There is a reason why jewelry is considered precious and buying jewelry is an investment, not an expense. The simple reason is the return on investment. Jewelry, especially those made of gold, diamond, silver, platinum and other valuable gemstones, can be resold for a profit.
They can also be pawned or pledged as security to get a short-term loan. Rare and exorbitantly expensive jewelry can be used as security for substantial long-term loans. Throughout recorded history, jewelry has been one of the most common assets of royalties, the wealthy and the industrious.
A Brief History of Pawning
The first ever historical evidence of pawning dates back to fifth century China. Buddhist monasteries had a system of pawning, that we call pawn shops today.
However, the concept of pawning predates the pawnbrokers in China. Ancient Rome and Greece had a practice of pledging precious items in exchange for cash or some other items of necessity.
This is not to be confused with the bartering system. In the case of bartering, there is a permanent exchange of items.
In the case of pawning, the exchange is temporary. Ancient Rome actually had laws that governed pawning. People could not pledge their apparel and household items.
This was not the case in England. The English could pawn anything that had some value and if anyone was willing to offer money or some other item in exchange.
In the United States, pawn shops are licensed and regulated. There are state laws with stringent instructions of how pawn shops must operate.
However, there is laxity in the execution of the said laws. Pawnbrokers around the country need to obtain a license from the aldermen, police commissioners or mayors, depending on the local law.
Most states require pawnbrokers or pawn shops to provide surety bonds to the Department of Consumer Affairs. The standard monthly rate of interest is 4%. The loans are granted with varying repayment terms though.
There are pawn shops that lend money for a day while some may offer four months or longer to repay.
Usually, all pawn shops provide a grace period for the repayment of the loan with interest.
Since you intend to sell jewelry to a pawn shop, the rate of interest or repayment term is not relevant.
Pawning Jewelry and Precious Metals
There are three distinct phases of the whole process of selling jewelry to a pawn shop.
First, you should know all the relevant information pertaining to the jewelry you are considering to pawn.
Second, you should find a reputed and reliable pawn shop. Third, you should have a successful negotiation with the pawnbroker or pawn shop staff.
Step 1: Find out the Value of your Jewelry
Jewelry is a vast category. It includes rings, earrings, nose studs, bracelets, watches, necklaces, gemstones, chains and any kind of ornament made of some precious material.
Gold is the most commonly traded commodity among precious metals and gemstones. Silver is less valuable but it is almost as widely traded as gold.
Diamond used to have moderate returns on investment because the hard substance cannot be modified as easily as gold or silver, thereby reducing the possibilities of the pawn shop or a jeweler to rework the material into something new so it could be sold for a much higher profit.
That is no longer the case since people buy diamond jewelry in an as is condition.
There are two ways to find out the value of your jewelry. You can do your own calculations or you can go to a pawn shop and get the piece evaluated.
A self-assessment is challenging but it can be done. You need to weigh your jewelry, refer to the prevailing price of the precious metal, substance or gemstone and determine its resale value.
You can use a kitchen scale or jeweler scale to measure the weight of the precious substance. Remember, the weight of the jewelry may be the sum of the mass of precious gold, silver, diamond or platinum and the mass of inexpensive metals or materials.
Not every piece of jewelry is pure gold, pure silver or pure platinum. Diamond jewelry will have gold, silver or platinum rings, strings and other components.
Refer to the stamp on your jewelry. You will find markings like 24K and 18K, 14K or 10K. These stand for the purity and will determine the proportionate weight of the precious metal or stone.
The value of precious metals and stones vary every day, especially gold and silver. Know the rate for the day and calculate the tentative resale value of your jewelry.
After you have assessed the value yourself, go to a pawn shop and let them evaluate the price. You can compare the two.
Walk out of a pawn shop if they go berserk with their evaluation. If you have very expensive and rare jewelry, then you should get it appraised by gemologists or certified jewelers.
Step 2: Find a Reputed and Reliable Pawn Shop
You must find a reputed and reliable pawn shop. All pawn shops will try to lowball you with a valuation and quote substantially lower than the real value of your jewelry.
This is simply because they want to make a profit. The best pawn shops will know the true value of your jewelry and they will be pragmatic with their offer.
When you deal with respected pawn shops, you don’t have to worry about being given a raw deal. They will offer the best price you can get.
Step 3: Negotiation is the Key
The biggest advantage and disadvantage of selling jewelry to a pawn shop is the negotiation. If you can get it right, then you will have a fairly rewarding deal.
If you cannot negotiate well enough and if you are unaware of the fair value, you can get a really bad bargain.
Check out multiple pawn shops if you want, don’t sell the jewelry immediately, take your time and go back a day or two later if needed.
Explore your options and only settle for the best price for your jewelry.