It’s a question I often hear and it can be confusing to the uninformed….so let me try to explain.
When a person wants to know what an object is worth, let’s use a diamond ring for example, it can have more than one value. To ensure the ring against loss or theft means to value the ring at what it would cost to replace it, at retail, in a store or through the insurance company’s jeweler. Let’s say to replace your ring it may cost $3,000.00 to buy a new one. Now if you wanted to sell that same ring and get cash for it this jeweler will look at it in one of two ways. Will I re-sell it as used (after paying to have it cleaned, polished, and repaired to almost new condition) or will I regard it as unsellable in this market and therefore liquidate or scrap it for the value of the metal and the stones (diamonds or otherwise)?
If I decide to re-sell it I know that it should not sell for the same price as a new, never before owned or worn ring. It’s used! So it’ll sell for less than the normal market price. Therefore I have to buy it (remember you’ve asked me to turn it into cash for you)as less than what I will sell it for, to make a gross profit to cover overhead costs and a net profit (a return on my investment). Often this buy price is for lower than what you originally paid for the ring when it was new and never worn. You may have worn the ring for 5, 10, 20 years or more. It should be far less than what you paid for it (although there are exceptions). I often ask customers this question, “What other piece of personal property can you sell that hold value like your diamond ring? Not your coach purse, or you $300.00 boots, certainly not your car even.”
So the rule of thumb is always a “willing buyer and a willing seller” will determine the fair market value.
On the other hand if I should decide that our ring will not sell in this market or if your diamonds no longer have cash value, because they are too small or too low of a quality than the cash offer could be based on the scrap or “melt down” value. This is based on the current value of the metal, be it gold or platinum, less a fair amount for the overhead costs and profit, just as mentioned earlier. If the diamonds or other stones can be used again then their liquidation value is added to the metal value and that’s what you get paid.
Now it is absolutely true that different jewelers may approach this differently and their profit margins may also be different. So it is always wise to ask the questions, “What this worth?” of a jeweler you trust or ask several jewelers to fin your best answer.