SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This joint proxy statement/prospectus contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “will” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, or expected strategic benefits, advantages and other effects of the combination or any statements about Superior’s business or operating results identify forward-looking statements. In particular, statements that involve risks and uncertainties regarding the expected strategic benefits, objectives, advantages, expectations and intentions and other effects of the combination described in sections such as “The Combination — DGSE Reasons for the Combination”, “The Combination — Superior Reasons for the Combination”, “The Combination — Other Factors Considered by the DGSE Board” and “The Combination — Other Factors Considered by the Superior Board”, on pages 42, 43, 44 and 45, respectively, and elsewhere in this joint proxy statement/prospectus are forward-looking statements. In addition, some statements concerning DGSE’s or Superior’s business, revenues, revenue mix, gross margin, operating expense levels, financial outlook, commitments under existing leases, sales and marketing initiatives and competition, such as the following, are forward-looking statements:

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projections of revenues, synergies and other financial items;

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statements of strategies and objectives for future operations;

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expectations regarding the completion of the combination;

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statements regarding integration plans;

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statements concerning proposed products or services;

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statements regarding future economic conditions, performance or business prospects;

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statements regarding competitors or competitive actions; and

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statements of assumptions underlying any of the foregoing.

All forward-looking statements are present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks related to the combination and to the combined businesses after the combination discussed in the section entitled “Risk Factors” beginning on page 22 of this joint proxy statement/prospectus, among others, could cause actual results to differ materially from those described in the forward-looking statements. Such risks include, among others: the competitive environment and competitive responses to the combination; whether the combined company can successfully develop new products and the degree to which these products will gain market acceptance; whether anticipated cost and product synergies can be achieved; whether the integration of DGSE and Superior will be more difficult and costly than expected; uncertainties as to the timing of the combination; approval of the proposals described herein by the respective stockholders of DGSE and Superior; and the satisfaction of other closing conditions to the combination. Neither DGSE nor Superior makes any representation as to whether any projected or estimated information or results contained in any forward-looking statements will be obtained or achieved. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the date of the documents incorporated by reference in

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this joint proxy statement/prospectus. Neither DGSE nor Superior is under any obligation, and each expressly disclaims any obligation, to update or alter any forward-looking statements after the date of this joint proxy statement/prospectus, whether as a result of new information, future events or otherwise.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the section entitled “Risk Factors”, beginning on page 22, and the annual reports on Form 10-K and the quarterly reports on Form 10-Q that DGSE and Superior have filed with the SEC.

Please see the section entitled “Where You Can Find More Information” on page 155.

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SPECIAL MEETING OF DGSE STOCKHOLDERS

DGSE is furnishing this joint proxy statement/prospectus to you in order to provide you with important information regarding the matters to be considered at the special meeting of DGSE stockholders and at any adjournment or postponement of the special meeting. DGSE first mailed this joint proxy statement/prospectus and the accompanying form of proxy to its stockholders on or about [●], 2007.

Date, Time and Place of the Special Meeting

DGSE will hold a special meeting of its stockholders at DGSE’s executive offices at 2817 Forest Lane, Dallas, Texas 75234, on [●], [●], 2007, at [●] AM Central Time.

Matters to be Considered at the Special Meeting

At the special meeting, stockholders of DGSE will be asked to consider and vote upon the following proposals:

1.

Proposal No. 1. To adopt and approve the Amended and Restated Agreement and Plan of Merger and Reorganization, which we refer to in this joint proxy statement/prospectus as the merger agreement, made and entered into as of January 6, 2007, by and among DGSE, DGSE Merger Corp., a Delaware corporation and wholly owned subsidiary of DGSE, Superior Galleries, Inc., a Delaware corporation, and Stanford International Bank Ltd., as stockholder agent, and to approve the reorganization contemplated thereby, including the issuance of shares of DGSE common stock to Superior stockholders, and the issuance of options and warrants to acquire shares of DGSE common stock, pursuant to the merger agreement.

2.

Proposal No. 2. To approve an amendment to DGSE’s articles of incorporation to increase the number of authorized shares of common stock by 20,000,000 shares, to a total of 30,000,000 shares.

3.

Proposal No. 3. To adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

While these proposals are being voted upon separately, both of the first two proposals may have to be approved in order for either of them to be implemented.

Record Date; Stockholders Entitled to Vote

The record date for determining the DGSE stockholders entitled to vote at the special meeting is [●], [●], 2007. Only holders of record of DGSE common stock at the close of business on that date are entitled to vote at the special meeting. On the record date, 4,913,290 shares of DGSE common stock were issued and outstanding.

As of the record date, the directors and executive officers of DGSE and their affiliates beneficially owned 4,214,280 shares of DGSE common stock representing 67.9% of the outstanding shares of DGSE common stock.

A list of stockholders eligible to vote at the special meeting will be available for your review during DGSE’s regular business hours at its principal place of business in Dallas, Texas for at least ten days prior to the special meeting for any purpose germane to the special meeting.

Voting and Revocation of Proxies

The proxy card accompanying this joint proxy statement/prospectus is solicited on behalf of the board of directors of DGSE for use at the special meeting.

General. Shares represented by a properly signed and dated proxy will be voted at the special meeting in accordance with the instructions indicated on the proxy. Proxies that are properly signed and dated but that do not contain voting instructions will be voted as follows: FOR Proposal No. 1, to adopt and approve the merger agreement, and to approve the reorganization contemplated thereby, including the issuance of shares of DGSE common stock to Superior stockholders, and the issuance of options and warrants to acquire shares of DGSE common stock, pursuant to the merger agreement; FOR Proposal No. 2, to approve an amendment to DGSE’s articles of incorporation to increase the number of authorized shares of common stock by 20,000,000 shares, to a total of 30,000,000; and FOR Proposal No. 3. to adjourn the special meeting, if necessary, whether or not a quorum

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is present, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

Abstentions. DGSE will count a properly executed proxy marked ABSTAIN with respect to a particular proposal as present for purposes of determining whether a quorum is present, but the shares represented by that proxy will not be voted at the special meeting with respect to that proposal. Because approval of Proposal No. 2 requires the affirmative vote of a majority of the voting power of the DGSE shares outstanding and approval of Proposal No. 3 requires the affirmative vote of a majority of the voting power of the DGSE shares present in person or by proxy, abstentions on either proposal will have the same effect as a vote AGAINST the proposal. Abstentions will have no direct effect on the outcome of Proposal No. 1. However, while Proposals Nos. 1 and 2 are being voted upon separately, both Proposal No. 1 and 2 may have to be approved in order for either of them to be implemented.

Broker Non-Votes. If your shares are held by your broker, your broker will vote your shares for you if you instruct your broker how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. “Broker non-votes” are shares held by a broker or other nominee that are represented at the special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of the shares to vote on the particular proposal and the broker does not have discretionary voting power on the proposal. Broker non-votes will be counted for purposes of determining the presence or absence of a quorum but will not be counted for purposes of determining the number of shares represented and voting with respect to a proposal. Failure to instruct your broker on how to vote your shares on Proposal No. 2 or 3 will have the effect of voting AGAINST the proposal. Failure to instruct your broker on how to vote your shares on Proposal No. 1 will have no effect on the outcome of that proposal, assuming that a quorum is present at the special meeting, but will reduce the number of votes required to approve that proposal. While Proposals No. 1 and No. 2 are being voted upon separately, both Proposal No. 1 and 2 may have to be approved in order for either of them to be implemented.

Voting Shares in Person that are Held Through Brokers. If your shares are held of record by your broker, bank or another nominee and you wish to vote those shares in person at the special meeting, you must obtain from the nominee holding your shares a properly executed legal proxy identifying you as a DGSE stockholder on the record date for the special meeting, authorizing you to act on behalf of the nominee at the DGSE special meeting and identifying the number of shares with respect to which the authorization is granted.

Revocation of Proxies. If you submit a proxy, unless you have entered into a support agreement to support the combination, you may revoke it at any time before it is voted in three ways:

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First, you can deliver a written, dated notice to the Secretary of DGSE prior to the date of the special meeting, stating that you would like to revoke your proxy.

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Second, you can complete, date and, prior to the date of the special meeting, submit a new, later-dated proxy to the Secretary of DGSE.

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Third, you can attend the special meeting and vote in person. Your attendance alone will not revoke your proxy.

Notices to the Secretary of DGSE should be sent to 2817 Forest Lane, Dallas, Texas 75234, Attention: Corporate Secretary.

If you have instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions.

Support Agreement. Dr. L.S. Smith, who holds the power to vote approximately 51.7% of the outstanding shares of DGSE common stock, has entered into a support agreement with DGSE and Superior solely in his capacity as a stockholder of DGSE. Pursuant to that agreement, Dr. Smith agreed to vote all of his shares of DGSE common stock in favor of the reorganization and related transactions, and against any proposal or action that could reasonably be expected to delay, impede or interfere with the approval of the reorganization or any related transaction. This constitutes sufficient votes for both Proposals No. 1 and 2 to be approved. For more information, see the section entitled “The Merger Agreement — Support Agreements” beginning on page 69.

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Required Stockholder Vote

In order to conduct business at the DGSE special meeting, a quorum must be present. The holders of a majority of the votes entitled to be cast by holders of common stock at the special meeting, present in person or represented by proxy, constitutes a quorum under DGSE’s bylaws. DGSE will treat shares of DGSE common stock represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the DGSE special meeting for the purposes of determining the presence of a quorum. If a quorum is not present, it is expected that the special meeting will be adjourned to solicit additional proxies.

With respect to any matter submitted to a vote of the DGSE stockholders at the special meeting, each holder of DGSE common stock will be entitled to one vote, in person or by proxy, for each share of DGSE common stock held in his, her or its name on the books of DGSE on the record date.

Proposal No. 1. If the shares of DGSE common stock continue to be listed on the Nasdaq Capital Market at the time of the closing of the combination, pursuant to the Nasdaq Marketplace Rules, the affirmative vote of a majority of the shares of DGSE common stock voting on the proposal will be required to adopt and approve the merger agreement and approve the reorganization, including the issuance of shares of DGSE common stock to be issued to Superior stockholders, and the issuance of options and warrants to acquire shares of DGSE common stock, pursuant to the merger agreement. If the shares of DGSE common stock are not listed on the Nasdaq Capital Market or another applicable national securities exchange which has a similar rule at the time of the closing of the combination, no applicable law or regulation will require DGSE stockholder approval for the adoption and approval of the merger agreement or approval of the reorganization, including the issuance of the shares of DGSE common stock to be issued to Superior stockholders in connection with the combination. Nevertheless, in that case, the board of directors of DGSE would still seek stockholder approval of Proposal No. 1 as a matter of good corporate governance, and if the number of votes present in person or represented by proxy cast in favor of Proposal No. 1 does not exceed the number of votes present in person or represented by proxy cast in opposition to Proposal No. 1, the DGSE board of directors would, subject to its obligations in the merger agreement, reconsider its decision to approve the merger agreement and the reorganization, including the proposal to issue and reserve for issuance shares of DGSE common stock, and the issuance of options and warrants to acquire shares of DGSE common stock, pursuant to the merger agreement. In either case, abstentions and broker non-votes will be counted towards a quorum, but are not counted for any purpose in determining whether Proposal No. 1 has been approved.

Proposal No. 2. The affirmative vote of a majority of the outstanding shares of DGSE common stock is required to approve the amendment to DGSE’s articles of incorporation to increase the number of authorized shares of common stock by 20,000,000 shares, to a total of 30,000,000 shares. Abstentions and broker non-votes will have the same effect as voting AGAINST Proposal No. 2.

Proposal No. 3. The affirmative vote of holders of a majority of the outstanding shares of DGSE common stock present in person or represented by proxy at the special meeting and entitled to vote is required to adjourn the special meeting, if necessary, whether or not a quorum is present, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2. Abstentions and broker non-votes will have the same effect as voting AGAINST Proposal No. 3.

While Proposals No. 1 and No. 2 are being voted upon separately, both of the proposals may have to be approved in order for either of them to be implemented.

DGSE’s bylaws authorize the shares present at the meeting in person or by proxy to adjourn the special meeting if a quorum is not then in attendance.

The inspector of elections for the DGSE special meeting will tabulate the votes.

Unanimous Recommendations by the Board of Directors

After careful consideration, the board of directors of DGSE has unanimously determined that the reorganization and merger agreement are advisable and in the best interests of DGSE and its stockholders. The board of directors of DGSE unanimously recommends that you vote FOR Proposal No. 1 for the merger agreement and the reorganization, including the issuance of the shares of DGSE common stock to be issued to Superior stockholders, and the issuance of options and warrants to acquire shares of DGSE common stock, pursuant to the terms of the merger agreement.

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The DGSE board of directors has also determined that the increase in the number of authorized capital stock of DGSE is necessary for the completion of the combination and advisable and in the best interests of DGSE and its stockholders. The board of directors of DGSE unanimously recommends that you vote FOR Proposal No. 2 for the amendment to the DGSE articles of incorporation to increase the number of authorized shares of common stock from 10,000,000 shares of common stock to 30,000,000 shares of common stock.

The DGSE board of directors has further determined that approving a proposal to adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies is advisable and in the best interests of DGSE and its stockholders. The board of directors of DGSE unanimously recommends that you vote FOR Proposal No. 3 to adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

Solicitation of Proxies

DGSE and Superior are conducting this proxy solicitation and will share the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this joint proxy statement/prospectus, the proxy card and any additional information furnished to stockholders. DGSE will also make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send the proxy materials to their principals and will reimburse them for their reasonable expenses in so doing. To the extent necessary in order to assure sufficient representation at the DGSE special meeting, officers and regular employees of DGSE may solicit the return of proxies from DGSE stockholders by mail, telephone, telegram and personal interview. No compensation in addition to regular salary and benefits will be paid to any such officer or regular employee for such solicitation. The total estimated cost of the solicitation of DGSE proxies is $75,000.

Security Ownership of Principal Stockholders, Directors and Executive Officers

For information regarding the security ownership of DGSE common stock by principal stockholders, directors and executive officers of DGSE, see the section entitled “Ownership of DGSE Capital Stock” beginning on page 114.

Stockholder Proposals and Nominations

Requirements for Stockholder Proposals to be Brought Before an Annual Meeting. For stockholder nominations to the board of directors or other proposals to be considered at an annual meeting of DGSE stockholders, the stockholder must have given DGSE timely notice of the proposal or nomination in writing to its Secretary pursuant to Rule 14a-4 (c) under the Exchange Act. To be timely for the 2007 annual meeting, a stockholder’s notice must be delivered to or mailed and received by DGSE’s Secretary at DGSE’s principal executive offices not later than March 26, 2007.

Requirements for Stockholder Proposals to be Considered for Inclusion in DGSE’s Proxy Materials. Stockholder proposals submitted pursuant to Rule 14a-8(e) under the Exchange Act for inclusion in DGSE’s proxy materials and intended to be presented at DGSE’s 2007 annual meeting must be received by DGSE’s Secretary in writing not later than January 10, 2007 to be considered for inclusion in DGSE’s proxy materials for that meeting. The proposal also must meet the other requirements of the rules of the SEC relating to stockholder proposals.

The matters to be considered at the special meeting are of great importance to the stockholders of DGSE. Accordingly, you are urged to read and carefully consider the information presented in this joint proxy statement/prospectus, and to submit your proxy by mail in the enclosed postage-paid envelope.

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SPECIAL MEETING OF SUPERIOR STOCKHOLDERS

Superior Galleries, Inc. is furnishing this joint proxy statement/prospectus to you in order to provide you with important information regarding the matters to be considered at the special meeting of the Superior stockholders and at any adjournment or postponement of the special meeting. Superior first mailed this joint proxy statement/prospectus and the accompanying form of proxy to its stockholders on or about [●], 2007.

Date, Time and Place of the Special Meeting

Superior will hold its special meeting of its stockholders at Superior’s principal offices at 9478 West Olympic Blvd., Beverly Hills, California 90212, on [●],[●], 2007, at [●] AM Pacific Time.

Matters to be Considered at the Special Meeting

At the special meeting, stockholders of Superior will be asked to consider and vote upon the following proposals:

1.

Proposal No. 1. To adopt and approve the Amended and Restated Agreement and Plan of Merger and Reorganization, which we refer to in this joint proxy statement/prospectus as the merger agreement, made and entered into as of January 6, 2007, by and among DGSE Companies, Inc., a Nevada corporation, which we refer to as DGSE, DGSE Merger Corp., a Delaware corporation and wholly owned subsidiary of DGSE, Superior, and Stanford International Bank Ltd., which we refer to as SIBL, as stockholder agent, whom together with any successors in that capacity we refer to in this joint proxy statement/prospectus as the stockholder agent, and to approve the merger contemplated thereby.

2.

Proposal No. 2. To approve the irrevocable appointment and constitution of SIBL, the largest Superior stockholder and its primary lender, including its successors as stockholder agent, as the exclusive agent, attorney-in-fact and representative of the Superior stockholders under the merger agreement and the related escrow agreement.

3.

Proposal No. 3. To adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

While these proposals are being voted upon separately, both of the first two proposals must be approved in order for either of them to be implemented.

Record Date; Stockholders Entitled to Vote

The record date for determining the Superior stockholders entitled to vote at the special meeting is [●], 2007. Only holders of record of Superior voting stock at the close of business on that date are entitled to vote at the special meeting. On the record date, 4,818,280 shares of Superior common stock and no shares of Superior preferred stock were issued and outstanding.

As of the record date, the directors and executive officers of Superior and their affiliates (including DGSE) held 380,000 shares of Superior common stock representing approximately 5.2% of the outstanding shares of Superior common stock.

A list of stockholders eligible to vote at the special meeting will be available for your review during Superior’s regular business hours at its principal place of business in Beverly Hills, California for at least ten days prior to the special meeting for any purpose germane to the special meeting.

Voting and Revocation of Proxies

The proxy card accompanying this joint proxy statement/prospectus is solicited on behalf of the board of directors of Superior for use at the special meeting.

General. Shares represented by a properly signed and dated proxy will be voted at the special meeting in accordance with the instructions indicated on the proxy. Proxies that are properly signed and dated but that do not contain voting instructions will be voted as follows: FOR Proposal No. 1 for the merger agreement and the merger; FOR Proposal No. 2 to approve the irrevocable appointment and constitution of SIBL and its successors as the

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stockholder agent under the merger agreement and the related escrow agreement; and FOR Proposal No. 3 to adjourn the special meeting, if necessary, whether or not a quorum is present, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

Abstentions. Superior will count a properly executed proxy marked ABSTAIN with respect to a particular proposal as present for purposes of determining whether a quorum is present, but the shares represented by that proxy will not be voted at the special meeting with respect to such proposal. Because approval of Proposal No. 1 requires the affirmative vote of a majority of the voting power of Superior shares outstanding and approval of Proposal No. 3 requires the affirmative vote of a majority of the voting power of the Superior shares present in person or by proxy, abstentions on either proposal will have the same effect as a vote AGAINST the proposal. Abstentions will have no direct effect on the outcome of Proposal No. 2. However, while Proposals No. 1 and No. 2 are being voted upon separately, both Proposal No. 1 and 2 must be approved in order for either of them to be implemented.

Broker Non-Votes. If your shares are held by your broker, your broker will vote your shares for you if you instruct your broker how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. “Broker non-votes” are shares held by a broker or other nominee that are represented at the special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of the shares to vote on the particular proposal and the broker does not have discretionary voting power on the proposal. Broker non-votes will be counted for purposes of determining the presence or absence of a quorum but will not be counted for purposes of determining the number of shares represented and voting with respect to a proposal. Failure to instruct your broker on how to vote your shares on Proposal No. 1 or 3 will have the effect of voting AGAINST the proposal. Failure to instruct your broker on how to vote your shares on Proposal No. 2 will have no effect on the outcome of that proposal, assuming that a quorum is present at the special meeting, but will reduce the number of votes required to approve that proposal. While Proposals No. 1 and No. 2 are being voted upon separately, both Proposal No. 1 and 2 must be approved in order for either of them to be implemented.

Voting Shares in Person that are Held Through Brokers. If your shares are held of record by your broker, bank or another nominee and you wish to vote those shares in person at the special meeting, you must obtain from the nominee holding your shares a properly executed legal proxy identifying you as a Superior stockholder on the record date of the special meeting, authorizing you to act on behalf of the nominee at the Superior special meeting and identifying the number of shares with respect to which the authorization is granted.

Revocation of Proxies. If you submit a proxy, unless you have entered into a support agreement to support the merger, you may revoke it at any time before it is voted in three ways:

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First, you can deliver a written, dated notice to the Secretary of Superior prior to the date of the special meeting, stating that you would like to revoke your proxy.

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Second, you can complete, date and, prior to the date of the special meeting, submit a new, later-dated proxy to the Secretary of Superior.

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Third, you can attend the special meeting and vote in person. Your attendance alone will not revoke your proxy.

Notices to the Secretary of Superior should be sent to 9478 West Olympic Blvd., Beverly Hills, California 90212, Attention: Corporate Secretary.

If you have instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions.

Support Agreement. SIBL and other Superior stockholders who together hold approximately 75.6% of the outstanding shares of Superior common stock have entered into a support agreement with Superior and DGSE pursuant to which the stockholders agreed to vote all of their shares of Superior common stock in favor of the merger and related transactions, and against any proposal or action that could reasonably be expected to delay, impede or interfere with the approval of the merger or any related transaction. This constitutes sufficient votes for both Proposals No. 1 and 2 to be approved. For more information, see the section entitled “The Merger Agreement — Support Agreements” beginning on page 69.

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Required Stockholder Vote

In order to conduct business at the Superior special meeting, a quorum must be present. The holders of a majority of the votes entitled to be cast by holders of Superior voting stock at the special meeting, present in person or represented by proxy, constitutes a quorum under Superior’s bylaws. Superior will treat shares of Superior voting stock represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the Superior special meeting for the purposes of determining the existence of a quorum. If a quorum is not present, it is expected that the special meeting will be adjourned to solicit additional proxies.

With respect to any matter submitted to a vote of the Superior stockholders at the special meeting, each holder of Superior common stock will be entitled to one vote, in person or by proxy, for each share of Superior common stock held in his, her or its name on the books of Superior on the record date. No Superior preferred stock is presently outstanding.

Proposal No. 1. The affirmative vote of shares representing a majority of the voting power of outstanding Superior voting stock is required to adopt and approve the merger agreement and approve the merger. Abstentions and broker non-votes will have the same effect as voting AGAINST Proposal No. 1.

Proposal No. 2. The number of votes present in person or represented by proxy cast in favor of the irrevocable appointment and constitution of Stanford International Bank Ltd. and its successors as the stockholder agent under the merger agreement and the related escrow agreement must exceed the number of votes present in person or represented by proxy cast in opposition to the proposal at the special meeting. Abstentions and broker non-votes will be counted toward a quorum but will not be counted for determining whether Proposal No. 2 has been approved.

Proposal No. 3. The affirmative vote of holders of shares representing a majority of the voting power of Superior stock present in person or represented by proxy at the special meeting and entitled to vote is required to adjourn the special meeting, if necessary, whether or not a quorum is present, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2. Abstentions and broker non-votes will have the same effect as voting AGAINST Proposal No. 3.

While Proposals No. 1 and No. 2 are being voted upon separately, both of the proposals must be approved in order for either of them to be implemented.

Superior’s bylaws authorize the shares present at the meeting in person or by proxy to adjourn the special meeting if a quorum is not then in attendance.

The inspector of elections for the Superior special meeting will tabulate the votes.

Unanimous Recommendations by the Board of Directors

After careful consideration, the board of directors of Superior has unanimously determined that the merger and merger agreement are advisable and in the best interests of Superior and its stockholders. The board of directors of Superior unanimously recommends that you vote FOR Proposal No. 1 for the merger agreement and the merger.

The Superior board of directors has also determined that the irrevocable appointment and constitution of Stanford International Bank Ltd. and its successors as the stockholder agent under the merger agreement and the related escrow agreement are necessary for the completion of the merger and advisable and in the best interests of Superior and its stockholders. The board of directors of Superior unanimously recommends that you vote FOR Proposal No. 2 for the irrevocable appointment and constitution of Stanford International Bank Ltd. and its successors as the stockholder agent under the merger agreement and the related escrow agreement.

The Superior board of directors has further determined that approving a proposal to adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies is advisable and in the best interests of Superior and its stockholders. The board of directors of Superior unanimously recommends that you vote FOR Proposal No. 3 to adjourn the special meeting, if necessary, to establish a quorum or to solicit additional proxies if there are not sufficient votes in favor of the proposals.

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Solicitation of Proxies

DGSE and Superior are conducting this proxy solicitation and will share the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this joint proxy statement/prospectus, the proxy card and any additional information furnished to stockholders. Superior will also make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send the proxy materials to their principals and will reimburse them for their reasonable expenses in so doing. To the extent necessary in order to assure sufficient representation at the Superior special meeting, officers and regular employees of Superior may solicit the return of proxies from Superior stockholders by mail, telephone, telegram and personal interview. No compensation in addition to regular salary and benefits will be paid to any such officer or regular employee for such solicitation. The total estimated cost of the solicitation of Superior proxies is $75,000.

Security Ownership of Principal Stockholders, Directors and Executive Officers

For information regarding the security ownership of Superior common stock by principal stockholders, directors and executive officers of Superior, see the section entitled “Ownership of Superior Capital Stock” beginning on page 153.

Appraisal and Dissenters’ Rights

Holders of Superior common stock will have appraisal and dissenters’ rights under Delaware law with respect to the proposed merger transaction. For information regarding these rights, see the section entitled “The Combination — Appraisal and Dissenters’ Rights” beginning on page 57.

Interest of Certain Persons in Matters to be Acted Upon

The executive officers and directors of Superior may have interests in the combination that are different from, or are in addition to, those of Superior stockholders generally. For information regarding the interests of Superior’s executive officers and directors in the combination see the section entitled “The Combination — Interests of Certain Superior Persons in the Combination” beginning on page 53.

Stockholder Proposals and Nominations

Requirements for Stockholder Proposals to be Brought Before an Annual Meeting. For stockholder nominations to the board of directors or other proposals to be considered at an annual meeting of Superior stockholders, the stockholder must have given Superior timely notice of the proposal or nomination in writing to its Secretary pursuant to Rule 14a-4 (c) under the Exchange Act. To be timely for the 2007 annual meeting, a stockholder’s notice must be delivered to or mailed and received by Superior’s Secretary at Superior’s principal executive offices not later than September 2, 2007.

Requirements for Stockholder Proposals to be Considered for Inclusion in Superior’s Proxy Materials. Stockholder proposals submitted pursuant to Rule 14a-8(e) under the Exchange Act for inclusion in Superior’s proxy materials and intended to be presented at Superior’s 2007 annual meeting must be received by Superior’s Secretary in writing not later than June 19, 2007 to be considered for inclusion in Superior’s proxy materials for that meeting. The proposal also must meet the other requirements of the rules of the SEC relating to stockholder proposals.

Due to the pendency of the combination, Superior did not hold an annual meeting of its stockholders in 2006. If the combination occurs, Superior will not hold its annual meeting of Superior stockholders for 2007. In that case, pre-combination Superior stockholder proposals must be submitted to the Secretary of DGSE in accordance with the procedures described in the section entitled “Special Meeting of DGSE Stockholders — Stockholder Proposals and Nominations” beginning on page 31.

The matters to be considered at the special meeting are of great importance to the stockholders of Superior. Accordingly, you are urged to read and carefully consider the information presented in this joint proxy statement/prospectus, and to submit your proxy by mail in the enclosed postage-paid envelope.

You should not submit any stock certificates with your proxy. A transmittal form with instructions for the surrender of stock certificates for Superior stock will be mailed to you as soon as practicable after completion of the combination.

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DGSE PROPOSAL NO. 1 AND SUPERIOR PROPOSAL NO. 1 — THE COMBINATION

This section of this joint proxy statement/prospectus describes the principal aspects of DGSE Proposal No. 1 and Superior Proposal No. 1, including the merger and reorganization and the merger agreement. While DGSE and Superior believe that this description covers the material terms of the combination and the related transactions, this summary may not contain all of the information that is important to DGSE and Superior stockholders. You can obtain a more complete understanding of the combination by reading the merger agreement, a copy of which is attached to this joint proxy statement/prospectus as Annex A. You are encouraged to read the merger agreement and the other annexes to this joint proxy statement/prospectus carefully and in their entirety.

Background of the Combination

During the summer of 2005, Superior attempted to raise equity capital using Wedbush Morgan as its exclusive investment bank. It was determined that no transaction could be presented that was either economically viable for Superior or acceptable to Stanford International Bank Ltd., which we refer to as SIBL, Superior’s largest stockholder and primary lender.

In October 2005, SIBL indicated that Superior should seek potential merger and acquisition candidates as SIBL was reluctant to offer any additional financing to Superior under Superior’s extant operational and management structure.

In November 2005, Lawrence Fairbanks Abbott, Jr., executive vice-president and former chief operating officer of Superior, contacted William H. Oyster, president and chief operating officer of DGSE, to introduce himself and to explore ways in which the two companies might work together, including scheduling a tour of DGSE’s primary office for November 22. After touring the DGSE facility and meeting with Mr. Oyster, Mr. Abbott contacted Paul Biberkraut, then a director and the chief financial officer and executive vice president of Superior, to report Mr. Abbott’s favorable observations regarding DGSE’s business. Mr. Abbott suggested that Mr. Biberkraut tour the facility and meet DGSE management to gather information and discuss mutual areas of interest to DGSE and Superior. A meeting was arranged for December 6, 2005 between Messrs. Abbott, Biberkraut and Oyster, DGSE chairman and chief executive officer Dr. L.S. Smith, DGSE chief financial officer John Benson, and DGSE executive vice president Scott Williamson.

Shortly after the initial contact, Mr. Abbott inquired whether DGSE would consider being acquired by Superior. Mr. Oyster referred the matter to Dr. Smith. Dr. Smith advised Mr. Oyster that he did not think that the initial concept of DGSE being acquired by Superior was feasible but expressed that DGSE would consider other alternative business combinations. Mr. Oyster informed Mr. Abbott of this position.

On December 6, 2005, Messrs. Abbott and Biberkraut toured the DGSE facility with Mr. Oyster and met with the rest of the DGSE executive team. Dr. L.S. Smith led the meeting and expressed his interest in finding a strong partner to grow the business. The broadly outlined nature of the transaction discussed was that Superior would acquire DGSE and that the transaction would involve the cash purchase of a significant portion of Dr. Smith’s stockholdings in DGSE. During this meeting, both parties indicated interest in moving forward. Superior indicated that, at that time, Superior needed to involve its largest stockholder, SIBL, in the discussion.

On December 6, 2005, in connection with the tour and meeting, DGSE and Superior executed a mutual confidentiality agreement to explore a potential transaction between the parties.

On December 6, 2005, based upon the tours and meeting on that date, and upon review of DGSE’s financial reports, Messrs. Abbott and Biberkraut reported to Silvano DiGenova, then the chairman, president and chief executive officer of Superior, that a merger or acquisition with DGSE held significant promise and deserved serious further investigation and consideration. Mr. Biberkraut also advised SIBL of the meetings.

In December 2005, Messrs. Abbott and Biberkraut approached SIBL’s investment banking division to seek assistance for Superior in developing a case for merging Superior and DGSE. During December 2005, Superior continued to have discussions with SIBL’s investment banking division about both the potential synergies and the structure of the transaction, as well as the associated risks.

Late in December 2005, discussions with DGSE about the structure of a transaction were expanded to include SIBL. Discussions continued in early January 2006, and SIBL began negotiating directly with DGSE.

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On January 9, 2006, Dr. Smith and Mr. Oyster had a telephone conference with Michael Guptan and Josh Feidler of SIBL to discuss possible concepts for a business combination between the two entities.

On January 18, 2006, Dr. Smith and Messrs. Oyster, Benson and Williamson met in Dallas, Texas with Messrs. DiGenova, Abbott and Biberkraut, in a meeting designed to acquaint the two companies and to discuss various alternative possible transactions.

On January 23, 2006, the Superior board of directors met and Mr. DiGenova delivered a report on his discussions with Osvaldo Pi, head of the merchant banking division of Stanford Financial Group Company, which we refer to as SFG, an affiliate of SIBL, regarding the viability of a potential merger with DGSE. The Superior board of directors discussed the potential benefits and risks of the merger and appointed Mr. Biberkraut to develop combined pro forma financial statements to facilitate further discussions regarding a potential merger.

On February 1, 2006, Dr. Smith and Mr. Oyster met in Houston, Texas with Danny Bogar, Osvaldo Pi, Ronald Stein, Joe Frisard and James Davis, each a representative of SIBL, to discuss SIBL’s position on DGSE possibly acquiring Superior.

On February 6, 2006, Dr. Smith had a telephone conference with Mitchell T. Stoltz, a director of Superior, regarding Superior’s interest in extending discussions regarding a possible transaction.

On February 7, 2006, Mr. Abbott sent Dr. Smith a plan for the merger developed jointly with Mr. Guptan which outlined terms of debt and equity for the transaction and organizational charts.

On February 8, 2006, Dr. Smith had a telephone conference with Mr. Guptan, who proposed a potential acquisition of DGSE by Superior. Dr. Smith advised Mr. Guptan that the proposal was not acceptable to DGSE.

On February 16, 2006, Dr. Smith met with Mr. Bogar in Dallas, Texas to explore additional areas that might lead to an acquisition of Superior by DGSE. During this meeting Mr. Bogar and Dr. Smith discussed alternatives that might be acceptable to DGSE.

During the month of February, Dr. Smith telephonically apprised the DGSE directors on the direction of the discussions with Superior on at least five separate occasions.

On February 23, 2006, Mr. Pi presented new proposed terms for the merger to DGSE.

On February 27, 2006, Dr. Smith provided a preliminary term sheet to Mr. Pi outlining the proposed terms of a merger between Superior and DGSE.

In March, 2006, DGSE and Superior negotiated a non-binding term sheet regarding the acquisition of Superior by DGSE.

On March 22, 2006, Dr. Smith provided a revised preliminary term sheet to Mr. Pi, outlining, among other things, the terms of a proposed merger between Superior and DGSE as well as the terms of the restructuring of SIBL’s revolving line of credit with Superior.

On March 25, 2006, the Superior board of directors met to discuss the preliminary term sheet proposed by DGSE. After discussion of the preliminary term sheet and the potential issues associated with the contemplated transaction, the board of directors unanimously authorized management to commence due diligence.

On March 29, 2006, DGSE had a telephonic meeting of its board of directors, with all members in attendance, to discuss the current state of the discussions with Superior and SIBL. The board of directors was advised of all of the events leading to the board meeting. The DGSE board authorized management to continue the discussions and to try and finalize terms leading to a definitive agreement.

On March 29, 2006, Superior’s board of directors retained a business advisory and valuation firm, Stenton Leigh Valuation Group, Inc., which we refer to as Stenton Leigh, to perform a fairness analysis in relation to the proposed merger and the resulting valuation to the Superior stockholders. The fairness opinion was presented by Stenton Leigh at a special meeting of Superior’s board of directors on June 27, 2006.

Beginning in February 2006 and continuing through July 2006, the parties conducted extensive due diligence on each others’ businesses and developed an integration plan to integrate the businesses following the merger. During this time the parties also negotiated the definitive merger agreement and set a timeline to complete the combination

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subject to the approval of each company’s stockholders. From March through June, 2006, Dr. Smith was in almost daily contact with Messrs. Pi and Bogar, on behalf of SIBL, and the Superior management regarding due diligence matters and issues involving a possible transaction.

On April 3, 2006, DGSE, Superior and SIBL entered into a confidentiality agreement and a shared expenses agreement, regarding the confidential treatment of information exchanged and the sharing of specified expenses, respectively, related to the exploration of a possible business combination between DGSE and Superior.

On April 13, 2006, DGSE distributed the initial draft of the original merger agreement for review by Superior and SIBL.