In the world of fashion and beauty, some of the accessories that stand the test of time are gold jewelry. Whether it’s a gold ring adorning your finger or a necklace showing off your cleavage, gold is always in fashion. However, what happens if you need money urgently and decide to pawn your precious gold?
This article aims to explain understandably how pawnbrokers determine the value of a pledge of gold to grant a quick loan. Read on to find out the secrets and pitfalls of gold valuation processes.
The concept of gold value
Gold is a precious metal that has fascinated mankind for centuries. Various factors determine its value, the most important of which are its weight, purity, and market price. In Latvia, gold is graded in pawn shops according to its purity, measured by the well-known purity test.
However, in Italy and the USA, the value of gold is expressed in carats. The higher the carat, the higher the gold content and the higher the value. For example, a 24-carat gold ring will be worth more than a 10-carat one.
How much is your gold worth?
Pawn shops use various testing methods to determine the exact value of gold. One of the most common methods is acid testing, where a drop of acid is poured on a scratch on a piece of gold to measure its reaction.
X-ray testing can also analyze the purity of gold without damaging the gold piece. The energy scattered by the X-ray fluorescence machine can accurately determine the gold content of the jewelry. These methods provide an accurate estimate of the gold purity.
The credit granting process
Pawnbrokers consider several factors when determining the loan amount they can offer against gold collateral. As we have already mentioned, the pawnbroker assesses the weight of the gold, its purity, the market price, and the demand for the item in question.
The valuation process considers the current price of gold per gram, after which a percentage of the value is offered as a loan. This percentage may vary from one pawn shop to another, typically from 40% to 80%.
Risks and repayment
Whenever a loan is offered, the risks involved should be considered. Today, pawnbrokers follow strict security measures, including jewelry insurance. If the borrower fails to repay the loan on the due date, the pawnbroker has the right to sell the pledged gold.
The gold sale covers the loan’s outstanding amount and any outstanding interest. In addition, pawnbrokers may choose to sell the item at auction if they believe it will sell for a higher price.
Evolution of gold jewellery
Gold jewelry has changed a lot in appearance over time. Today, you can choose from delicate gold chains to large, bold pieces. Pledging gold can provide a quick financial solution in times of need, but it’s essential to understand how pawnbrokers determine the value of your collateral.
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Pawnbrokers ensure fair transactions by considering factors such as the gold’s purity, weight, market price, and valuation process. After all, gold remains a reliable investment and a stunning fashion accessory, making it an expensive asset for everyone. Trust the experience of trusted pawnbrokers to get the best deal on your favorite gold jewelry.
Es, Beatrisa Granta, Topkredit.lv veidotāja, izmantoju savu finanšu pieredzi, lai palīdzētu lasītājiem orientēties kredītu izsniegšanas iespēju klāstā un izvairīties no biežāk pieļautajām kļūdām, ņemot patēriņa un ātros kredītus.