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Ask Julie

Putting Your Money Where Your Mouth I

Every weekday since Friday, September 12, 1919, with very few exceptions, at precisely 10:30 a.m. and 3 p.m., the five members of the London Gold Pool, an elite group of businessmen from five of the most prestigious financial firms in the world, talk on the phone for approximately 10 minutes.
At the end of their call, with the announcement of “we’re fixed,” the price of gold is set for the world. This is what is called the London Gold Fixing or Gold Fix.
Once fixed, the price of gold is published in U.S. dollars (USD), Pound sterling (GBP) and European euros (EUR).
The official website of the London Bullion Market Association (www.lbma.org.uk) publishes a chart twice daily, morning and afternoon, with the price of gold in these three currencies. The a.m. and p.m. announcements represent the price fixed at the two phone meetings by the five panel members.

The London Bullion Market
Association
For investors, gold has had a special appeal over time due to the resilience of its worth during times of inflation and economic crisis. Today, investing in this precious metal has gone beyond the realms of traditional means, such as the purchase of bars, coins, certificates, Exchange Traded Funds or shares in mining companies.
Gold parties have taken the place of Tupperware or Avon parties, and the guests are lining up to turn in their gold trinkets to hosting jewelers in exchange for cash. And, who can blame them? The price of gold has exceeded $1,000 an ounce this year, luring customers to dig deep into their drawers for coins and pieces of jewelry in an effort to melt them down rather than keep them.
But, it’s easy to get burned in the gold-selling business, and before you accept any offers in exchange for the contents of your jewelry box, you should have an idea of what you are selling. You may have your piece appraised by an independent jeweler or, in the case of coins, by a coin dealer who is a member of the American Numismatic Association, but here is a practical guide to help you reach an approximate value even before you have it appraised.

The Language of Gold
There are two components that affect the price of any gold piece: weight and content.
Weight: Most gold transactions are based on what is called pennyweights. Twenty pennyweights, or DWT, are equivalent to one troy ounce of gold, the official unit of measurement used by the London Gold Pool. To find out how much you should receive by for your gold, you need to convert the cost of a troy ounce into its equivalent per pennyweight. Here is an example of how to do that math. Let’s say that gold is selling at $900 a troy ounce. Since a troy ounce equals 20 pennyweights, divide $900 by 20 and your result will be $45. That is the value per pennyweight.
The next step is to find out how much your gold weighs. If you have a jeweler’s scale, great! But if you are using an ordinary kitchen scale in ounces, you need to convert them to pennyweights. Here’s the equation: 1 kitchen ounce = 18.23 pennyweights. Multiply the number of ounces by 18.23 to find out how many pennyweights you have. The next step is to multiply the current price per pennyweight (in this case $45) times your pennyweights.
Content: The values we discussed apply to a 24 Karat gold piece, which is considered to be pure gold. But if the content of your jewelry is 18K, 14K or any other (dental fillings, gold teeth, bridges and crowns are usually 16K), you need to adjust your price accordingly. The World Gold Council (www.gold.org) offers a table that can help.
If you follow these steps, you should have a pretty good idea of the worth of your wares, but don’t forget to factor in the buyer’s commission, which can range between 10 percent and 30 percent of the final price. This cost is negotiable, so compare before you accept payment.

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