What You Should Know Before Selling Gold?
- February 22, 2023
- Posted by: editor
- Category: Gold
Understanding how pawn shops evaluate your gold jewelry is essential for making an informed decision.
Want To Turn Your Valuable Gold Into Cash? What Are The Options Available?
|Option 1: Sell gold|
|Option 2: Pawn gold|
With that, people asking questions such as "which option is most suitable for me?", "should I sell my gold?", "or is pawning gold wiser?", "what are the actual differences between these two options?", "how much cash can I get?" and various other related questions.
Take a moment, step back, and try to calm down. Let us answer all your questions as best as possible.
Firstly, let's see what 'Sell Gold' means, what 'Pawn Gold' means, and what the advantages of pawning gold are.
Clearly, selling gold means selling your gold items, gold bars, or gold coins in exchange for cash. Selling also means you relinquish ownership of your items. In other words, you will no longer own the items you sell and will not get them back. This issue may become a problem, especially in cases involving family heirlooms or items with sentimental value.
Furthermore, selling gold means losing the gold items for sale if you encounter other financial emergencies in the future. On the other hand, if you pawn, you can use it as collateral in the future, as long as you repay the loan and the applicable interest before the due date and redeem your gold.
Pawn gold means obtaining a loan based on the collateral of your gold items. The valuable items you possess serve as collateral to the pawnshop if you are unable to repay the loan.
Before we explore the advantages of pawning gold, please note that the advantages discussed are not necessarily the advantages of pawning gold compared to selling gold. Instead, they also include the general advantages of pawning gold.
Advantages of Pawning Gold
The process of obtaining a loan through pawning gold is considered immediate - a clear advantage compared to personal loans from banks and other financial institutions, which may take several days to approve.
In addition, obtaining a loan through pawning gold does not involve any credit checks on the borrower. There are no verification processes such as checking salary slips or bank statements. For the pawnshop, the valuable items you provide as collateral are sufficient to approve the loan you wish to take.
Moreover, even if you fail to repay the loan and the interest and redeem your gold items, your credit score will not be affected. In all pawnshop loan transactions, the worst-case scenario is that you will lose the gold items you pawned.
Another interesting feature of pawning gold is that when the gold market price rises, you can obtain additional cash through the"Add Loan" process.This means that due to the higher gold price compared to when you pawned your gold, you have the option to receive extra money based on the reassessment calculation using the higher gold price.
For further information on the comparison between pawning and selling gold, please refer to our blog article on PAWNING GOLD VS SELLING GOLD.
Important and Useful Additional Information
Gold trading is subject to a "spread."
The term 'spread' is usually referred to as the 'markup.' Although the meaning is equivalent and accurate in both languages, 'markup' is less suitable when used for gold. Markup implies a decrease in value, while gold is said to be inflation-proof. Therefore, the original English term 'spread' or 'spread margin' is preferred among gold investors. 'Spread' is the percentage difference between the selling price and the buying price, just as we deal with money changers. Those who are familiar with currency exchange will know that the 'Sell' price is always higher than the 'Buy' price. The higher the spread, the "more expensive" it is to trade with the vendor, while a lower spread is the opposite.
As an explanation, when you buy gold, the price you need to pay is the 'Sell' price, whereas when you want to sell gold, the referred price is always the 'Buy' price’.
So be cautious, it is to trade with the vendor, gold spread.
Understanding the Value of Gold
Before deciding whether to sell or pawn gold and gold items, you should know their value. Only then can you determine the actual market value and the amount of money you can obtain through your transactions with the pawnshop.
In general, you should understand that the price of gold depends on its purity, with 24-karat being the purest, followed by 22-karat, 18-karat, 15-karat, and so on.
For further information, please refer to our blog article on GOLD TYPE VS GOLD PRICE.
Is selling gold better, or is pawning gold wiser?
In essence, there is no definite answer to this question. Gold, as an asset, has its market value and is traded openly, similar to stocks. Therefore, the price of gold fluctuates due to supply and demand, political climate, and purchasing power. Selling gold, therefore, will also yield different returns (cash) depending on these factors.
Determining whether to pawn or sell depends on whether you need a large sum of money or want to keep your gold as collateral for other short-term loans in the future.
The best answer can be found based on your needs, preferences, and the situation at that time. The best offer, in terms of financial value obtained (immediately), is undoubtedly found in the option of selling gold. On the other hand, pawning gold favors long-term needs.
Have you decided to “Pawn” or “Sell” your gold?
If you just needed some fast cash, and do not wish to lose your gold so you can re-use it in future, it will be the best to “Pawn”. However, if you have confirmed that you do not want your gold item, it will be better to sell it off. Of course, it is still up to your comfort.