How to Discover Your Gold Value - Putting it All Together

gold value

How to Discover Your Gold Value - Putting it All Together

G’day again and welcome to my special three part submission on just how appraisers and Valuers arrive at an appraisal or Valuation Replacement price by using formulas and calculations to arrive at a final figure.

In an earlier article (see website if you missed any) I covered the basics of just what a Gold Value Calculation was and the formula we needed to use to arrive at a figure.

But we left the last part out of the equation because it is so important to explain just how the jewelry industry really works in the ‘Real World’ that we couldn’t do the Gold Value Calculator justice by simply adding a few lines to the bottom of previous information.

So lets quickly recap because you may have just arrived at whatever website this article has been published on and not seen the earlier explanations.

So here goes: The gold value formula is: G/32/24xQxW where G equals the Spot Price of Gold Today and Q equals the quality of the gold being assessed with W being the weight of the item being priced.

The 32 is the number of grams in one ounce and 24 is the number of carats (karats) in pure gold.

The ring we used in the example was my own wedding band which was made from 9 carat gold and weighed 5 grams. All other details such as Antique Value or Workmanship are ignored but explained in earlier articles.

Transposing the numbers then became 883/32/24x9x5 and gave a final result of $ 51.738275 US Dollars as a basic gold value BEFORE any trade markups or taxes.

Naturally we wouldn’t need to take the figures so far in our calculations so we can safely round them up to $ 51.74. This represents the gold ‘Scrap Price’ or ‘Spot Value’ of my wedding band. 5 grams of 9 carat gold.

But this is before any value has been added by supplier, manufacturer, wholesaler, retailer and yes - I’m sorry to add - The Taxman through State Tax, Sales Tax and Import Duty - depending where you live.

It is a well known fact that the jewelry Trade like to double their money (not all - but some even more) so we have to take a stepped approach to arrive at the retail or Insurance Replacement price often quoted in Jewelry Store Sales Promotions as 50% percent Off (Off What should be the real question?).

Sp lets start with a brief outlook to the chain or funnel between the BASE price of Gold and the Retail Window.

Those steps are: refiner - Manufacturer - Wholesaler - Retailer - Taxman. There might also be Importer, Exporter, Setters Fees, Finishing Fees and a whole lot of other little guys in the middle.

But as an average lets just go with the first few.

The Refiner would take the ‘Spot Price’ of Gold and sell it on at say 10% surcharge. Quite reasonable but not necessarily this low. This would then pass to the Manufacturing Jewelry Factory who would add 25% percent to the finished article. This passes to the Wholesaler who might slap on 50% percent to the final figure while the retailer (who ALWAYS gets the biggest chunk) would double their money at a full 100% percent markup.

Let’s look at that in our example. The base price was rounded to $ 51.74 and the refiner would add 10% percent to that ($ 56.91) but let’s make that $ 57 bucks because no-one is going to bother with lose change.

The Manufacturer is next with a 25% percent margin - so the same gold (now made into something) is now valued at $ 71 dollars or so. It gets better…

The Wholesaler who buys in Bulk and deserves everything they get slaps on 50% percent into the equation so it now becomes a $ 106 dollar value. It’s beginning to look a lot like Christmas.

The nice FRIENDLY jeweler in the Retail Shopping Mall or High Street doubles their money, so it now looks like $ 212 - more like $ 220 to round things up a little. The Taxman can add another 10 to 25% percent depending on State and GST or Sales Taxes which would bring your jewelry to between $ 250 to $ 275 retail.

Or to make it VERY SIMPLE - 5 grams of 9 carat gold is now worth $ 250 divided by 5 or $ 50 per gram, and this is very conservative. It can go higher than that but you get the idea.

You might even see Handmade Items selling for as high as $ 80 to $ 100 per gram for 9 carat. In the States with 12 carat or 14 carat it can go higher. 18 carat gold to 22 carat and pure is valued at a completely different scale - But they ALL use the same formula we have covered here or variations of it.

In certain parts of the world it’s a straight double - double - and double again so the original $ 50 value becomes $ 100 - $ 200 - $ 400 plus taxes as it filters through the golden chain (yes I’ve done one more Pun - a record).

I hope this series or articles has made you aware of just how easy it is to calculate your Gold Only Valuables and to consider these figures when you are looking in the shop window, on eBay or any website for Value.

It can also be applied when selling your jewelry as the resale figures are entirely different (but that’s for another series of articles).

If you enjoyed the information, please don’t hesitate to contact me at the website and let me know how you might have used it - especially if it saved you money. I would love to hear from you.

The Gold Value Calculator is built into a special tool we have available at the Jewelry Appraisal Center and is inexpensive and produces a five page report based on your input. You can find the address below or at my website.

In the meantime, and until next time, take care and watch the road.

David Foard F.G.A.A. resident gemologist and former member of the Valuers Council (retired) - Yeah Right!

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