Selling Scrap Gold - A Case
You have probably seen their ads on
TV. "Send us your scrap gold and we will send you a big fat
check". As a former salesman of precious metals, I decided to put
one company to the test. What I found out was surprising -- to say
Preparing To Sell My Scrap Gold
I chose a small 10 karat gold ring to send in to
company X. In a worst case scenario, I might never see my item(s)
again. So this was a way to limit my losses in case that happened.
How could I tell the ring
was 10 karats? Items containing gold will have the content marked
or stamped on the item. This is usually expressed in karats but
sometimes is expressed in parts per thousand. For instance, if you
see 500 stamped on your gold jewelry, it is an alloy containing
If you have read my Gold Weights & Measures article
elsewhere on this site, you know that a pure gold item is
expressed as 24karats or 24K. Anything less and the item is an
alloy of gold and one or more other metals. My ring has 10K
stamped on the inside so the gold content (purity) is 41.66%.
I requested my mail-in kit online and
waited for it to arrive. Before sending the ring off, I made sure
to get a "gold weight" of either Troy ounces, pennyweights or
grams. Since I didn't know which of the various weights Company X
would use to base their offer on, I wanted to be prepared to see
how good a deal they offered.
handy multi-weight pocket scale (about $20.00), my ring weighed in
at 8.2 grams. With the information in Gold Weights and
Measures, I calculated that 8.2 grams = .265 Troy
ounces = 5.3 pennyweights. Now I was ready: 1) to see if Company X
matched one of these readings after weighing my ring; and 2) to
convert their stated weight (if necessary) to Troy ounces and
figure out what percent of the ring's value they paid out.
Results Of My Sale To Company "X"
On Day 1, I mailed the packet they
provided back to them with the ring enclosed. After about seven
days, I started checking the progress using their online tracking
system. On Day 12, after getting messages they still hadn't
received it, I sent them an E-mail asking "where is my
ring"? They quickly responded, apologizing for the
delay and said my check would be mailed on Day 14 via 1st Class
Mail. I received their check on Day 18 for a whopping $12.72.
That was with
a 20% special bonus.
There must be some mistake!!!!
So I started examining Company X's figures to try to make sense of
it. First of all, did their weight match any of my weights?
payment was based on the ring's pennyweight which was stated as
5.3. So far, so good - it matched my pennyweight result. With 20
pennyweights in a Troy ounce, 5.3 pennyweights equals .265 Troy
Second, what was the price of spot
gold when they "locked in" my price?
didn't provide that but checking the price of spot gold from Day
1 to Day 13, the price averaged about $800 per ounce.
Third, what percent of the ring's gold
worth did they actually pay me?
multiplying $800 by .265 percent, I came up with $212.00. If the
ring were pure gold (24K), this would be the actual value. Since
the ring is only 10K (41.66 %), the gold value is .4166 times
$212 or $88.32.
check Company X sent me was approximately 14.4% of the ring's gold
value. They kept 85.6% as their processing and refining fee.
Trying To Understand Company X's Buying "Logic"
Company X's return policy states they
will return a customer's scrap gold if their check is returned
within 10 days. I took them up on their return policy by mailing
the check the next day (Day 19). Notifying them in an E-mail that
their check was being returned, I told them of my calculations. I
asked them "how accurate were my calculations and what was I
missing in understanding this low payout"?
Their response was my calculations
accurate". But because my ring was not 24K and required
refining to extract the gold, payment was based on a sliding
scale. Also, because my total shipment was less than one ounce (20
pennyweight), my payment was in their lowest payout category.
It was then they
made a surprise offer...
Without my asking, the representative
checked with management and offered a price based on the five
ounces and higher category. They now were willing to send me a
check for $28.49 for the ring. That brought their payout
percentage of the ring's gold value of $88.20 to 32%. Not enough!
So I thanked them for the offer but asked for my ring back. It was
finally returned on Day 44.
Selling Scrap Gold - Lessons Learned
If you decide to sell your scrap gold
to one of the big companies advertising on TV, or to one of the
local jewelry stores that accept these items, or even attend a
"precious metals party" that a friend or acquaintance is holding,
Keep in mind that these companies are
performing a service and deserve a fair
processing fee - especially if the scrap gold is not 24 karat and
requires refining to extract the gold. You have to decide what is
fair and if you want to part with your scrap gold based on their
- Convert the weight of each piece
to a "gold weight" such as Troy ounces, pennyweights, grams or
grains. If you don't have a scale to do this, ask your
friendly postmaster or butcher. Their scales will give you the
Avoirdupois weight which, when multiplied by 0.911, will give
you the Troy weight.
- Get the purity of each gold piece
which is usually expressed in karats. If you see a 24K stamped
on the piece, it is pure gold and requires no refining. Other
common karatage markings are: 22 karats = 91.67% gold purity,
18 karats = 75.00% purity, 14 karats = 58.30% purity, 12
karats = 50.00% purity.
- Find out the current price of
spot gold. There are various places you can get that
information including the Gold Investing Simplified Home Page.
- For each of your scrap gold
pieces, calculate the value by multiplying the weight of the
piece (in Troy ounces) by the spot price of gold. Then
multiply that result by the purity of the piece. For my 10K
ring, the calculation was $800 x .265 x .4166 = $88.20.
- You are now better prepared to
approach buyers of scrap gold, understand their offer and
negotiate the best possible deal. If you're dealing
face-to-face, you can take it one piece at a time. Remember,
you are in control. If you don't like their offer or the piece
means more to you than what they are offering, don't sell it
My suggestion? You should get at
least 80% of the total gold value of your scrap gold
based on the current spot price but Strive for more.
I have made every effort to produce an informative and helpful
article on Selling Scrap Gold based on my research and
experiences. However, I make no representation or warranties of
any kind with regard to its completeness, accuracy or suitability
for any specific situation or purpose. See Terms&Conditions
for more info.
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