5 July 2012

The Truth About Jewelry Appraisals

If you’re someone who’s interested in Pawning or Selling your Gold or Valuable, than there are a few important things you should know about the process:

The first step in understanding the value of your Jewelry item is to remove any & all emotional attachment you may have. Jewelers, Appraisers, and Insurance companies alike, unfortunately have no interest in the how or where your item came from. The business of these companies is to assess the value of the jewelry as it pertains to their business model and YES there is a difference. You may already be asking how one item can have varying values when the value of gold, silver and precious metals are a fixed and traded commodity. Here is where it gets interesting.

Insurance Companies: The role of an insurance company is to offer you coverage against any valuable or possession you wish to protect. They typically send an appraiser to check out the goods and offer you a value of near 100% and up as a measure to replace the item in an event of a disaster. This valuation is ultimately a number which fits into an equation that helps them determine a monthly premium for this protection. The higher the valuation, the higher the premium. You may already be able to see how the inflated appraisal works to the benefit of the insurance. In many cases we see people coming in with their insurance appraisal and they often get upset when they realize this is not the true value of their gold or jewelry.

Independent Appraisers: There are many 3rd party and independent appraisers that can offer you their services in relaying true value for an item. These appraisers are trained and certified by many organizations (which we recommend you ask before using) and they rely on current market values, collectability, rareness, quality, etc. Unless specified, they typically provide the average re-sale to consumer value which will usually fall into a close range if you were to go shopping this around. It’s important to note that Independent Appraisers provide a paid service which is strictly for valuation of your goods. They have no vested stake in what may happen after their appraisal. Simply, they are trying to provide a best estimate for the client.

Jewelers Appraisal: This is where things drastically change when it comes the item value. A Jeweler, is often a retailer, wholesaler and trader of gold and silver. There business is to supply the market with jewelery so that consumers have access to buying gold and precious valuables. The appraisal process in a jeweler must and always will take into account a margin for them to actually resell the item, the street or actual value, and risk assessed value. The jeweler must and always will cover the cost of their business service in making the final valuation. Whether it is from a reputable manufacturers such as Cartier® and Tiffany® or B2B through the gold and diamond trade and specifically in the pawning and selling of 3rd party goods, Jewelers build a number for all the appraisal factors mentioned. WHY? In the end the Jeweler is the one person in this matrix that is taking the risk. They are offering to immediately buy or loan against your item and need to both cover their expenses, future fluctuations in the market and provide that they don’t go bankrupt from improper assessments. This is why you will often see the largest fluctuation in value from one jeweler to another.

Now that you understand the variables, how are you supposed to make a decision? The simple answer is to understand what you have in your possession (i.e – raw metal or stone value by weight and quality). It is often a good idea to shop around a few reputable jewelers to see if there is an average value that keeps presenting itself. You can also use the Internet, but we caution you to understand the differences you find there. This will be covered in our next article titled “Hey I saw this being sold on Ebay for …

If you have any further questions, or wish to speak to one of our professional appraisers, than please don’t hesitate to call Lombard Mutual at (212) 819 – 0366.

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