Pawn 101: Jeweler markups

The following incidents both happened Monday, but something similar occurs just about every day in the pawn shop.

A woman came in wondering if she could sell a gold chain with a small (about the size of a postage stamp) bangle covered in diamonds.

The chain was very fine and the whole item weighed around 7 grams, or about a quarter of an ounce.

It was 18-karat gold, so sure, it had value. We estimated about $150 for the gold and another $50 for the diamonds, which were miele — tiny chips.

The woman and her husband really needed cash, but she hesitated to take the offer. After several exchanges, it came out why: She had paid $2,400 for the jewelry.

That’s right. The retail jeweler had sold it at a price 12 times the value of the materials. And, to tell the truth, probably more than 12 times, because the value of gold has gone way up over the past year.

With mass-produced jewelry, which is what this was, the resale value is almost always the recycling value: the gold is melted, after the diamonds are recovered, and the miele is sold to jewelers for reuse.

$200 was a fair price — it was based on the New York spot price of gold and the world diamond market — but the woman didn’t take it. Too painful to realize the loss, probably.

Later in the afternoon, a man came in with a bracelet string of small, misshapen, grayish pearls — rather pretty but valueless.

He was hoping to get $250 for it. $100? No. $50? Sorry.

But, he said, he had paid $525 for it.

It really had almost no resale value, either as a whole piece or as individual pearls.

He was mighty disappointed and left to shop around. Late in the day, he came back. The answers he had gotten everywhere else were, manana.

Our pawnbroker offered him $10, more as an accommodation than anything else, as we really didn’t want it.

In the end, he kept his bauble.