Advice on Selling and Buying Scrap Gold

Do Pawn Shops Pay Well For Gold?

No, pawn shops are one of the worst places to sell your gold, whether it’s a coin, jewellery or scrap.

Pawn shops, like jewellery shops, have large overheads to cover and are notorious for offering very low prices.

How Much Does A Pawn Shop Pay For Gold?

A very common question is “What percentage of value will a pawn shop give you?”

Whether it’s in grams or ounces it may be as little as 25% of the value of the gold!

So if you have say a full Krugerrand (1oz of gold) worth say £1400, a pawn shop may offer you just £350 for it, way under the market value.

This is the disadvantage of selling to a physical store where they have rent, staff, cost of stock, utilities to pay, taxes, etc.

All of these costs need to be accounted for, and on top of that they want to make a profit, so selling at a pawn shop or jewellers will result in you getting far less for your gold than if you sell to a gold dealer.

Is It Better To Sell Or Pawn Gold?

The only time it makes sense to deal with a pawn shop is if you intend on redeeming your item, that is to say buying it back from the pawn broker.

Perhaps if it’s a sentimental item that you don’t want to let go, or if you’re just having a short term cash flow problem then a pawn broker might make sense, but other than that you should not sell gold to a pawn broker.

If you are looking to obtain the maximum money possible for your gold items then the best bet is to sell them to a gold dealer or scrap gold dealer.

These are large companies that offer the best possible prices and deal in huge volumes of gold.

Many of them turn over tens of millions of pounds per year, and they pay a very good price based on the current value of gold, often 95% or sometimes more.

So using the same Krugerrand example from above, a good gold dealer or scrap gold dealer would give you around £1330 – £1350 for your £1400 coin, compared to £350 from a pawn shop.

You can find plenty of professional gold and scrap gold dealers online with great reputations, and pay outs are fast.

When you post your items today on a next day delivery, you will usually have the money in your bank account tomorrow or the next working day after.

Do Pawn Shops Give Fair Market Value For Scrap Gold

It doesn’t matter if it’s a gold coin or jewellery in perfect condition, or a pile of broken bits of scrap gold – gold is gold and the value will be determined by the weight.

Whether it is scrap, or anything else the price you are offered may be around the 25% mark, it will be a huge discount from the gold’s true value.

Will A Pawn Shop Buy A Broken Gold Chain?

Yes pawn brokers will take broken items because it’s the gold itself that is worth the money, but as above you will not receive a fair price.

If you have broken items and want the best value then use a reputable scrap gold dealer and you may get almost 4 times as much money in return.

How Do Pawn Shops Make Money On Gold?

Great question!

If a pawn shop buys say a gold coin (like the Krugerrand worth £1400 in the example above) for a price of £350, or even if they pay you £700, then they have a huge profit margin.

If you don’t redeem it then they could simply send it off to a gold dealer themselves and pocket a hefty profit.

But what many of them will do is offer the Krugerrand for sale at more than £1400 – maybe £1500 or even more.

So they make money on both ends, they buy a substantial discount from you, and make a good profit from the person they sell it on to as well.

If they buy jewellery they may try and sell it, but jewellery can be a tricky thing to sell.

It is very personal and subjective and fashions change, so possibly they will simply send it to a scrap gold dealer to go into the melting pot.

Since they pay so little they are going to have a very good return on any gold item they buy.

Should You Buy Gold From A Pawn Shop?

If you shouldn’t sell gold to a pawn shop then you’d probably think you shouldn’t buy from a pawn broker either, but you can actually find some bargains when you do.

If you think about it a website can be plugged in to the latest price of gold and change the price of every item on the site instantly as the gold price changes.

But when a shop has hundreds of items on display with price tags, it’s a monumental task to change them every time the price of gold changes.

And it changes daily – even hourly.

So if the price of gold has gone up quite a bit over a couple of days or so, the pawn brokers shop might still have the prices based on the lower gold price.

I know someone who did this and bought 4 gold sovereigns from a pawn shop and got them for around £120 less than the value of the gold in the 4 coins.

It might not happen often but it is well worth keeping an eye out for, especially with the smaller privately owned shops where they might not be quite as quick off the mark.