Rule of Thumb in Calculating the Cost of Gold Jewelry

Author: Susanna

Nov. 28, 2023




Tags: Timepieces, Jewelry, Eyewear

So Many Questions About Gold Prices


What is the cost of gold jewelry? How does the cost of gold jewelry compare to the price per ounce of gold on the metals market?
Are rings more expensive by weight than chains? What is retail markup? What makes one type of gold jewelry more expensive than another?

Here at Calla Gold Jewelry we get asked and try to answer all kinds of jewelry questions. With help from my mathematically happening husband Jeremy, we take on these questions!

Is There a Rule of Thumb to Predicting the Cost of Gold Jewelry to Buy?

Is there a rule of thumb a person can use to calculate the cost of a 14k piece of jewelry? I wish it were that easy. Let’s break it down in to what we can figure out.

24kt vs. 14kt.

24k gold is 100% gold. Why the number “24”? All you need to know is it’s an ancient story having to do with kings and seed pods, best left for another time.
Do know this: 14k gold is 14 parts real gold and 10 parts other metals, or expressed as a percentage, 58% gold and 42% other stuff. 18k gold is 75% gold and 25% other junk.

Ounces vs. Grams

Unfortunately, pure gold is typically sold by the ounce while karat jewelry (kt.) is usually sold by the gram. Thus, we have to convert ounces to grams to find out the cost of the gold in a particular piece of jewelry.
One troy ounce equals 31.1 grams. If pure gold is selling for $1300 per ounce in the metal markets, then one gram is going for $41.80 ($1300/31.1g).

"Give Me a For Instance"

So let’s say a particular 14k gold chain weighs 20 grams. Remember, only 58% of the weight is pure gold. The other 42% is a conglomeration of other metals. (Called alloy metals). So: 58% of 20g = 11.6g. In other words, out of that 20 gram chain, only 11.6 grams of it are pure gold. And with gold at $1300/oz.—or $41.80/gram—the gold in the chain would be worth $484.88 ($41.80 x 11.6 = $484.88).

This is the Melt Price

This value (the $484.88) is what is known as the “melt price” of this particular chain.  The “melt price” refers to the actual price that your jeweler would receive from a refiner if they chose to melt it down and just be paid for the value of the gold.

The melt price, like the gold price, changes on a daily basis, but as long as gold stays stable in price, it will pretty much remain the same for any given period of time.  Keep in mind that the melt price does not take into consideration any other factors, such as labor to create the piece, any stones that may be set into the piece, or any margin for profit that will be added on at the point of sale.  We’ll discuss these points below.

Three Reasons it Costs Way More in the Store

But wait! In the store that 20 gram chain is selling for $1,500.00 What’s up with that?
1. Our calculations up to this point haven’t included the cost of the other metals.

2. We haven’t figured in the cost of labor to make the chain.

3. We haven’t bumped up the price to a retail level. So far, we've been figuring things out on a beginning level.

Explanation With Lots of Math!

What this means is that if the 20 gram chain is selling for $1,500.00 and $484.88 is the cost of the gold, the other $1015.12 ($1500.00 - $484.88 = $1015.12) includes the cost of the other metals, the labor, and the jeweler’s profit. What percentage is the cost of the other metals? The labor? And the markup from the jeweler? Unknown!

All I can tell you with certainty is that if pure gold is selling for $1300/oz. and the weight of the 14k chain is 20 grams, then the melt price of the  gold is worth $484.88. There is no way to know what the jeweler paid for the chain from the manufacturer. Furthermore, we don’t know what gold was going for at the time of purchase. The jeweler might have bought it when gold was at $1200.00 per ounce. Or $1800.00 per ounce!

Gemstones Add a Level of Complexity

Finally, we’ve only talked about the gold. If there are gemstones in the piece… Yikes! So for that reason we'll just speak to gold-only jewelry in seeking a rule of thumb.

"What Should I Expect the Markup to Be?"

To have a rule of thumb on what mark-up to expect, think a minimum of double. If the cost of a chain is $500.00 expect to pay $1,000.00 or more. A machine made chain will have a cost of the gold, plus alloyed metals, plus labor to make it.

Earrings, rings, bracelets, are all more complex to create than machine made gold chains. So the mark-up will be more just for that aspect of your jewelry.

Any retail mark-up of course takes into account rents, marketing, staffing and we just won't go there. Just know that the reason you can't get it at the price the jeweler does is because you aren't buying a kilo at a time from a gold manufacturer.

The Cost of Making Chains vs. Earrings

A popular style of gold chain will be more reasonably priced than say a pair of earring as an earring takes more time and steps to make. Also a company might make 100 pair of earrings in one year, while they make 1,000 pieces of a frequently ordered chain style.

They can make that chain style again and again for years, but the styles of earrings change regularly, and the cost of designing and testing each earring style would increase the overall cost of the earrings as well.

"How Do Designer Jewelry and Custom Jewelry Prices  Get Figured Out?"

If you have a one-of-a-kind custom-made ring created for you, your price to be paid will be greater, than a ring of similar weight and style that was factory made. The cost of a custom made ring includes the time of t he designer to create it, as well as the wax carving or CAD/CAM creation, casting, polishing, setting and adding the special finishes or textures plus any engraving that make your ring unique.

A custom wedding or engagement ring has no economy of scale because it is one of a kind. So expect to pay more for the singular care that goes into its making.

The Bigger the Factory....

The more multiples of that piece of jewelry that are out there in the marketplace, the less you pay by weight for the design and initial set up to make it. That cost has been absorbed by the many pieces made.

You Are an Individual and There's No Rule of Thumb About You

Where you’re getting the "only one" or " a style made just for you," you are paying for a work of art, not something that was mass produced. The fame and popularity of the designer will also have an effect the price you’ll pay for their design work.

There really is no rule of thumb for figuring this stuff out, but now that you are armed with some information, I hope you feel more comfortable when shopping for jewelry and know what to expect.

Get something that is as unique as you are.

Calla Gold

How Much is a 14k Gold Necklace Worth at a Pawn Shop?

Most people know that gold is highly valuable due to its rarity. Many assume that gold has a standard price. However, that's not quite true. The value of gold, especially of jewelry, varies depending on the economy, market demand, the purity of the gold. So, whether you're considering pawning your gold as collateral or selling it outright, do your homework. Once you understand the key factors in gold pricing, you'll be able to identify the best offer from your pawnbroker. 

How much can I get for gold at a pawn shop or jewelry store? 

First, remember that high demand for a product that is in low supply drives up prices. This means the value of gold rises during times when more consumers are buying it (e.g., leading up to Valentine's Day or Christmas). Gold also becomes more valuable during economic strife or inflation as it's considered a safe investment. While currency values drop or crises impact consumer behavior, gold tends to retain its value — and often increases in price. The biggest factor, though, is the gold's purity. The precious metal itself is what holds value. The more your gold is mixed with other metals, the less valuable the piece is. Because gold is so malleable, most jewelry is made from a gold alloy. The priciest gold is 24 karats, which is 99% pure. The karat level refers to the number of units out of a possible 24. Most people's fine jewelry will be 14k or 18k, meaning there are 14 or 18 units of pure gold. 

Here's a quick guide: • 14k gold is 58.3% pure gold (14/24x100) • 18k is 75% pure gold (18/24x100) • 20k is 83.3% pure gold (20/24x100) When you bring your gold to a pawnbroker or jeweler, they will consider the purity level along with its overall condition. Obviously, dinged or scratched gold holds less value. If the piece has other gemstones, that complicates the value. In a nutshell, though, appraisers will determine the volume of actual gold and multiply it by the current market price. Over the past decade, the average U.S. price per ounce has fluctuated between $1160 and $1769. The appraiser will determine the total mass of gold in the piece, based on its purity level. 

For how much can I pawn a 14K gold necklace? 

To illustrate the appraisal process, let's say you have a 14k gold necklace. A troy ounce of gold contains 31.1 grams. If the current gold value is $1500 per ounce, the price of gold per gram is $48.23. A 14k gold piece is 58.3% pure gold. If it weighs 15 grams (a common measurement for gold necklaces), it contains 8.75 grams of actual gold, setting the total gold value at $421.77. Of course, you probably paid more than that, because when you purchase gold jewelry, you're also paying for the labor to craft it, any additional gemstones, plus a retail markup. That applies to pawn shops as well. 

If you don't repay your loan, the pawnbroker will sell the gold — and they need to generate a profit. That means you'll get less than the actual gold value. As a general guideline, expect to get 55 to 75 percent of the total gold value (assuming the piece is in good shape). So, if your necklace contains about $420 worth of gold, a fair offer would be $231 to $315. Another way to calculate it is to reduce the per-gram value by 25-45 percent. While the actual price per gram is $48.23, you'll only get up to 75 percent of that, i.e., $36/gram. 

Is it better to sell gold at a pawn shop or jewelry store? 

As you see, you won't get the full value of your gold when you pawn it. If you're not interested in holding onto the piece, you could sell it. Both pawnshops and jewelers will purchase gold from you. Because the value is based on the market price, appraisers at either place will likely come to a similar valuation. Keep in mind, though, that pawnbrokers are typically not jewelry experts. This can make it a bit more challenging to sell gold pieces with multiple gemstones, gold coins, or rarer gold alloys. Always make sure they're using a special scale for weighing the gold — something like a kitchen scale is not accurate enough. Come prepared with an idea of how much you'd like to fetch. 

How much do Jewelers pay for scrap gold vs Pawnbrokers? 

Some pawnbrokers may be more likely to buy your gold as scrap, meaning it will be melted down and sold to a jeweler. You can also cut out the middleman and sell scrap directly to jewelers. You'll typically get less at the scrap gold price — about 20-40% less than market value — as the buyer will need to pay for melting and refining the gold. Whenever you sell gold to a reseller, such as a pawn shop, you'll likely get lower offers because they will need to market and store the item or resell it to a jeweler. Of course, there are exceptions. A unique piece of jewelry may be more appealing as-is than as scrap. Pawnshops that specialize in collectibles or fashion items may offer more for a full piece than for scrap they'd struggle to sell. It all depends on your location and the shop itself. Warning: if you are selling your gold as scrap, be sure the appraiser doesn't weigh your 10k pieces with your 18k pieces! They'll calculate the lowest value. So, is it better to pawn or sell? That depends on your goals. If you want the piece back, selling is out of the question. 



Assessing and Preparing Gold for Selling or Pawning Measuring Your Gold's Purity 

Not sure of your gold's karat level? 

Concerned it may not be real gold? 

Today's fakes are so convincing that some people have discovered their beloved gold jewelry contains no gold at all! Obviously, you'll want to make sure your jewelry is what you think it is before you take it to the shop. There are at-home tests to detect the purity, but it's best left to a professional appraiser. Be sure to find the market value of any diamonds or other gemstones as well. Can fake gold be stamped 14K or another karat level? It's possible, but it's more likely that the stamp will reveal its actual composition. For example, gold-fill or gold-plated pieces have no actual gold, but they'll be stamped as GF and GP respectively. That said, it's worth testing any piece labeled as 14k or higher, just in case. 

Proper Care of Your Gold 

Gold is quite malleable, so you should never attempt to polish your gold. Only clean it with a damp cloth. Anything else can remove gold from the piece, decreasing its value. And of course, be sure to store your gold properly to avoid dents and dings. Over time, the other metals in the alloy will tarnish. This is especially likely for lower-karat gold. Minimize exposure to oxygen to avoid this. 

Wrapping Up

Gold is a rare and valuable precious metal, but it's quite difficult to achieve market value at a pawn shop or jewelers. That's just the nature of the business. However, by doing your homework, getting multiple offers, and understanding the gold market, you can fetch more cash or higher-value loans for your gold items.


Rule of Thumb in Calculating the Cost of Gold Jewelry

How Much is a 14k Gold Necklace Worth at a Pawn Shop?


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