Before you sell your gold, read this

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As Sarah blogged here earlier, many people are catching gold fever as the price of the metal exceeds $1,000 an ounce. Consider this, though; $1,000 gold may sound huge, but in 1980, gold peaked at almost $900 an ounce, which, in today's dollars, would be over $2,200. If there is going to be run on gold, I think the prices could go much higher, and I'd sit on my jewelry for a while yet. There's a reason dealers want your gold now; they think so too.

There are some other things you should know before forking over your bling.

You won't get $1,000 an ounce for your gold.

Gold is weighed in Troy ounces. One Troy ounce is about 10% heavier than our usual avoirdupois ounce, so you can't weight your gold on your kitchen scale without doing some fancy conversion. More and more, jewelers are adopting the metric system, and your haul may be expressed in grams. 31 grams make up a Troy ounce, so at $1,000, each gram represents a little over $32. You will not get $32 a gram for your gold, however. Any dealer will have to cover the cost of reclaiming your gold, with some profit for his time. Don't be surprised if the offer is half of that.

You don't own as much gold as may think you do.

Most jewelry gold is 14 karat, which means it is 14 parts out of 24 gold, or about 58.5%. The rest of the metal has no value to speak of. 10k gold is only 41.6% gold, while 18k is 75% gold.

Many older pieces of gold jewelry are gold-filled, rather than solid gold. Look for a tiny 'gf' mark on the inside of the ring. Gold-fill is made by sandwiching plates of gold around a plate of another metal, often brass or silver (called vermiel). Gold-filled jewelry is usually about 5% gold.

Gold-plating is common on inexpensive jewelry. It uses electrolysis to deposit an extremely thin coating of gold over a base material. There is negligible gold on a gold-plated item.

Some jewelry is worth more as estate pieces (industry lingo for used jewelry) than for scrap, although the dealer may not tell you that. If you have handsome pieces, think about selling them as jewelry pieces rather than scrap.

Lastly, don't expect to get offers for any gemstones except (perhaps) diamonds, emeralds if they are of a good quality and unscathed, rubies and sapphires.

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