Friday, 14 Jun 2024

Why Are Pawn Shops Buying Gold Jewellery

Gold jewellery is the most common item pawned or bought from pawnshops across the globe. Some pawnbrokers buy more jewellery than anything else. Probably 90% of the precious metal jewellery that pawn brokers buy is made of gold whilst the rest is made of other precious metals like silver or platinum. But why do pawn brokers favour gold jewellery more than the usual electronics, tools and instruments?

The answer is simple. The value of gold is determined on the open market and expressed in U.S dollars. This value is known as the “spot price” so when someone walks into a pawnshop with a piece of gold, the pawnbroker can easily work out value can easily be determined. The pawn broker can quickly decide what a worthy offer should be for that item. The simple fact about pawnshops is that they only accept items they can value without having to guess and gold has consistently been a valuable commodity since it was discovered millennia ago. 

How do pawnbrokers price gold jewellery?

When people bring their gold jewellery to a pawn shop, they know how much it cost new and might hope to sell for a price close to what they initially paid for it. It does not work that way at pawnshops or any other establishment that buys old and used gold. 

Pawnbrokers often deal with so much jewellery that they often have to look at every little piece as part of the bulk metal. They might not be able to sell every piece of gold jewellery in the store, even the pieces that are in good condition.

First things first, you need to be sure of what you are selling. Is it real gold? How many carats? Does it have valuable stone? How much does it weigh? To answer these questions a pawn broker will inspect the items, test them to verify purity and weigh the item. The pawn broker will then use the current spot price of gold to determine how much a particular weight of gold is worth. To make a profit, the pawn broker will offer a percentage of that value as a loan or a sale. 

What happens to the gold that pawnshops buy?

Pawnshops either lend money against gold items or they buy the items from customers. If the customer meets the terms of the loan and pays the money back with interest on time, he or she gets her valuables back however if the loan is not related, the customer forfeits his pawned items and the pawn broker can now resell for a profit. As far as gold jewellery is concerned, a pawn broker may decide to sell the jewellery as it is or to sell it as scrap gold. 

Pawnshops don’t always buy pristine-looking gold jewellery, they also buy broken jewellery. Scrap gold is usually sold to dealers who can smelt the gold. A pawnbroker like Brisbane Gold Company who specialise in gold, go as far as smelting their own scrap gold and then reselling it to refineries where gold is separated from the alloyed metal used to make it harder. 

Buying jewellery from an actual jewellery store is expensive which is why a lot of people opt for pawnshops. A pawnbroker will have the jewellery cleaned or refinished, he may even have that broken clasp fixed and then display the jewellery in the shop for those who are looking to buy something for themselves or for others.