Learning how to buy scrap gold from private individuals is easy and very profitable.
Whether you plan to buy scrap gold for investment purposes, or resell for profit, the techniques are the same.
Buying scrap gold, or any other precious metal, is very different than buying other types of goods.
The reason is, that before you buy, you already know exactly what you will get when you sell.
When you do sell, there is no waiting for someone to buy, you can sell it instantly and on demand because it has an absolute value.
It’s hard to find any other product that can be sold on demand for a guaranteed price, especially near 100% of value.
Nearly everyone owns gold in one form or another that they eventually will need or want to sell. Every day, in every location throughout the world, individuals are looking for gold buyers.
A large percentage of what individuals sell is jewelry such as necklaces, rings, bracelets, pins, broaches, wrist watches and pocket watches.
Other types of items that are sold to scrap gold buyers are rare gold coins and bullion. They could originate from either a personal collection or received through inheritance.
Occasionally you’ll have the opportunity to buy dental gold as well. Dentists are frequently looking for someone to buy their dental scrap.
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The following are the techniques of how to buy scrap gold.
Gold is graded in what is called the “karat system.” In the karat system, pure gold is expressed as “24 karats” (24k).
The gold content of any item depends on the amount of pure gold it contains.
The most popular grades in the United States are:
18k = 18/24ths or 75% gold. Also indicated as .750
14k = 14/24ths or 58.5% gold. Also indicated as .585
10k = 10/24ths or 41.67% gold. Also indicated as .417
In the United States, as well as any civilized country in the world, legal regulations require the marking of gold jewelry to protect the public against fraud.
If, for example, the item is stamped 14k it can not be less than 58.5% gold or the maker could be charged for fraud or counterfeiting.
Although this has been a law for many years, the United States Congress most recently passed an amendment in 1976 that stipulates the gold content of an article must be at least 10 karats for it to be called “karat gold.”
The karat stamp can be found on the inside of gold rings, on the clasp of gold chains and bracelets, on the back of pendants and on earring posts.
If there is no stamp present the item may still be gold, sometimes through wear the stamp is hard to see or is completely gone.
These stamps are sometimes hard to see with the naked eye. You could use a magnifying glass, but the best tool to use is a 10X Jewelers Loupe which can be purchased at any jeweler supply company.
As stated earlier, all jewelry manufactured in the United States must be stamped and support its karat grade.
Be aware, there are counterfeiters of gold, just as there are of money, even though it is illegal.
The usual type of jewelry that is copied are heavy necklaces, were they take silver chains and gold plate them. And yes, they put a karat stamp on them!
Although it is rare that you will look at fake items, it’s good to keep your guard up and be ready if and when they do appear.
Early on, you may want to make it a rule to test every item you look at. Eventually you’ll be able to tell the fake from the real just by looking at it.
Although there is electronic testing equipment available, the less expensive route to take is simply a gold test stone and acid.
They can be purchased at any jeweler supply company.
When testing the item you simply rub it against the stone. Press firmly as you rub until you see the gold on the stone.
Then, using the bottle of acid, squeeze a drop on the stone where you rubbed the gold.
If it disappears, or turns green, the item is not gold. If it stays unchanged it is gold.
If it turns a dark brown it is most likely a lower karat grade than the acid you are using. In that case try a higher karat acid.
If you already have an idea what karat grade the gold is, use the acid labeled that particular karat. If you're unsure what karat it is, start with the 18k acid. If it turns dark brown then try it again with 14k acid. If it still turns dark brown it is most likely 10k.
If you have any doubts about the item being genuine, or if you think it may be gold plated, run the test several times. Sometimes the gold plating is very thick and will not disappear from the stone during the first test.
You could also rub the item on the stone several times to be sure to rub through the plating. Then just drop the acid on the stone where you did the last rub.
When buying scrap gold you sometimes have pieces that are very small and hard to handle. In this situation just lay the piece on a folded paper towel and put a drop of acid right on it.
After you are finished testing, wipe the acid off of the stone with a wet cloth.
Be careful not to get the acid on your fingers it will leave a yellow stain deep into your skin and take weeks to wear off.
Once you’ve determined the item is gold, the next thing you need to do is calculate it’s weight.
In the gold industry weights are measured in troy weight. The troy system began in medieval times and is named after the city of Troyes, France.
The troy ounce is what the price of gold is based on, hence the spot price is for one troy ounce of pure gold.
Below are some popular weights in the troy system and their conversion:
1 Troy Pound = 12 Troy Ounces (oz)
1 Troy Ounce = 20 Pennyweights (dwt) or 31.103 Grams (gr)
1 Pennyweight = 1.555 Grams (gr)
When buying and selling scrap gold you will deal in pennyweights (dwt) a majority of the time.
To weigh the gold items you’ll need to
purchase a scale that weighs in grams, pennyweights and ounces.
There is a formula that is used throughout the trade that makes it simple to estimate the scrap value per pennyweight for each grade of gold.
Here is that formula:
18k - spot price X .0347 = price per dwt
14k - spot price X .0269 = price per dwt
10k - spot price X .0195 = price per dwt
As a rule of thumb, these formulas will result in the price that you will receive for each specific karat grade based on the spot price.
The following example is how you would use the formula:
Let's say someone had three wedding bands to sell, all 14k, with a total weight 7.7 dwt.
At the time you purchased them spot gold was at $1000/oz.
You would take $1000 (spot price) X .0269 (14k) = $26.90 per dwt.
Then multiply $26.90 X 7.7 (total weight of the rings) = $207 (scrap value you will receive when you sell).
You just received a crash course on how to buy scrap gold.
For tips on finding and dealing with sellers grab a copy of the popular e-book, "How To Buy Gold Low."
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