How To Prepare Your Gold For Sale

Key Takeaways:

• Gather documentation, know the current bid price, and understand purity before selling your gold.
• Choose the right selling channel—online buyers, dealers, jewelers, pawn shops, or auctions—based on your priorities of speed, value, or expertise.
• Watch out for risks like scams, lowball offers, and sales pressure, and remember that profits from gold sales are subject to federal and often state capital gains taxes.

Gold prices have been nothing short of stratospheric in the past few years. Even those who purchased their gold recently may be considering selling it for a profit.

If that description matches you, then you’ve come to the right page. The information below contains the various considerations you need to address before you sell. Here’s how to prepare your gold for sale.

What to Do Beforehand

The first actions to undertake are mostly educational and informational.

• Gather documentation: Get your ownership proof documents together regarding the gold that you plan to sell. Have as clear a chain of title about it as you can, as doing so will yield additional authenticity (and value) to your item(s). Try to have as much proof about any rare coins you plan to sell, as these are much more specific in terms of their features, authenticity, and condition than bars or rounds of gold are.
• Know the current market price: The price of gold has been in the news lately due to its record-breaking rise. However, you need to make sure you keep an eye on each day’s price, as you will lock in your sales price based on where things stand. The only thing to bear in mind is that it is not a fixed price, so it’s best if you have a real-time tracker – like the one at the top of this page. Note: You want to use the bid price, not the ask price, as your basis. The ask often doubles as the spot price, but the bid is always going to be slightly lower. Consult our gold chart page to find the bid price updated in real time.
• Understand your gold’s purity: If your gold’s purity level is recorded in terms of percentage, then it’s not hard to understand. On the other hand, many gold pieces have their purities expressed in terms of karats, which you’ve probably heard but may not fully understand. The karat system is an expression of purity where the highest purity is 24. So, whenever you see a gold purity level in karats, simply divide the number by 24 in order to find the more traditional decimal or fractional percentage.

Should I Clean My Gold?

You should not attempt to clean your gold. First things first, do not attempt to clean your gold coins. We have an entire page covering whether or not to clean your coins, but the long and short of it is that you are almost certain to damage and devalue them. In fact, the two primary coin grading services (PGCS and NGC) can detect cleaned coins and will refuse to grade them on the spot.

However, even gold bars and rounds are best left unwashed. If you must, use only distilled water and the mildest of soap, as even the minerals in tap water can leave damage in the surface of the bullion gold and (potentially) decrease its value. Gold does not corrode or tarnish, so almost any discoloration is surface level. Before you do anything else, try to wipe it down with a very light cloth – or just leave it alone and don’t take a chance.

Where to Sell Your Gold

Now that you’re prepared to sell, let’s walk through the different options for where to sell your gold. The main idea about where you decide to sell is that it depends on your highest priority for the sale.

So, think about what traits are more valuable to you in a seller: speed, value, security, or knowledge. The different options below offer different combinations of these traits, so you’ll have to choose the one that best fits your needs.

• Online gold buyers: Online gold buyers are likely to offer the best values you can get on nonspecific gold items. Reputable dealers usually insure your shipments to them as well, so long as you follow their shipping instructions to the letter. However, selling to an online gold dealer is certainly not as fast as selling in person, and you may not be able to take advantage of the online buyer’s knowledge base as easily and interactively.
• Precious metal dealers/coin shops: These dealers are retail outlets that are available near to your residence or normal area. While they can offer competitive prices, the reality is that they are not pressed by competition the way that online dealers are. However, there’s no denying that you can get an expert opinion about your specific gold in one of these locations, and you can have the money from your sale in hand within a few minutes.
• Local jewelers: Jewelers in your area can also make an offer on your gold, but the offer will likely be no more than 40% – 60% of the melt value of the gold itself. Furthermore, a jeweler may not possess the knowledge to understand the true value and markers associated with specific pieces, especially if they are rare coins and the like. However, if you do have gold pieces that are, for lack of a better term, “pretty,” then you may be able to get more in their sale – and regardless, you’ll be able to have cash in hand almost immediately when you close the deal.
• Pawn shops: Pawn shops are certainly another local option, and of the group, you cannot sell your gold faster anywhere else. However, understandably, that speed comes at a tremendous price – you will probably receive no more than 50% of the melt value of your gold, and sometimes quite less. Furthermore, you do not enjoy any particular expert knowledge at a pawn shop, and, for that matter, any knowledge the pawner possesses may be used against you. Security is a bit questionable, but the reality is that you have the widest and nearest selection of ready buyers if you use a pawn shop.
• Auction houses: Finally, if you have a vintage or rare (or both) coin that you wish to sell, your best bet to maximize your value likely rests with an auction house. Auction houses know their stuff – they undoubtedly have a coin expert on staff – and can do a certain amount of verification if necessary. They also aren’t really quoting a price or trying to carve out profit from you – it’s in their best interest if the coin(s) sell as high as they can, as auction houses profit from commissions drawn from the sales themselves. However, if you have any kind of time constraint on your need to sell, auction houses may not be for you. You should also watch out for any high commissions – shop around, and beware a commission rate that consumes most of your profit.

Red Flags and Risks

We mentioned that some pawn shop owners may be inclined to use their knowledge of gold values against you. To be frank, you may run into villains no matter what avenue you choose to sell your holdings.

As with anything of value, fraudsters come out of the woodwork to try and take advantage for a quick profit. So, here are some tips on things to watch and observe before you commit to a sale.

• Don’t just get one offer: Although the first offer that you receive may be the one you end up taking, the reality is that you should shop around and see what offers you can get on your gold. It may end up that the first was the best, but you won’t know that without getting a couple of additional offers.
• Seek transparency: The dealer you select should be open about what factors he or she uses to arrive at your offer price. They should indicate the bid price they used, along with the premium that they attached to it. If the dealer acts as though they’ve conducted a seance to arrive at your offer or claims some sort of proprietary process that they can’t share, be very concerned and consider doing business elsewhere.
• Avoid sales pressure: You should never feel pressured to sell your gold. The dealer should present the offer, then let the ball reside firmly in your court. If anyone tries any sales pressure tactics, like urging you to close the deal or acting as though there’s a fast time limit on the offer (where the offer depends on your quick action, not the quality of your items), you should consider abandoning the deal altogether.
• Confirm credentials: Even if an offer seems promising, consider the reputation of the dealer who is making it. Whether you are selling online or in-person, you don’t want to do business with someone who has a checkered service history. Look up online reviews, ask around discussion boards like Reddit, and investigate the dealer’s Better Business Bureau ratings and reviews so that you know that the offer is made in good faith.
• Beware of scams: Finally, be aware that scams exist throughout the precious metals industry. If you are selling your gold to someone that isn’t a professional in the business, be especially cautious, as they might be attempting to use your perceived lack of knowledge against you. Even with the pros, you should be wary about any sales offers that are overly complicated. If they want to pay you in multiple ways or at different times, or if they require you to ship your gold without proof of funds or payment ability, stay away. Selling gold may be a high-dollar deal, but it should always be simple.

Taxes on Selling Gold

No matter how you sell your gold, you will owe capital gains taxes on any profit you realize. Now, let’s be clear – capital gains taxes only take money away from gains, so if you are selling your gold at a loss, you won’t owe anything more in tax.

If you do sell for a profit, you will have taxes to pay. First, let’s talk about the federal taxes on gold sales.

The first thing to know is how long you’ve owned your gold. If you sell it within a year of acquiring it, then the profit just counts as income and gets taxed along with the rest of your income for the year.

On the other hand, if you have owned it for more than a year, you will be subject to federal capital gains tax. The IRS considers gold to be a collectible, which makes it eligible for a tax rate as high as 28%. The only exception is if your regular income tax rate is lower than 28%, which would make it taxable at the lower rate.

Now, on the state level, you will likely have to pay the capital gains tax prescribed by your state’s laws on the matter. However, if you are a resident of the following eight states, your government does not tax income, so you are exempt from additional capital gains taxes on your profit:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Wyoming