A large assortment of gold bars and coins against a black background

Understanding the Precious Metals Evaluation Process: How to Estimate the Value of Your Gold

As a precious metals investor or collector, information is the best tool in your kit for making informed decisions about buying, selling, and trading precious metals products. You need to know how to evaluate gold, what goes into the price of buying bullion, and how to estimate what you can get when you sell gold bullion and jewellery.

This is your guide to evaluating precious metal products, including bars, coins, jewellery, and other items made from gold, silver, and platinum.

Getting Started with Bullion: How Do You Know What Gold and Silver Is Worth?

From buying gold bars and coins for the first time to selling bullion products that you inherited, it helps to start with the basics.

The value of any precious metal product starts with three things: weight, purity, and the spot price.

Weight: The weight of the item should be relatively easy to determine. A scale will tell you how much a piece of jewellery or heirloom weighs. If you have a gold bar or bullion-grade coin, the weight should be stamped on the item. There can be some complications with objects like jewellery or watches, as the piece could also include diamonds, gems, or components not made from precious metals of greater or lesser value.

Bullion gold is typically measured in either troy ounces or grams. It should be noted that a troy ounce is not the same size as a standard ounce. A troy ounce is slightly heavier and equal to 31.103 grams.

Purity: Once you have the weight of the product, the purity will tell you how much of the piece is actually made out of gold or silver. Again, investment-grade products will make this very clear. They will have their gold or silver purity stamped on them with a number.

When it comes to jewellery, if you know how many karats the piece is, you can calculate the purity from there, as karats refer to parts per 24 with precious metals.

Otherwise, a local bullion dealer will be able to test to find the precise purity of a metal.

Spot Price: Gold and silver trade on global markets the same way other commodities and stocks do. There are higher asking prices and lower bids, and the current price falls somewhere in between. The spot price is a benchmark taken at specific periods throughout the day.

The spot price is usually used for very large bullion transactions, not the kind most investors are likely to be involved in themselves. However, the spot price is still a good guidepost for estimating the price you can expect to pay or receive when you buy or sell. Below you can find more details about factors beyond the spot price that go into the price of bullion.

How to Evaluate Gold Jewellery

Most of the time, used and broken jewellery can still be sold for a good price thanks to the value of the materials it’s made from. Some jewellers or pawn shops may resell used jewellery at a discount, but that means you will also have to accept a steeply reduced price.

Selling jewellery can be a bit more complicated than coins or bars because it’s not quite as clear what it might be worth. As a general rule, you may be able to get the best deal selling jewellery to a bullion dealer. It’s easier to make money selling gold bullion because it’s clearer how much you can get for it.

As mentioned above, you need to know the weight and gold content of the jewellery. Once you have that information, the spot price can inform you what the piece could be worth. Generally, you will get offered less than the spot price, but the closer you can get to it, the better the deal.

Five South African Gold Krugerrands in a row

How to Get a Gold Evaluation from a Bullion Dealer

When you have unwanted gold or silver, you have a couple of options. The first is an appraisal, where you pay an appraiser to inspect a piece of jewellery and give you an estimate of its value. Appraisals can be quite expensive, and this process is usually reserved for very valuable jewellery that you need covered by an insurance policy.

If you are planning on selling the precious metals, or you’re selling clearly marked gold or silver bars and coins, you’re likely better off with a free evaluation from a bullion dealer.

A bullion dealer will give you a free evaluation and quote what they would be willing to pay you for your precious metals. If you live somewhere with multiple bullion dealers, you can get several quotes to find the best deal.

For those who don’t live somewhere with easy access to a bullion dealer, mail-in evaluations are also an option. When you sell to Global Bullion Suppliers, we post our going rates publicly so you know what to expect. With our mail-in evaluations, we send you a prepaid shipping label that is tracked and insured. We then evaluate the material and give you a quote to purchase it.

We use XRF technology to determine the makeup of metal alloys. This refers to X-ray Fluorescent spectroscopy, a non-destructive technique that allows us to analyze the elemental composition of an object. This allows us to see exactly what the precious metals purity of an object is without damaging it. It is the best way to get the most accurate analysis of metal alloys.

Testing the Authenticity of Gold and Silver

In some cases, you may not be sure whether a coin, bar, or jewellery that is supposed to be made from precious metals is real or fake. Be careful about testing the authenticity of gold or silver at home, as there are some tests that can cause damage.

There is one quick test that can tell you right away if a piece is not made from real gold that won’t harm the piece if it’s real. The magnet test can tell you whether or not a piece of jewellery or a bar is made from a magnetic or non-magnetic metal. Gold and silver are not magnetic, so if your necklace or coins stick to a magnet, there is a good chance it is made from other metals.

That said, the magnet test cannot necessarily tell you that a piece is real gold. Metals like copper, zinc, and lead are also non-magnetic.

One test to avoid is the acid test. Acid testing kits can provide a more accurate estimate of an object’s gold content, but they work by forming a chemical reaction with the metal. It can damage the piece and affect its value.

XRF technology does not harm the piece it tests. You can rest assured that when we evaluate your bullion, our testing methodology poses no risk to your valuables.

Three Credit Suisse half ounce gold bars and a stack of Canadian Gold Maple Leaf coins

Buying vs. Selling Precious Metals: What You Need to know

There is more that goes into the price of precious metals than market factors. One of the more important things you need to understand about bullion is how premiums work.

Premiums on bullion are what the dealer charges above spot price to cover several costs. These include costs like overhead, shipping, insurance, storage, and the manufacturing costs of certain products. Even the plainest gold bar has manufacturing costs, while coins can come with higher design costs.

Premiums are often calculated as a percentage of spot price, but they can also rise and fall with the availability of bullion products. As a general rule, coins tend to have higher premiums than bars due to the higher manufacturing costs, and premiums on silver usually make up a higher percentage of the total cost due to silver’s lower prices.

The important thing to know when you sell precious metals is that dealers won’t repay the premiums when you go to sell. That means you may need to wait for higher prices to improve your profits. It helps to record all of your precious metal transactions, including the date and price, for this very reason.

If you want to learn more about where your money goes and how you can reduce the premiums you pay, schedule a consultation with Global Bullion Suppliers. We can teach you all the essentials of investing in precious metals.

FAQs for Bullion Dealers

Anytime you trade bullion, it makes sense to have questions for a bullion dealer. You want to make sure you’re getting the best value from your investments. Asking these questions can help.

How can you reduce the premiums you pay when you buy bullion?

Bullion dealers will often reduce the price per ounce that you pay when you buy in higher volumes. Sometimes, your payment method can also reduce costs, as credit cards come with higher fees.

How much are you paying in premiums?

Transparency is key to investing success. One very useful piece of information you get when you buy with Global Bullion Suppliers is the price you’re paying over spot. Knowing what our premiums are helps you make an informed decision about your investments.

How much will shipping cost?

Unless you’re buying bullion in person, shipping costs will also be an important factor. Some bullion dealers may offer free shipping on orders over a certain price. This can help you reduce the price per ounce that you pay.

When Is It Time to Sell Your Precious Metals?

The right time to sell your bullion is when it makes sense for you. If you have a better use for the finances or prices have increased substantially since you initially bought it, it may be time to find out how to evaluate gold and see what you can get for it.

Bullion is a great investment for wealth preservation, but there may come a time when it’s served its purpose. Many investors use bullion to pass wealth on through the generations, while others like the reassurance of knowing they have a relatively stable asset that won’t lose value to inflation, like cash.

A gold evaluation will provide an accurate quote for how much you can expect to earn when you sell bullion.

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