What Is It Worth? Appraising and Valuing Estate Jewelry

July 17th, 2009 by James L. Sweaney, CGA, FGA. GG

Yesterday, a rather imperious elderly lady came into our store with husband in tow, and asked me to look at a yellow metal pierced cuff bracelet. She said “I just want to know what it is worth” (and of course, didn’t want to pay anything for the service).

I began to explain that I needed to know what she meant by “What is it worth?”  Was she looking to sell the item? Did she need to insure it? Did she need an estate value for taxes?

She kept saying impatiently that she just wanted to know “What is it worth”, not hearing my questions. Long story short, she stomped out of the store, convinced that I didn’t want to take the time to tell her what her bracelet was worth.

To begin with, there is just no simple answer. What anything is “worth” is always based on the circumstances. For example, if a person is trying to sell a piece of used jewelry, then it’s “worth” would be it’s liquidation value. Generally, a liquidation value is based on the immediate cash value of your item, and is its lowest valuation.

For items likely to be recycled, such as low quality, less desirable items, or broken jewelry, their value may be only as scrap metal. In today’s market, many buyers will not pay anything for small diamonds unless they are very high quality, concentrating only on the value of the gold. Larger diamonds of quality may bring 50% of wholesale at best- shapes other than round are not as easy to resell, so buyers may only offer 25% of wholesale.

The scrap market normally pays 40 – 80% of gold value, depending on quality and quantity.  For example, a 14k ring weighing 10 grams may bring 40-50% of the daily spot value for it’s actual gold content. A group of karat gold items weighing 10 ounces might bring 60-80% of spot value because that’s a large enough quantity to recycle as a single lot–the refining costs would be offset by the cash value the refiner would return.

The liquidation value reflects not only the quality and weight of metal and gems, but also how you go about selling the item– the assumption is that you need money right away so you have to find a buyer with ready cash such as a pawn broker or jeweler who buys used jewelry.

Pawn brokers usually pay 10% or less of the current retail for pawned items because they are making you a short term loan. They can’t resell your item until the pawn period has expired.

Jewelers who buy estate jewelry for resale pay somewhat more- about 10 – 20% of current retail. If your item is something they can easily resell, they may pay as much as 25% of the original retail. These buyers will pay premiums only for highly desirable items, such as well known brands, high quality items, or items with an immediate market.

If a person is valuing his estate for tax purposes, we call that the estate value. If a person is valuing an item in order to insure it, we call that the retail replacement value. The estate value and retail replacement value of most estate jewelry items is usually the same because of the definition of fair market value that we appraisers are required to use by the IRS.

Fair market value is an estimate of the current price to the ultimate consumer for an item of like kind, quality, utility, and condition from an establishment commonly selling similar merchandise (the most common market). Estate or period jewelry cannot be replaced with a new item, so we assume that the replacement would be a similar used item. With period and other estate jewelry that is resaleable as is, the most common market is generally a firm that sells estate jewelry to the public.

Usually, the fair market value of resaleable estate jewelry reflects the current wholesale value of the gold and gems only. All the costs to originally produce and market the item, such as labor, overhead, advertising, etc. have already been paid for when the item sold the first time. What remains is the intrinsic value of the materials and the desirability of the item.

Because an item is old or from of a particular period doesn’t necessarily mean it is especially valuable.  What matters is marketability and desirability, generally a function of beauty and workmanship. Ugly or poorly made pieces can be very difficult to sell as is, so they may be valued only as scrap.

So, you can see by the length of this blog that it’s not easy to give a simple answer to a simple question like “What is it worth.” The devil is in the details– it all depends on what it is, who’s buying, who’s selling. We offer consultation services with our Certified Gemologist Appraiser beginning at $25- we’ll examine your jewelry, grade the gems, weigh the metal and give you a realistic idea of the various ways to look at the value of your jewelry- call or email for an appointment.

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