Selling Your Gold Jewelry on Your Own? Get the Do's and Dont's

The economy is down, unemployment is up and money is tight for many people.

Gold prices are at a 10-year high, so some people look to make extra cash by selling their unwanted gold jewelry.

Mellody Hobson, president of Ariel Investments and "Good Morning America's" personal finance contributor, visited the show to discuss the do's and don'ts of turning gold into cash.

VIDEO: Mellody Hobson explains whether its time to sell your jewelry

Gold Parties

The price of gold has risen more than 25 percent in the past 12 months, and, with so much uncertainty in the world's economy, gold is in high demand. Hobson said gold parties have become popular. People get their jewelry appraised at these parties, and are then paid cash on the spot.

The pieces are eventually sold to refiners. This is not a way to get rich, Hobson cautioned.

The average seller earns between $100 and $200 per party, according to one gold party company, she said.

The service can be beneficial if someone has jewelry that won't be worn again because of damage or some other reason.

People should not trade sentimental pieces or pieces that are valuable, she said. Buyers at gold parties are not interested in the artistic or decorative value of the item but only the gold it contains.

An expert at Weiss Research Inc. estimated that people should be able to get 70 percent of the value of their gold at a reputable gold-party service. Purchasers have to pay middlemen and other overhead costs, Hobson said.

She urged sellers to walk away from any offer that's significantly less than that.

She noted, however, that prices vary widely from appraiser to appraiser. Whether sellers dispose of their gold at a party, to a jeweler or through some other service, they should be sure to get multiple quotes, she said.

How Your Gold Is Priced

Hobson said there were three important things to know about gold if you are going to sell it on your own:

Know how much the gold weighs. Prospective sellers may weigh the gold themselves or they can take their items to a jeweler to have it appraised.

Know the price of gold. Sellers may find the daily price of gold in the business section of any newspaper or on any Web site. Be aware that gold prices are quoted in Troy ounces, which are not the same as regular ounces, Hobson said.

Know the number of karats in your piece of jewelry, she said. There is usually a marking on each piece of jewelry that indicates how many karats of gold it contains. Prices are based on the level of purity: 24 karats is the purest gold. Gold that has less than 24 karats will be worth less, Hobson said.

Taking all these facts into consideration, sellers will likely get between 70 and 80 percent of the real value of their item, she said.

Click HERE for more of Mellody's tips about cashing in on your gold.

Alternatives to Gold Parties

Gold parties aren't the only way to sell unwanted or damaged gold jewelry. Hobson said most people don't have gold parties because they offer the best value. The parties are more about fun, she said.

The best way to get the highest value for gold is to sell it to a jeweler, said Hobson. The jeweler may be willing to pay more for a piece if it's from a known designer or if it has attractive features. Using the jeweler cuts out the cost of the middleman, she said.

Jewelers may also offer credit to sellers who are looking for other pieces of jewelry, according to Hobson.

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