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How to be sure you get a fair price when you sell your gold

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User ID: 24118278
United States
02/05/2013 05:08 PM
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How to be sure you get a fair price when you sell your gold
Florida Avenue is the main drag in our little town in central Florida. In less than a mile, you're likely to see three or four folks standing on the sidewalk wearing headphones, bopping to music, and waving big glittery signs or arrows with "We Buy Gold" written across them. It's a common sight across many cities today.

During my annual trip to Arizona, my friend Phil asked me about gold. He owns some gold with no emotional value tied to it, and I convinced him of two things. First, he should not sell his gold; and second, he should hold it in a portable form with an easily recognizable value, like Gold Eagles. If things really get tough, he wouldn't want to have to barter jewelry with no easily agreed-upon value.

There are many places where he could probably sell his jewelry, but how would he know if he was getting a fair price? I didn't know either, but I knew I had a friend who would.

I called up my good friend Rob. His family has owned a pawnshop for decades; it even has a "We Buy Gold" sign in the window. Who better to ask?

Rob explained his position as a dealer. For him, gold is a highly volatile asset; its price swings can have a major impact on his margins. When he buys gold, he must hold it – sometimes for several months – until he has enough to sell to a refinery. His highest percentage payout at the refinery is tied to the volume he sells.

Under Florida law, even if he buys the gold outright, as opposed to taking a pawn, he's required to hold the item for at least 30 days. The normal "We Buy Gold" facilities have a 15-day minimum hold.

When the price of gold is rising, a lot of folks come into his store to sell. When it drops, Rob can get caught with inventory he can't sell at a profit. The dealer does take a sizeable risk.

Rob walked me through the process his clerks use to evaluate gold, using a necklace as an example...

[link to www.millersmoney.com]