Money Matters
5:00 am
Tue September 13, 2011

It's a good time to sell your gold

If gold is part of your investment portfolio, or you have some old jewelry you'd like to get rid of, now may be a great time to cash in. Gold prices are at record highs, recently approaching $1,900 an ounce.

On this week's Money Matters, financial commentator Greg Heberlein and KPLU's Dave Meyer talk about how to get the most money for your gold.

Greg's advice:

To buy or sell, make sure you find a reputable local dealer who has been in business for some time. Fly-by-night companies renting hotel rooms might not give you the best price. Neither do most of the operators flooding the TV channels. Almost all local dealers will happily tell you how long they’ve been around.

There is wiggle room on the price. When I sold a few weeks ago, the dealer offered me 96 percent of the up-to-the-minute spot price. I checked and found another dealer willing to pay  97 percent. I called back the original dealer, and he agreed to raise his price to 97 percent.  That’s a difference of $100 per $10,000.

You will always buy precious metals a little bit above the spot price, and sell a little bit below. That’s the spread dealers make their living on. Without a spread, there wouldn’t be a market.

Because pure gold is 24 carats, jewelry normally is a lot less. That’s because 24-carat gold is too soft. A small amount of other metals strengthens it. So, 18-carat gold is three-quarters the value of pure gold; 14 carats is about 58 percent, and 10 carats is nearly 42 percent.

Don’t expect to get the spot price of an ounce when you take in handfuls of gold jewelry. You may be disappointed. One gold chain around your neck, which might have cost a lot of money, may yield much less. Since the gold usually will be melted down, the dealer has no interest in what designer crafted your necklace. 

Stocks still beat gold

I bought gold to hedge against bad times. I sold because the price skyrocketed. Over 30 years, the gold I held rose 260 percent, which sounds pretty good. But if I had put that cash in a broad stock market portfolio, the gain would have exceeded 1,100 percent.

Money Matters” is a KPLU feature covering the economy, investments and more. The feature is published here and airs on KPLU 88.5 during Morning Edition and All Things Considered on the second and third Tuesdays of the month. It also airs on Weekend Saturday Edition.