Selling Gold Jewelry – A Good Idea?

Selling gold jewelry has become quite a big business recently. I’m sure you’ve seen the TV ads encouraging you to call and pawn off your gold jewelry for some cash.

It’s tempting, for sure. After all, gold has been sitting at more than $1,000 an ounce for a long time now.

Most of the sales pitches rest on a couple key points. The first key point is that you might need cash fast. Selling your gold jewelry could quickly raise funds.

The second key point is a suggestion that gold prices might fall. This creates some urgency for the potential seller: “How long will gold prices stay above $1,000 an ounce? I better sell now while I still can.”

Where Is Gold Headed?

The reason gold seems to be increasing in value is because the dollar is declining in value. So gold is a hedge against the dollar. It is a way to preserve your wealth.

By getting out of gold and getting into dollars, you’re moving out of an asset that is appreciating and getting into an “asset” (the dollar) that is depreciating.

My opinion is that gold is headed higher. I would not be surprised if we see it surpass $5,000 an ounce by 2012.

Of course, I have no magic ball, so I have no idea what the future holds. But generally speaking, I expect the price of gold to continue to go up — not go down.

Selling Gold Jewelry – Timing the Market

You can never know for sure when the price of something has peaked. So your decision to sell your gold jewelry has to be based on your own in-depth research and the urgency of your need for cash.

For the time being (early 2010), I would personally wait to pawn off my gold jewelry. I would attempt to sell other things first: furniture, electronics, appliances, cars, etc.

Again, my logic is based on the simple fact that I believe gold will continue to appreciate. Other possessions like cars, gadgets, and so forth will continue to depreciate.

It’s almost always better to sell something that is losing value instead of something that is gaining value. With that in mind, my personal belief is that selling gold jewelry may be a bit premature at this point.