Stock - Gold
Window display of jewellery shop in Dubai. Possible to profit from buying or selling your gold jewellery? Yes, here’s how.. Image Credit: Bloomberg

Dubai: Buying or selling gold can be a way to make some extra cash, be it in the form of coins, bars or jewellery. The yellow metal can be a worth investment, when buying, selling or investing at a profit.

In most countries, as the value of currency weakens, the price of gold tends to go up. However, how do you buy gold at a profit if prices have been soaring off late and increasing almost every day?

Most gold jewellery buyers worldwide refuse to budge given that prices are currently very expensive. But whenever prices start a downward slide, there is always a frenzied buying of gold jewellery at different shops in the UAE.

Expatriates in the country have a long tradition of hoarding gold jewellery as a form of investment or personal saving. It is their common belief that storing jewellery offers more security than keeping cash in the bank and is an effective hedge against inflation.

For many gold aficionados, the precious metal can provide much-needed relief during emergencies, such as when a family member needs urgent medical assistance, the daughter’s school tuition or the mounting household bills need to be paid.

Many find gold much more appealing than other luxury items due to the metal’s unique attributes: perceived longevity, purity and value.

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Window display of jewellery shop in Dubai Image Credit: Antonin Kelian Kallouche/Gulf News

How do I buy gold jewellery at a low price?

The first thing you need to do when trying to deal with gold jewellery is knowing how to buy high-quality gold jewellery at the lowest possible prices.

Although gold prices are always soaring, there are periods when the prices plummet. With these changes taking place within days or even hours of each other, you may not know when to buy gold.

You’ll find yourself wondering if you should start selling the gold jewellery when the prices are on the rise or just how low you would have to let the gold prices drop before you can buy gold jewellery.

These are important factors to consider because the price and value of gold often rebound, but even when it does, there is often the risk of you making a big loss.

Let’s understand how to buy gold jewellery at the lowest possible prices to be able to profit off the sale of the jewellery later, when the prices rebound.

However, before we do, how about a look at some of the basic terms you should be familiar with, as these are important terms whether you are a buyer or a seller of high-value gold jewellery.

Glossary for gold: Few terms to familiarise yourself with
• Hallmark – The hallmark sign-on jewellery can be defined as the small stamp of authenticity that’s present on most high-value jewellery. This small impression is used as a certification which shows that the piece of jewellery actually contains the amount of pure gold it says it does. Hallmark signs are common for precious metals such as sterling silver, gold, and platinum.

• Karat – Karat or Karatage is the fractional measure of pure gold in gold alloys. The purity level is measured out of 24 parts. An 18-Karat gold ring, for example, is gold jewellery that contains 18 parts of pure gold. The remaining six parts are often made of other metals or metal alloys. For such gold rings, the percentage of pure gold is 75 per cent. The other hallmarks you need to be aware of include – .999 for 99.9 per cent or 24-Karat gold; .916 or 91.6 per cent for 22-Karat gold, .750 or 75 per cent gold for 18-Karat gold; .585 or 58.5 per cent for 14-Karat gold, and .417 or 41.7 per cent for 10-Karat gold.
Stock Dubai Gold
Using induction and high frequency melting, technicians can control both temperature and atmosphere in casting chambers Image Credit: PHOTO Virendra Saklani

When and how should I buy gold jewellery?

Because gold is such a valuable precious metal, there is always a market in which you can sell your gold in any form, whether as gold coins and bullion, gold jewellery, scrap gold, or other gold objects.

If you have gold jewellery that you are hoping to sell, it is beneficial for you to know how much your gold might be worth before you try to sell it.

To be able to buy gold jewellery affordably and to eventually make a good profit from future sales, understand the following in your purchase journey to help you gauge whether you are getting a fair price for your gold. This will help you avoid gold buyers that may try to take advantage of you.

Basic steps: Research and determine the best gold purity for you and inspect the jewellery
Researching gold means familiarising yourself with the different purity levels of gold; you should also determine what the most valuable gold purity level is. 18-Karat gold, for example, has 75 per cent pure gold, and it’s one of the most valuable types of gold you could invest in.

You may also want to think about plated gold options – these are both created from the dipping of base metals into molten gold, creating a coating. Though cheap and almost invaluable, you can still find great value from some of these jewellery options.

Every time you come across a piece of jewellery at an upmarket (credible market), you should first inspect that jewellery. Look out for the hallmark sign showing that karats first and confirm the hallmark signs.

Dubai Municipality, through the Dubai Central Laboratories (DCL), regulates the gold, silver, platinum and gemstones trades in the emirate. They have a facility dedicated to inspecting the purity of these metals.
Stock Dubai Gold
Staff with Gold bars at Meena Jewellers in Gold Souq of Dubai Image Credit: Ahmed Ramzan/ Gulf News

How do I determine the value of my gold?

The best way to value gold jewellery is to value the pieces. Determining the exact price of your gold items can be tricky because there are factors other than the market price of gold that help determine the value of an object.

However, no matter what type of gold objects you have, you can count on them to at least be worth the market value of the gold from which it is made. Knowing the below will help you get an idea of the value of your gold jewellery before trying to sell these items.

Equation to determine the price of your gold

To get a better idea of the dollar value and the corresponding dirham value of your gold items, you can use the gold price equation. Make sure you follow these steps to get an accurate assessment using this equation:

Start by looking up the current market price for gold. The market price is constantly changing, so make sure you look online for the current price. The price is given per ounce which contains 31.1 grams. Therefore, you can get the current price per gram by dividing the price per ounce by 31.1.

To determine the price estimate for an individual piece, you will need to factor in the Karat. Divide the Karat number by 24 and multiply this number by the price of gold per gram that you determined in the previous step. This number will give you the cost of gold per gram for that specific Karat number.

Stock Dubai Gold
Staff with Gold bars at Meena Jewellers in Gold Souq of Dubai Image Credit: Ahmed Ramzan/Gulf News

Next, you need to multiply the cost of gold per gram for that specific Karat by the weight of the gold piece in grams. Weigh your gold piece using a jeweller’s scale, or food scale if you cannot get a jeweller’s scale. Multiply its weight in grams with the cost per gram for its Karat number that you determined in the previous step.

For example: if the current market price of gold is $1,500 (Dh5509.50) per ounce. Divide 1500 by 31.1, the number of grams in a troy ounce. The price per gram is $48.23 (Dh177.15).

If your jewellery piece is 14-Karat, divide 14 by 24 and multiply this number with the price per gram: 14/24=.5833, 48.23 x .5833=28.13, this makes $28.13 (Dh103.32) to price per gram for 14-Karat gold.

Weigh your gold piece and multiply its weight in grams by the price per gram for the karat. If your 14-Karat piece weighs 5 grams, multiply 5 by 28.13. This equals 140.65, which is the estimated price for a 14-Karat gold piece that weighs 5 grams in a market in which gold is valued at $1500 per ounce.

Checklist when buying or selling gold: Key factors to keep in mind

1. Know that the precious metal prices are quite volatile, don't act on impulse

Like any other investment, the value of the precious metals is highly volatile. However, you should be careful about the decisions you make and don’t be too fast to act when the prices dip too fast; the fluctuation is pretty much second-nature in the jewellery business, gold retailers explain.

You should evaluate the pieces of gold jewellery carefully, especially the ones you are willing to sell. Bear in mind the emotional value of the jewellery too, and only sell the pieces of gold jewellery when you are sure that they attract great value and will make great profit margins.

Stock Dubai Gold
Stock Gold Dubai jewellery Image Credit: Antonin Kelian Kallouche/Gulf News

2. Getting the jewellery appraised

As mentioned above, during the purchase process, you should get the jewellery appraised. This is important for the highly intricate, antique pieces of jewellery, especially the ones that are paid for by weight. For these appraisals, contact reputable and independent jewellers.

3. Determine the value of the jewellery’s design versus. the material of the gold jewellery

Often, the scrap value of jewellery might appear too low, but when the scrap is melted into bullions, you could get much more value selling these bullions. But, just check the hallmark stamp on these metals before you test the purity level of the gold.

In other words, you must know exactly what you have. This is the most crucial consideration for you to bear in mind because the gold jewellery in your possession is hardly ever made of pure gold.

Even solid gold is made of impure gold, which means that whether you are looking to sell 10-Karat, 14-Karat, or 18-Karat gold jewellery, you must have an understanding of the exact composition of the jewellery. The gold alloys will have gold in different percentages, and the higher the percentage of pure gold, the higher its value.

4. Find reputable buyers

Once you’ve determined the value of the gold jewellery, you’d have to find a reputable buyer to sell to.

For starters, the buyer must have a license to buy the gold, preferably in the state you live and run your business from. Check out their membership in reputable associations, registration, and trustworthiness.

What this means is that before you settle on a buyer, you must take time to research and shop around for the jewellery. Ask for bids from multiple companies and only settle on a buyer once you are sure about doing business with them.

5. Document and check the reimbursement policy

You can do this by documenting and photographing everything necessary about the jewellery. Check the reimbursement policy for the jewellery in case of losses, and also get an appraisal in case of high-value pieces of jewellery.

6. Monitor the real-time market price of gold

To sell the gold appropriately and for a good profit, you must know the actual market prices for gold. As mentioned above, the prices fluctuate pretty much every day, which means that you should do market research for gold every day.

Know the risks: Buying gold jewellery has some downsides

However, is jewellery the best way to make money out of gold? Can it provide returns higher than stocks or property? Will the bracelet you bought from earn you considerable profits if you sell it when the gold price goes back up?

Unlike gold coins and bars, jewellery carries additional charges that makes it more expensive to buy in the first place. The additional costs also mean you may not be able to recover your capital even when the prices go up.

Jewellers normally collect charges to recover the labour cost of crafting a shiny necklace, ring or bracelet out of raw gold. Then there are ‘wastage charges’ to cover for the amount of gold that is wasted when the precious metal is cut, melted or soldered.

When it’s time to ‘cash’ your most prized possession, your jeweller might not repurchase it based on the spot gold’s current market rate, because he will likely quote the wholesale rate or deduct the making and wastage charges from the price. The wear and tear on your jewellery can also depreciate the resale value.

It is important to take these considerations into account before choosing jewellery as an investment vehicle.

If you really have to buy into the craze, the least you could do is ask your vendor if they can guarantee that they will repurchase the item without cutting the making and wastage charges. Opting for unique design and good quality might also help fetch a good resale rate.

So, before buying gold jewellery, decide on the kinds of gold you would be buying and selling. You should also make up your mind on the kinds of gold you want to be dealing in.

Do you want to be buying outdated jewellery or broken jewellery, so that you can refine and resell? Wedding bands or brand new gold jewellery for resale, or would you rather deal in raw gold?

You must also be able to decide on the people who would buy your gold. Examine the market to see where demand for gold comes from and who your competitors are selling to.

You can also form an alliance with jewellery shops in your area so that you can supply them gold which they can also sell for a profit. You could also look out for gold wholesalers who would buy them in bulk from you.