Gold Archives

Gold and Diamond Jewelry is a Bad Investment

Gold and Diamond Jewelry is a bad investment. It’s such a simple statement, but many do not understand just how bad of a hit you are going to take when purchasing jewelry.

The jewelry market is ten times worse than a used car dealer. Jewelry dealer’s job is to sell you something for literally at least double the price of the actual value. They will assure you of it’s value through certificates of appraisal which might as well say it’s worth “clown bananas and Nyan cat moon rainbows.”

Jewelry is StupidMoon Rainbows

I came across something that really makes the point. A local craigslist’er sells gold and diamond heart pendants. These retail from anywhere from $99 to $299 in store , and the seller asks for about $100 to $125 for these pre-owned pendants. This sounds pretty fair? Oh heavens no.

Jewelry is a Scam

How much are these pendants actually worth? About $25 dollars. That’s right, $25 dollars.

Don’t believe me? Here is a the ultimate fair market test – a completed eBay auction. $28.99 with 4% cash back.

jewelry is a waste of money

This eBay auction is not an outlier at all. I am constantly reminded of how worthless jewelry really is thanks to eBay. Sad part is, this is virtually scrap value! 2.2 ounces of 10k would be worth $51.11 at current market prices, and assuming it is half gold and half diamonds it would be worth about $25.55 in scrap gold alone!

Remember these pendants sell for about 600%-900% more in retail stores. The best part is if you had it appraised, I’m sure a jewelry store would assure you it is worth hundreds even if you show them the eBay auction (try it yourself).

The scam continues and America has yet to wise up to it. If you don’t buy your girlfriend jewelry, you’re a terrible man according to what I’ve been told via media. My girlfriend deserves the best and I don’t mind if it costs a little bit of money to achieve that, but the jewelry industry is disgusting.

On a side note to all of this, I find it interesting that so many people are engaged in gold scrapping and salvaging. People will salvage anything from jewelry to CPU and motherboards from old PC’s (which contain gold). Sure they have to use $10 of chemicals that most likely cause rectal cancer to get that $100 of gold from the 400lbs of motherboards they paid $40 for, but I think it’s awesome. The best part is the equipment  — I have a crockpot and a coffeemaker in my home and this device below is up for $299 dollars! I think I’m going into the jewelry and/or gold salvage equipment business. What a world we live in!

gold salvage kit

Gold is Still Arguably Cheap.

Gold might not be as overpriced as you think. This is opinion of course, but let me show you why this is my opinion. Let’s start with the fact that gold cost only $35.94 on average per ounce in 1970 (41 years ago) and the 70’s is when all of the gold speculation really started.

You should take a look at the chart below for the last 40 years or so with gold.



As it stands today if you have invested in gold 42 years ago and held until today you would have a return of 4496%. This equates to 1.0954^42. In other words a 9.542% return every year. So gold averages out to a return 9.542% every year? No, only during these 42 years. Remember that the 70’s is when all of this gold speculation started.

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goldjewelryYou have scrap gold to sell? Do not sell it to an online money for gold program and/or send-away program.

The VAST majority of these people are scammers. I understand that a person has to make a markup and that these dealers and programs need to make a living, but their offers are commonly flat out criminal.

Many case studies have been done on this subject, (with a couple news videos below as examples) that prove that the offers by these dealers/programs are usually a joke.

How do they get away with this:

  • Under-estimate your gold’s weight
  • Under-estimate your gold’s karat (purity)
  • Offer a fraction of the true value of gold
  • They assume you have no idea how much gold you have, what quality the gold is, or even what gold is worth.

As one of the videos points out, (a major gold buyer) had a D rating with the BBB (which is now a B-). What is more embarrassing is when you deny their offers, they tend to increase their offer. Also some of them go so far to insult your intelligence that they offer you “BONUS cash awards.” The gold is actually $350 (which they usually claim is “top-dollar” ) but they can give you a bonus $100 or a $50 gas card because they have just lost their minds with generosity. The minute someone tells me there is a bonus on selling a precious metal investments – I view them as a con-artist.

Make no mistake, that these sites and programs are scammers. They are criminals and some are making more money than you can possibly imagine.

Great Videos:

What is an alternative? Go to multiple local jewelry dealers and/or gold buyers and get multiple quotes. Still not happy with their offer? Record what they tell you about carat and weight, then sell it on eBay as gold scrap, people tend to get about 80 to 95% of what gold is currently going for on eBay. Downside to eBay is the chance of a scammer trying to obtain your gold or challenge the quality of gold and some how work buyer protection in his favor to get their money back. Buyer protection is too strong.

In conclusion, it might be worth giving up 10% or even 20% of your gold’s value to a local jewelry dealer, but do not fall for one of these online dealers and/or send away programs. I hope these criminals will face justice soon.

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