How Does a Pawn Shop Determine the Price for Gold?

Ever wondered how Wm S. Rich & Sons determine how much money we pay for gold? Wonder no more, we’re here to give you insight into the process.

The price we offer for gold jewelry is based on its weight and gold purity and then compared to the current market price for gold. This is what’s typically known as the “melt” price, or what we could reasonably melt down and sell the gold for. We also take into account the regional competition for gold in our area. Because of our company’s size and history with our partners, Wm. S. Rich & Son can offer a very competitive price for gold.

Precious metals are brought and sold by weight. So if you’re looking to pawn your jewelry for a short-term loan, choose your heavier pieces. The heavier the gold in your chain or bracelet or ring, the more money you will get.

Using a NJ state verified scale that can measure jewelry to the tenth of a gram, the gold weight is measured first and then cross referenced with the current price of gold on the open market.

We then subtract the weight of any gemstones or non-gold items included with your jewelry.

Next we look to measure the purity of the gold. The higher the karat, the more pure the gold is.

Look inside or on the underside of your gold jewelry and you’ll typically see a stamp that indicates the purity. Here are some common denominations:

  • 10K equals 41 percent gold
  • 14K equals 57.5 percent goal
  • 18K equals 75 percent gold
  • 925 indicates sterling silver. It is worth much less than gold and a heavy piece of jewelry is needed to pawn.

Remember that when you bought the jewelry, you were paying for more than just the jewelry itself. You paid for the manufacturing costs, employee salaries, benefits, rent, overhead and a contribution to the store’s profit margin. Unfortunately, you will not recoup those additional retail costs when you go to sell your jewelry.

When you pawn an item, we will hold it in our vault for up to six months, during which time you can come back to claim it. In order to protect ourselves in case the price of gold falls dramatically while an item is on pawn, we typically pay up 60 to 70 percent of the melt price.

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