Don't Mail in Your Gold

“What’s with all these ads to sell my gold jewelry?” writes a reader “Will I get a good deal on that?”

The short answer: No.

In general, the mail-order gold people are paying about 10-25 cents on the dollar.

We’re seeing monetary psychology at work here. It’s the feel of cash in hand. We have relatively unsophisticated people sending in “old” jewelry, and they don’t know what they have. The mail-order gold buyers are sending back a check, and the crinkle of that check makes people think they got a good deal.

Don’t sell your goods to the mail-order crowd, unless you want to get taken to the cleaners. If you sell your old disco chains at a reputable jewelry store, you’re likely to get a reasonable deal for the gold content [up to 75 cents on the dollar], as well as for any precious stones.

We’re living in tough economic times. There are a lot of people who are desperate for immediate cash. So they send in their “old” gold and such. But the process we’re seeing is a classic case of valuable goods flowing from weak hands to strong ones.

Byron King
for The Daily Reckoning