Pawning Jewelry Versus Selling to Gold Buyer

Should I Pawn or Sell?

Pawning or Selling?

When to Sell,  When to Pawn

Deciding Whether to Sell or Pawn



Deciding Between Pawning Jewelry and Selling Jewelry

Being a gold buyer, people often ask me if it is better to pawn, or to sell a silver jewelry and gold jewelry.   The answer is always “it depends”.   The decision shall be based on knowledge rather than on guess.  That way the result will be based on the intention.

In this article I am going to give you the needed criteria to make the right decision about whether to sell or pawn.  To better explain this, I will start with couple of definitions.   This will help understanding.

To Sell Jewelry:

To transfer ownership of jewelry in exchange for payment.  The buyer takes possession of the jewelry.  All interest and claims on the gold or silver jewelry are relinquished at payment.  The gold buyer becomes the owner of the jewelry right away.  The seller no longer has anything to do with the jewel, even if the seller has any regrets or similar emotions.  There is no turning back.  At sale, the gold becomes property of the buyer.


To Pawn Jewelry:

To obtain a loan with the jewelry as collateral.  The lender takes possession of the jewelry.  No interests and claims on the gold or silver jewelry are relinquished at receiving the loan.  However, as per the loan contract, if the borrower defaults, the lender takes ownership of the jewelry as if the jewelry would have been sold.  At this point, there is no turning back.  The gold becomes property of the lender.


Pawn Shop:

A pawn shop is establishment in the business of lending money with jewelry used as collateral.  Also known as hawk shop, pawn broker, pawn dealer


Gold Buyer:

An individual or establishment in the business of buying gold, silver, platinum and palladium .  The correct name for this is “Precious Metals Dealer”.  Precious metals dealers deal with precious metals in all their forms.  Often they specialize in a defined aspect of precious metals:  Buying gold scrap, buying and selling coins, etc.

Gold Jewelry Liquidation Value:

Amount at which a gold jewelry liquidates at.  This amount is typically based on the intrinsic value of the metal and gems.  The intrinsic value of the precious metal is based on refining the gold out of the jewel’s metal

How Pawn Loans Work:

As per above, in a pawn loan, gold jewelry is taken as collateral.  After an specific period, the borrower needs to bring the lender the amount of the loan plus interest.  In Oregon, where I am located, as of this writing, that is typically a period 90 days and an interest of 30%..  If that does not happen, the borrower “looses the gold to the pawn”.


How Much Does the Pawn Shop Lends

In the case of gold jewelry, or silver, or platinum jewelry, with very few exceptions, the pawn shop will lend such that after the first period of interest payment, if the borrower defaults, then shop obtains the jewel at liquidation value.


Liquidation value:   $1000

Pawn amount:          70% 0f $1000 = $700


How Much Does a Gold Buyer Pay?

Gold buyers pay the liquidation value of the jewelry, meaning a price at which it is worth to the gold buyer to buy the gold jewelry for the purpose of refining.   Same for silver, platinum and palladium items.


When to Pawn

It is best to pawn when “FOR SURE”, no matter what, the borrower is better off paying back the principal of the loan plus the interest.   Other than that, it is best to just sell the gold jewelry to a gold buyer, because the borrower will get more money than if losing it to the pawn.

When to Pawn Example:  Expensive ring, that the borrower really wants to get back, that liquidates for a lot less than to buying or having made again buy a jeweler.  Maybe there is sentimental value.  For the borrower, the value of the ring is for sure more than the value of the loan plus the payment of the interest.

Liquidation value:   $1000

Pawn Amount:          $700

Value to Borrower:  $2000


When to Sell

It is best to sell when the value of the jewel is close to liquidation value.  The seller does not care much any more for the jewel.  There is no sentimental value.

When to Sell Example:  An outdated but heavy, high carat gold ring, that does not even fit the seller, and has no sentimental value.  In the case of this type of item, it is very unlikely that anyone will sell it for more than the liquidation value.  So selling it to a gold buyer is the best option

Liquidation value:  $1000

Payment amount:   $1000

Value to the Seller:  $1000



Deciding whether to pawn gold, or sell gold, is mostly a matter of knowledge.  The decision has to be made based on the intended result.