How To Calculate The Value Of Scrap Gold

Looking to sell some gold? Learn how to value your own gold to ensure that you don't get ripped off!

There has been a very buoyant market for scrap gold in the past few years, demand for gold rises significantly in a global recession as governments and private investors seek to underpin their currencies. If currencies fail then gold is the fallback; fast forward a few years to the next boom and the price will fall again. The jewelry market actually utilises only a small proportion of the annual global gold mine output. Companies offering to pay money for your scrap gold in a recession are doing so for one reason and one reason only, and that is to make some big profits.

They know that they can buy for a price perceived by many to be a good price and sell at a huge price. Selling your gold whilst the prices are high, particularly if it is broken or unwanted jewelry items, is a perfectly viable and acceptable way to turn physical assets into cash. But how many people know the true worth of their gold before accepting a price? This page will explain the valuation process so that you can negotiate heavily with the gold buyers.

Scrap Gold Valuation

Valuing your own scrap gold is actually pretty easy, there is no complex formula. Selling without this knowledge is just silly though, it is fair to expect any buyer to want to make a decent profit; most will be out to seriously exploit you for major profit. Most of these businesses which have emerged wanting to buy scrap gold can melt it down themselves, have it stamped as authentic, and sell it as bullion within days.

Value Your Own Scrap Gold

To value your gold you first need to follow these quick and easy steps:

Step 1 - You need to arrange your scrap gold into piles depending on its carat. So, 10k in one pile, 14k in another pile, and so on. The higher the carat the more the value per gram. Pure gold is 24k but pure gold is seldom used for jewelry in western societies as it is too soft and can scratch easily. If an item is 9k then it is 9 parts gold and 15 parts something else, if it is 14k then it is 14 parts gold and 8 parts something else.

Step 2 - You need to purchase or borrowa good pair of digital scales, these can be had for less than $20 on Amazon.com, American Weigh are one of the best manufacturers of accurate but affordable digital scales. Do not use kitchen or bathroom scales, these are completely inappropriate for this use.

Step 3 - Once you have picked up a suitable scale, you need to remove any stones from the gold. Whilst these stones may have monetary value themselves, you are not valuing these.

Step 4 - Now, weigh each pile of gold. This must be done seperately, so you must ascertain how much your 9k gold weighs, how much your 14k gold weighs, and so on. Record the weights of each in both grams and ounces; some dealers will use ounces and some will use grams, most will use both whilst grams is perhaps more common than ounces for the purpose of trading scrap gold.

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Calculating Scrap Gold Value

Now comes the big finale, the conclusion; at current prices this bit may actually pleasantly surprise you. You need to ascertain the current value of gold, this changes on a near daily basis. For your convenience, the RSS feed to the right displays today's gold price. A good website for checking daily gold price is Goldprice.org; at time of writing the price per ounce is $1386 per ounce. Now, the price quoted is for one troy ounce of 24k gold and the likelyhood is that none of your gold is 24k. Here is the formula for working out the value of your scrap gold:

1. Divide the troy ounce gold price by 31.1 (there are 31.1 grams in 1 troy ounce). The price at time of writing is $1386 per ounce, so the value of 1 gram of 24k is $44.56.

2. Now multiply the value per gram by the number of grams of gold that you have for the first pile. So, if you have 12 grams of 9ct then you are left with $534.72. Write down the figure.

3. Now multiply the weight of gold by the number of carats and divide by 24. You have 12 grams of 9ct gold, so multiply 12 grams by 9 and then divide by 24. So basically (12 x 9)/24. In this scenario your scrap gold contains 4.5 grams of scrap gold.

4. You already know the value of 1 gram of pure gold, in this hypothetical scenario it is $44.56; multiply this figure by the quantity of pure gold that you have (44.56 x 4.5). Your 12 grams of scrap 9ct jewelry contains pure gold worth $200.52.

5. Now repeat steps 2, 3 and 4 for all of the gold types that you have. If you have any gold which does not state the gold purity on the hallmark, for example if the hallmark has worn down or it is very old gold which was often unstamped, then you need to take it to a Jeweller to ascertain purity before valuing. Simply add up the value of each of your piles of scrap gold and find the total figure, you now have your gold value. You aren't going to get this price though when selling scrap, read the next paragraph for an idea of how much you should expect to be paid for the gold.

Scrap Gold Prices

The price that you have just calculated is the value of the pure gold if it was pure and in a bullion bar or bullion coin format. Anybody who buys that gold has to melt it down, turn it into bars or coins, get it hallmarked, and then distribute it. There are costs involved for the buyer, and that is before taking into consideration their profit margins; these are businesses not charities. The profit margin really is the bit that you need to be concerned about, scrap gold buyers are only concerned with their bottom line and will seek to make as much money from your gold as possible. So, how much should you expect to receive? It is reasonable to expect at least 60% for scrap jewelry, 80% for bullion. You would be lucky to get anything over 70% for jewelry, if they quote you less than 60% then negotiation upwards.


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Comments

FloraBreenRobison on 05/03/2012

This is a great article for me as gold (and silver) are often the only things that people will buy and we need to find a safe way to invest money that does not involve banks or the stock market. . Nobody is interested in buying pearls for example. I discovered that when I tried to sell pearls my parents bought me. I had always heard that diamonds were a good investment decades ago, but that is not true anymore. No one wants to buy diamonds. I had a small diamond in a gold pinky ring that I got as a graduation present and discovered that jewelers were only interested in the gold-not the diamond. I do find it frustrating trying to keep up with the daily changes, but I would much rather sell my gold and silver if I need money than trying to go through the bank. No, no no!

Quite often too you pay a lot of money when you buy jewelry for the time the artist took in making it as well as the art design itself which is understandable as otherwise the artist doesn't survive-as the daughter of an artist, I know this too well.

But: I have discovered the hard way that you have to make sure when you are buying jewelry in the first place that you check to see if the piece is made of real silver or real gold if I am buying it as an investment. Some things I have no intention of ever selling. But others I buy with the idea that I prefer jewelry to the stock market and there is no point in buying things which jewelers will not buy if you ever need liquid assets for an emergency.