By the editors of BIG GOLD

The Best Way to Cash in Your Gold Jewelry

You haven't worn it since you donned bell bottoms and danced to Saturday Night Fever. Yes, we're talking about that gold chain that now looks suspiciously like a Mr. T starter-necklace. The one that's done 30 years in solitary, locked away in a jewelry box. Have you ever thought of trading it for some cash, perhaps to a processor of scrap gold?

If so, how do you cash out? Is it really worth the trouble? And just as important... will you have to deal with the people who put on that cheesy Super Bowl ad?

Take Stock

First, take inventory of what you're willing to part with and that's salable. Almost anything made of solid gold can be sold, of course. But unless you want to pop out a filling or tear apart 100 cell phones, most of it is going to be jewelry. Here are a few of the items that might make your list: Necklaces, charms, watches and watch bands, bracelets, brooches, money clips, earrings, pins, key chains, rings, cufflinks, pendants, chains.

Listening to Your Earrings

How do you know that your items contain real gold? Most jewelry is stamped, or hallmarked, with its karat content. Examine an item's inside and underside surfaces, or the clasp if there is one. Look for a hallmark showing the composition - for example "14K" or "14KT." If you encounter the letter "P" (as in "14KP"), it means "plumb," a term used by a few exacting manufacturers to indicate the gold content is stated precisely. The legal standard for gold hallmarking allows up to a ½ karat variance, so an item marked 14K (58.3% gold) can actually be as low as 13.5K (56.25% gold).

If your "precious" metal item isn't marked, it's likely not precious metal. But there's an outside chance of it being a high-karat item: has it been altered or repaired? A jeweler might have filed the stamp off during his work or soldered over the marking.

So if you suspect your jewelry contains gold and yet there's no karat mark, what do you do?

To investigate whether unmarked jewelry is made of gold, use a magnet. If the jewelry sticks to the magnet and it's not grey or green in color, it's not karat gold, because gold isn't magnetic and gold alloys with iron are grey or green. Failure to stick would be a sign, but not proof, that the item contains gold.

What to Look For

When you go on your in-house scavenger hunt, you'll be looking for as much pure precious metal as possible. Some types of items will be especially valuable. Others won't be worth your time.

Karat Gold. A gold karat means 1 part out of 24. So 24 karat gold is pure gold. The table below shows the gold content corresponding to the karat markings commonly found on jewelry.

Gold-filled. Such pieces are fabricated by fusing one or two thin sheets of karat gold, typically 10K or 14K, to a core sheet of base metal, usually brass. Gold-filled jewelry is marked "GF" or "Gold Filled." The hallmark shows the karat purity of the gold sheet and also indicates the percentage of the item's total weight that is gold. "1/20 10K Gold Filled," for example, would mean that 1/20 of the item's weight is 10K gold.

The gold content of such pieces usually is small, and refiners require very high minimum weights of GF before they will make the assay required to establish the material's value. Yet GF jewelry is not costume jewelry and wasn't cheap to buy. So before you throw such an item away, we suggest searching eBay for similar items from the same source to get an indication of the possible value to a collector.

Gold Plate, Rolled Gold Plate, Plaque and Electroplate. These items carry the hallmarks "gold plate" or "GP" or "RGP" or "plaque" or "electroplate" or "EP" and might also include a mark like "20M" or "G20M," which means the gold plating is 20 microns thick. (A micron is 1/10,000th of a millimeter.) Such plating is so thin that refiners won't accept the items for assaying. These go to your junk pile.

Vermeil. This is gold plating over sterling silver. The hallmark refers to the silver - as "925" or "Argent" and to the gold plating as "Plaque" or "G20M." Treat these items as just silver.

What About Gemstones?

If your gold jewelry holds gemstones, you can request they be assessed to get a little more moola out of the deal. However, most places charge for stone removal - a minimum of $50 - and will toss them unless you ask for them back. As such, we generally would avoid sending them to the smelter. Instead, pay a quick visit to your neighborhood jeweler for assessment and removal because they'll probably remove them for free and will surely give you more for them.

Who You Gonna Call?

There are three types of places that will buy your gold, only one of which BIG GOLD recommends.

1. Pawn Shops. As you'd suspect, pawn shops are the stingiest. The "good" ones will pay you 50% of the gold content; the Cash-and-Dash Pawn Shop on Seedy Lane may offer you as little as 25%. Unless you're desperate to make bail, we suggest passing on this option.
2. Scrap Dealers. This includes the company that brought you the Super Bowl, Cash4Gold. And there are plenty others out there in Googleland. For fun, we called Cash4Gold to get some prices, but they refused to tell us the percentage they pay, insisting they must have the item in hand first. Nice try. ABC's Good Morning America recently tested various scrap dealers by sending identical amounts of gold jewelry to them. Cash4Gold - which, by the way, has a D- rating with the Better Business Bureau - offered $66.05 on a package of jewelry worth $410... that's about 16% of the true value. Other scrap dealers fared better, but we still wouldn't recommend them.
3. Refineries. Yes, there are refineries you can deal with directly. They are the same operations that turn the gold dug up and processed by miners into the metal you buy from your local dealer. By going directly to a refinery, you cut out the middleman. In fact, it's to the refineries that scrap dealers send your gold, to collect a better price than they paid you. Refineries pay between 95% and 99% of the value of an item's gold content. This is where we recommend you send your unwanted jewelry.

How It Works

You'll have to ship the items to the refinery yourself (they don't provide pre-paid envelopes), and you'll probably want to insure it. Include a letter itemizing what you're sending and indicating what you think the gold content is for each piece. That way the refinery can account for any discrepancies, such as the discovery that the watch you bought at 42nd and Broadway (shock!) isn't 14 karat gold. And, of course, include your contact info.

Upon receipt of your package, the refinery will inventory the contents, weigh the material, and send it to the induction furnace. The smelter will then take a sample of your melted gold and assay it by fire, the most accurate method. From the assay, the refiner can calculate how much of each metal you sent. Expect the refinery to contact you about three days after receipt of your package to lock in the price they'll pay you, based on current spot prices of precious metals. (Once you're an established customer, you can lock in a price before you've mailed your items).

Refineries are in the melting business. Meaning, they will melt whatever you send them. So make sure it's not something you'll want back when you later find out it doesn't contain as much gold as you'd hoped. They won't give you a value without performing a fire assay (no x-ray machines here) and that means it's gotta be melted. Also keep in mind that you are charged the refining fee regardless of the value of your melted gold, which means you could owe them if you ended up sending yellow paint. They'll return your blob of metal but will charge you for the hassle.

Recommended Refineries

We found two refineries we like:

Dillon Gage Refinery, 11312 Indian Trail, Dallas, Texas 75229, phone 888-436-3489.

Website: http://www.dillongage.com/Metals/RefiningServices/tabid/31/Default.aspx

Dillon Gage would be our first choice. They pay 98% of the gold value on the first 50 ounces and 99% beyond that. There is a $30 assay fee per lot.

They don't accept gold-plated items. They do accept gold-filled "if you have 10 pounds total weight of gold-filled or more." The terms are less attractive than for karat gold - 80% of the gold value - but unless you've been a busy, busy burglar, you're not likely to have anything close to the 10-pound minimum.

Dillon Gage has been in business for 33 years, and we had no difficulty contacting the refinery whenever we called. And D.G. is one of the players in the industry.

Precious Metal Recovery (a division of Northern Refineries), 29509 Sierra Point Circle,

Farmington Hills, Michigan 48331, phone 800-882-7729.

Website: http://www.preciousmetalrecovery.com/

PMR pays 95% of the gold value, but they charge no assay or other fees. They are accredited with the Better Business Bureau and claim "many happy customers."

They will accept gold-filled, but only in quantities of "at least 8 lbs." They don't accept gold plate, because "it's not worth the cost to extract it."

One negative: on a call during business hours, we could only leave a message. They did call back the same day but then cut the call short. We had a better experience with Dillon Gage.

Which smelter gives the best return? Dillon Gage charges an assay fee but pays a higher percentage of the gold value, so they will net you more cash for orders over a certain weight. At today's gold price, here's a good rule of thumb: if you have over one ounce of gold, Dillon Gage pays the best return; for silver, anything under 45 ounces would fetch a better price from PMR. Higher metals prices would lower the weight threshold at which you would do better with Dillon Gage.

You may find other refineries you like better. Basic due diligence standards apply: check fees, turnaround time, and reputation.

Finally, what to do with your money? That's up to you, of course, but we'd recommend buying some gold coins!

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