My Answer to Reader Query About Selling Placer Gold (Part 3)
(This placer gold I recovered in New Mexico runs about .917 fine, some of the purest I've ever recovered.)
Remember, Placer Gold is Never Pure
First off, let me remind you again that placer gold is never .999 pure...the standard gold spot prices are based on. In my previous post on this topic I alluded to the fact that even after you've "discounted" the price of your troy ounce of placer gold to adjust for the purity factor, the buyer still needs to make a profit.
(Tip: "Know what your gold is worth BEFORE you sell it!" J.R.)
Placer Gold Locations
You've already determined through testing that your ounce of placer gold is running close to .850 fine (out of a possible .999) and the spot price of gold right now is $1,600.00 per troy ounce. Theoretically your ounce of placer is worth, once again, $1,360.00 once the purity factor is added to the equation.
Usually a Fixed Percentage Profit
Here's where it starts getting tricky. Unless he or she is a true philanthropist, the gold buyer must add in some sort of profit margin to make a few bucks. This profit is usually based on a fixed percentage of the total amount of the transaction before any sales taxes or other reduction "add ons."
(Know what your gold is worth BEFORE you sell it.)
So, if the gold buyer's profit margin is 5% (not bad, by the way), or $68.00 for the sale, you'll expect to receive $1,292.00 for your troy ounce of placer gold before any sales taxes, etc. if there are any. If there are sales taxes involved (and there may be) or other add ons you may end up receiving about $1,215.00 or so for your gold. I think you're getting the idea about how all this works, right?
Ridiculously High Profits
In my day I've seen gold buyers take profit margins as ridiculously high as 15%-20% (yep, believe it) after all the other factors were adjusted. Some of these rip-off artists can be the ONLY gold buyers around in more remote areas. That's why back in the 1980s myself and my dredging "pards" used to drive 2 hours one way to Reno, Nevada to sell our placer gold after working claims in the Northern Motherlode region of California.
I'm sorry, but anyone desperate enough or stupid enough or lazy enough to take an inordinately high buyer percentage hit when selling his or her hard-earned placer gold doesn't deserve the title miner. How about "patsy," "mark," or "fish" instead?
Now I'll throw another monkey wrench in the works here...some buyers will not accept placer gold at all. Nada, none, not one little grain.
More on that when I finish up this series of posts next time.
If you liked this post, you may want to read: "Can I Make a Living Gold Mining? (Part 3)"
(c) Jim Rocha (J.R.) 2012
Questions? E-mail me at email@example.com