The "best gear" can (and usually does...) change with every update. It's really up to you.

I'm an alt-aholic, and I enjoy experimenting with new builds, so I try to hit a balance between being prepared and not being a hoarder.

I have six characters set aside for gear like so:
-Elite Gear (Monster Masks and such)
-Heavy Armor
-Medium Armor
-Light Armor
-Jewelry
-Weapons/Shields

The weapons are either sharpened overland sets or dungeon sets with a trait that's at least somewhat useful
The armor and shields are Divines or Impenetrable overland or dungeon sets, limited to the best trait
The Jewelry is purple or up for overland, blue for dungeons.
The Elite Gear is only disposed of if I have multiples with better traits

Anything that doesn't fit those criteria, or are doubles, are then sold if they have an MM rating of 1000 or more, otherwise they're deconned. The ones I sell I usually mark forty to fifty percent off MM because odds are the demand is going to be low. The ones I decon are on characters with the best chance to reclaim high-level tempers.

Anything I keep on these characters for this storage I lock, not only to stop me from mixing things up and selling something, but also to make it easy to figure out what I need to add to my collection and what I don't. I just move all the Heavy Armor on the character, sort by name, look for the gap in the locks on the left until I find each item and check to see whether I add it, replace an existing one, or put it back on the banker to be sold/deconned.

And if you're curious, I play with those characters, I just dump the gear onto the banker when I take them out, then put it all back when I'm ready to log.

Hope that helps!

Master Merchant is one of the two primary addons in the game, along with TTC (Tamriel Trade Center, I think). Master Merchant gives you the price based on actual sales in guilds you're involved (so not everyone's MM is the same, it depends on their data sources). TTC is based on price listing of any guild with a trader that was visited by someone with the addon. MM is a good indicator of past performance to help determine what is likely to sell, while TTC is a good option if you want to wet your finger and see which way the wind is blowing. There are arguments over which is better, I go with MM because I prefer sales history to see whether I'm selling too low or buying too high (it color codes guild traders, actually, so you can see if a deal is great or overpriced - but it is only as good as its data).

Level your crafting, and put skill points in your decon passives.

Decon everything you don't want/need. You'll get a nice pile of purple improvement mats, along with some other stuff.