How Much Is My Placer Gold Worth?

Gold! We love it. Spend countless hours searching for it. Dreaming about it. But eventually we want to sell it. And that's what this page is about. I surveyed six prominent websites about gold values and combined what I learned from them to provide a good idea of what to expect when you decided to sell your placer gold. I say "good idea" because how much you will actually get depends on so many variables that it's not possible to state what you'll really receive.

A second reason for this page is that in my gold pay dirt reviews, I use a metric called the Actual Return On Investment or AROI. This page explains what that is and why I created it. So, without further delay... let's get started!

 

How Much Is My Placer Gold Worth?

Google "current gold value" and you'll get a host of pages stating the current, or spot, value of pure, 24-carat gold. In early 2016 it's hovering around $39 per gram. But because placer gold isn't pure gold, it's typically 70 to 90-percent pure, your placer gold is only worth 70 to 90-percent of $39. Gold buyers are only interested in the actual amount of gold your selling them. Additionally, they deduct around 10-percent as a handling fee to cover their expenses and enable them to make a little money on the transaction. So, combine these two factors and on average you might get something like 75-percent of the spot value. That's the short answer. Here's the long one with attributions so you can verify my conclusions:

The website detectorprospector.com has an in depth article about a professional part time prospector and what he gets for his placer gold. Typically it's around 72-percent of spot out-the-door.

 

Goldhog.com buys placer gold for 85-percent of spot and is unique that it doesn't deduct for the fact placer gold isn't pure gold. You have to pay to ship it to them and first time customers may be limited to a 2-gram limit until they can determine the quality and cleanliness of your gold, but it's about the best you can expect. Gold Hog charges a $20 fee because many people send them small amounts that take as much time as larger samples to process but don't return enough profit to cover their fixed expenses. They pay through PayPal. This can be a problem if you've never tried to get money from PayPal. The company purposely makes it as difficult as possible the first time because they don't want you to get it. They want you to leave the money in your PayPal account and use it to buy things because then they make more money. Also, they deduct 2.9-percent plus $0.30 as a fee for transferring the money from Gold Hog to you. Withdraws don't cost anything. Instead of trying an electronic transfer, it might be easier to pay them $1.50 to have them send you a check. Withdraws are limited to $1,000.00 per month. This limit is supposed to be able to be increased, but I tried to do it twice and both times it failed. In March of 2017 I sold Gold Hog 35 grams of gold. After deducting both the Gold Hog and PayPal fees and shipping costs I pocketed 81-percent of spot, which is excellent compared to selling it to a pawn store.

 

Goldgold.com has an extensive article explaining the pros and cons of selling gold in a wide variety of venues. In summary, pawn stores typically pay 50-percent of spot and it can be less. In essence they are treating placer gold like trash gold such as low-carat jewelry and dental gold. The actual price can vary widely depending one how much placer gold is coming into stores, the demand and how many competing stores are in the local area. They get away with this because most people going to pawn stores are in need of quick money and in their desperation are willing to accept low valuations.

Specialty buyers who only deal in gold typical pay 70 to 90-percent. Most do not pay extra for nuggets so if you have larger pieces you should hold them back. There are specialty nugget buyers who will pay more per nugget. The best way to find both of these is to contact the local gold prospecting clubs and ask them where to sell placer gold.

Coin shops often buy placer gold, sometimes paying as much as 90-percent of spot based on the purity of your sample. Some require a report from a certified assayer, which can be hard to find and expensive.

Large cities may have precious metal dealers who buy placer gold. Like coin stores, they may require an assay report before buying and are more likely to only pay for the pure value of the gold after subtracting handling fees.

The place to get top value for placer gold is selling it directly as placer gold samples directly to the public in rock and gem shows. There you may be able to charge a premium over the spot value because of its uniqueness and because the public doesn't always know what it's really worth. As attractive as this option sounds, even it has overheads. You'll probably have to pay a stall fee to the organizers. There are costs for buying all the vials needed to hold the gold. Rock and gem show usually only happen once a year in most towns. That means you have to wait for the next one to come around. If it happens that in the meantime the price of gold has dropped, you may not do as well as you hoped for. On the other hand there's also the chance that gold will be at a high and you'll make money hand-over-fist. Before jumping at this option, consider the hassle of preparing the gold, traveling to the venue, setting up and waiting hours watching thousands of people pass by without buying anything. If you put a dollar value on your time, you may discover you're working for starvation wages. It's a gamble.

Another self-help solution is to sell your placer gold by mixing it with an inexpensive material and selling it as pay dirt. There are dozens of companies and individuals doing this. The nice thing is that you usually sell it for more than the spot value. The problems are the hassle of setting up an on-line business.

Finally, you can sell your placer gold through Ebay or any of the similar selling forums currently available.

One factor that can cut into your profits with either of these last three options is that the paper trail created by them may obligate you to report your earnings to the IRS and pay taxes on them.

 

Nuggetshooter.ipbhost.com has two entries in its open forum about selling gold. One states that he sold 1 ounce of gold (31.1 grams for a Troy ounce) for $650 when the spot value was $1,000 an ounce. That's 65-percent. Another entry discussed selling to a refinery in his location. Ignoring for the moment that fact that he mentioned most refineries require a minimum of 5 ounces, he said that they charge a flat fee of typically $200 (2009), then deduct an average of 85-percent because the gold isn't pure, then 3-percent handling and may add on assay fees so the final pay-out for one ounce would be $652 for a spot of $1,000. Again, 65-percent. This second writer also warned against TV gold purchasers because in his experience they only pay 20-percent of spot.

 

Rarenuggets.com states that averaging all venues, placer gold sells for around 75-percent. It also states that the average from jewelry stores that buy placer gold is slightly higher at 80-percent of spot, but stores that'll buy it are few and far between.

Nuggets are more valuable but subject to even wider variations in price depending on who's evaluating them, the location (high population areas usually pay more because there is more demand) what the nugget looks like, how big it is and how pure it is.

There is considerable debate about what constitutes a nugget. Some sellers (goldbay.com) list 25-mesh flakes on their nugget sales section. I surveyed goldnuggetsales.com, goldfeverprospecting.com, goldrushnuggets.com and goldbay.com and the smallest size they all start accepting as being a nugget is around 15 mesh, just under 1/16th of an inch across or about 0.030 grams. At this size they are charging an average of $49 per gram. That's 20-percent above spot. But that's what they are selling it for. What they pay for such small pieces will be less. Unfortunately I could find no guidelines in any of the references cited on this page about how much less it could be.

Finally, hookedongold.com states that the price paid for placer gold ranges between 60 and 80-percent of spot.

 

After sifting through all these references, statements and claims, I came up with and average of most dealers paying 85-percent of the spot value of gold for placer gold because it isn't pure and 10-percent for handing. Depending on your location, the quality of your gold and the venue you choose to sell it you may do better... or you may do worse. Each case is unique but this provides an approximate rule of thumb based on many references.

BUT!!!

All this is theory. Here's what I learned in the real world when I went to sell my gold.

After a year of backyard gold prospecting I had accumulated 34 grams of gold and decided that was too much money to let sit around collecting dust. When I went to sell it I couldn't find anyone willing to pay more than 50-percent of spot. Worse still, the stores I checked in my town all treated me like they didn't want to bother with it and that they were doing me a favor by purchasing it.

On-line refineries weren't any better. None mentioned how much they pay and the one I tried contacting refused to answer any of my emails.

Then I remembered that Gold Hog (www.goldhog.com) buys placer gold. I got on their site and learned that they offer 85-percent of spot. I was sold. I sent the gold off to them and in short order had my money... with a nice surprise. They weighed the gold at 35 grams, one gram more than I had measured. Since I had specified my weight they could have kept the difference and I would have been none the wiser. This attests to their honesty. In the future Gold Hog is where I will be selling my gold. Gold Hog pays via PayPal.

While I had no problems with Gold Hog, I did with PayPal. PayPal is set up to make getting your money as difficult as possible if you are a first time user of their money transfer system. They want you to leave the money in their system and use it to buy things so they earn more money. Getting transferred to a checking account the first time requires filling out forms, waiting for checks, multiple confirmations and finally dealing with the fact that they have limits on the amount that can be transferred in a month. When I tried increasing this amount, the system intended to do so refused to work properly. Also, they charge 3-percent for the initial transfer, which cut into my actual ROI. Had I know all this in advance I would have paid their $1.50 fee and had them send me a check in the mail.

If you'd like to watch a video record of my experience selling gold with additional details, you can do so by clicking on the following YouTube video:

 

ROI and AROI Explained:

The most common metric for comparing pay dirt sold by different companies is the Return On Investment or ROI. It's the spot value of the gold recovered divided by the price pain for the pay dirt. For example: If I purchase a bag of pay dirt for $55 and recover 0.5 grams of gold when the spot value is $39 per gram, the ROI = (0.5 x 39)/55 = 19.50/55 = 35.5-percent. This allows easy comparisons between pay dirt offerings that differ in cost and gold content. But there's a problem with it.

It creates a false impression on how much someone buying a given pay dirt will get if he sells the gold he recovers. This is why I created the Actual Return On Investment or AROI. It takes into account the fact that placer gold sells for less than pure gold and provides a more reasonable expectation on what someone might actually realize if and when they sell their gold. Is it 100-percent accurate? No. But it's closer than the ROI and even if it's incorrect in specific cases, it still succeeds in informing anyone reading it that they won't get spot value for their placer gold.

I elected to not consider nugget values in formulating AROIs for my pay dirt reviews because there are so many variables and unknowns as to make that impossible. I couldn't even get a good definition for what size a piece of gold has to be to qualify as a nugget. Buyers and sellers want to classify them as small as possible to capitalize on their superior marketability. But goldrushnuggets.com states that they don't consider gold a nugget until it's at least one gram, whereas goldgold.com accepts anything over 10-mesh, about 0.07 grams, as a nugget. Making things even more complicated is that a lot of larger mesh placer gold is so paper thin that even if it is +10, it's so light that it still isn't considered a nugget. For all these reasons I elected not to muddy the waters by trying to account for the increased value of nugget gold. I accept that this may undervalue a pay dirt, but the AROI is designed to avoid creating an over optimistic estimate for what the recovered gold might be worth. My advice would be to use it as a starting point, then if your gold has some +10 pieces that look chunky, set them aside and negotiate for them separately. Just be aware that a gold buyer may scoff at what you consider a nugget to buy it at a lower price, only to have you discover next time you're in his store that it's in a special holder and being sold as a nugget.

 

I hope this page helps explain what to expect when you go to sell your placer gold and what I intend when I quote an AROI value in one of my gold pay dirt reviews. Thank you for visiting and if you'd like to watch some of my videos about gold and pay dirt reviews, please click on the following link:

BACKYARD GOLD PROSPECTING

 

 

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