Not All that Glitters is Gold

In a collectibles box I’ve had for over 20 years, I keep my watches, cufflinks, tie tacks, rings,
bracelets, charms, chains, silver business card holder and other expensive looking knick-knacks. I don’t even wear tie tacks! My wife has about four of these kinds of jewelry boxes of various sizes and qualities. In her boxes are unmatched earrings, chains that go back for decades, school rings, pendants that don’t fit on anything and gifts from ex-boyfriends that mean more in the box than anything else.

As I write this blog today, I quickly Google the price of gold- $1,650 per ounce. What does that mean? Hmmmmm, you are thinking, maybe I have an ounce of gold in all of those pieces I don’t wear? Perhaps, but probably not. Let me explain what it means when something is stamped 14k or 18k in karat weight. A 24k piece is pure gold, and 14k and 18k are gold blended with other materials. Sometimes you'll find the number 5.85 stamped (or hallmarked as they say in the United Kingdom) on a gold piece, and this actually means the same things as 14k.  This refers to the percentage of pure gold the piece is made of: 14k equals 58.5% of pure gold, and 18k is 75% pure gold. 

Pure gold

With gold recently weighing in as high as $1,850 per ounce, the “cash for gold” business is literally booming. Some radio advertisements call it “the next gold rush” and many newspapers frequently advertise, “top cash paid”, for your extra gold.

I have always thought of jewelers who advertise “cash for gold” or hang signs in their windows that proclaim, “We buy diamonds!”, as kind of tacky. During the 2009 Super Bowl, I was blown away when M.C. Hammer and Ed McMahon were touting, “Send your gold in and we will send you cash!” Remember, those ads cost $2 million per minute! These places MUST be making big bucks. There was an exposé written in USA Today describing the business practices of this organization, and let’s just say it was not flattering. The bottom line is that the consumer does not know the true liquidation value of their old and all-but-forgotten jewelry.

When the ad says, “we buy gold for cash”, here is what the process typically involves: you bring in a broken gold chain, they weigh the chain and look for a karat marker or hallmark with a magnifying glass. Sometimes they will even test the gold chain piece with a device that looks like a battery meter reader or they may even use a dabble of a chemical mix that will tell the percentage/karat weight. They will then routinely offer 20-30% of the true value of the gold you are selling. Since most customers do not know the real cost of gold, someone offering you $400 for a ring may seem like a great deal. If you came to us, we’d probably offer double that. But, how can we do that and what is it based on? 

Today’s gold price closed at $1,637.60. Remember that the price per ounce also translates to a price per gram. At today’s closing per ounce, gold is $52.72 per gram. Once you see the gram weight of the gold and know the karatage, you have an approximate value of grams per pure gold. Turning the gold into cash is a little more complicated because it has to be refined to pure gold to realize any value. If you figure the weight of the piece you are recycling times the price per gram (divided by the percentage of karat) and then figure 20% for the price of cash and refining cost, you can now calculate what the fair price should be, less the cost of refining the gold.  We do this routinely and as a result, pay two to three times what the “cash for gold” hustlers will pay.  No one can give you 100% value because of the costs involved in refining the gold, and the chemicals needed to return it to its true form.

Refining process

More importantly, we got into the jewelry business with incredible collections of raw and polished diamonds and colored gemstones all set in certified recycled gold and silver. We create custom pieces starting with a pad of paper and a sketch, and then make that piece of jewelry you’ve always wanted go from your imagination to your neck or finger. Imagine melting down all your mismatched earrings, chains and gold you have not worn in 10 years, and making that diamond and gold peace sign pendant you always wanted.

Now just imagine what we could create for you...

For example, a recently divorced woman came into the store with an engagement ring she wanted to turn into something new. First we explored a necklace with a pendant, and she said no because it would remind her of her ex. I looked at her legs and noticed a very cool ankle bracelet. I suggested, “Let’s make a toe ring out of it to go with match that ankle bracelet.” She looked intrigued. I continued, “If we make a very cool toe ring, every step you take you will be walking on your ex. And, you will be the only woman with a 2 carat GIA certified diamond on your toe!” She loved the idea! I weighed the ring and gave her a $600 credit, and then we measured her toe and took the pad of paper out to design the piece. Since delivery and every time I’ve seen her since that day, she stomps her foot in delight!

Our message is, in today’s world we need to constantly think about reducing, reusing and recycling. This mentality is the expression of our generational values. This recession may be breaking you and you need cash, or it’s keeping you from getting engaged or buying that great piece of jewelry your loved one wants. Now there is a solution to this dilemma. You can reuse – redesign – and recycle that old gold into an heirloom in waiting. After that, you may even have money left over to buy another gift for another loved one….

Written by Wade Watson, Founder of Ruff&Cut and Co-founder of Glittering Conscience