the same gold jewelry you find in large chain stores, which are staffed by mindless, un-empowered cashiers (like the above named stores) in a store that won’t treat you like an uninformed boob.
With the above information, you can divide the final price of the item after any discounts, deals or promotion, by the weight of the item in grams, and get the asking gram price of the item. You can then accurately shop the asking price from one store to the next. But, what is a fair price for the item? How would you know if everyone was charging more than a fair price for similar items? (Ever get off a cruise and wander around from store to store and realize that prices are very similar?)
Here is a rule of thumb for the price of gold items:
To know how to buy gold like a pro, you must be able to determine what a fair price is for the gold you are considering buying. Using what you now know about gold prices, figure out the world gold price of gold for the purity you are looking at (see calculations). Add 20% to the price (in the industry this is referred to as the labor charge (see glossary) and then multiply by 2. (Let’s call this formula 1)
That will be the average “sale” price per gram of most of the gold you will look at. For example, at a gold price of $1000, 14K = $18.80. $18.80 + 20% ($3.76)=$22.56, multiply by 2 = $45.12 per gram. A 10 gram 14K gold chain would sell for around $451 at $1000 gold at the average asking price in most stores. (after all discounts)
These are some of the variables to keep in mind. The “labor” charge can vary from 10% to 30%, but the vast majority of goods, mostly made in Italy or the USA, will average around 20% or less. The “initial markup” or profit margin in the jewelry industry is rarely below 100% (buy for $l sell for $2) and can be higher.
Formula 1 represents the average high asking price after all the phony sales and discount you are offered. You should never pay more than this for gold items. But remember, I keep referring to the asking price.
Which brings me to my cardinal rule for where to buy gold jewelry.
Never buy gold from someone who is unable, or unwilling to negotiate a fair price with you for your gold purchase. This is a key part of knowing how to buy gold.
A 15 to 20% discount off the average high asking price is the least you should be willing to settle for. A good, fair and knowledgeable buyer should get a 20 to 35% additional discount.
If you are able to get a discount of more than 35% of the average asking price you really know what you are doing and / or you are standing in one of the wholesale / retail jewelry markets or exchanges that exist in some of our major cites, or you have gotten mixed up in this price equation. Or the price is too good to be true. (See under karating, Glossary)
Would you rather buy a gold chain for $35.00 a gram or for 70% off the ticket price of $1400.00? You need to know the weight of the chain and a little math to figure this out.
You found out that the chain weighs 8 grams
First, figure out the price per gram of gold in the purity you are looking at.
In this example, the published price of gold is $1100 a troy ounce, and the price converts to 14K = $20.62 a gram.
$1400.00 less 70% = $420.00 in this case
$35.00 x 8 = $280.00
One more comment on the “labor charge”
When a professional jewelry buyer shops for gold jewelry, they are concerned with the quality and workmanship of the item so look very closely at the closure device and the finish, and when it comes to price, only what the industry calls “the labor charge” of the item. This is usually the most important factor for them in determining where to buy gold jewelry.
This is actually a pretty simple way to compare the price of items. In simple terms, the labor charge is the difference between the intrinsic price of the gold and the wholesale selling price. When shopping, they will ask what is the labor charge of the item. The labor charge will not go up or down, it is a constant. The price of gold will fluctuate, the labor charge will not.
Shop like a pro!
You have just had a peek at the wizard behind the curtain.
Have fun shopping.
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