In most countries around the world, gold is the base for the paper currency and what gives the currency its value. Throughout history, gold has been the most valuable metal for most trading activities, and entire civilizations based their economy around it. Since the early days, kings and their armies went to war over the noble and shining material. Even today, the international trade of this metal is used as the base for currency exchange.
It is one of the few precious metals used to fight against inflation, and it is the basis of country-wide investments. Gold never loses its value, it’s the same across time, no matter if it’s a freshly mined piece or an old, dusty jewelry item. Today, many dealers make a living dealing with used, old or pre-owned gold, and it’s a lucrative business buying and selling scrap gold jewelry, where all you need to know is how to conduct it.
THE VALUE OF GOLD – SPOT PRICE
Every day, the global Gold Market sets a price for the daily cost of gold; this is called “Spot price”. This is important to know on a daily basis as it will determine if you’ll make more or less profit. You can find the spot price in any precious metal dealer’s website or magazine. It’s important to remember that the spot price is for one troy ounce of 24 karat gold.
To learn how to buy or sell gold jewelry there are three main ways. You can either read on the internet or watch a video clip, contact people who are in the business for a tutorial, or get a part-time job and work with a pawnbroker or a dealer who buys and sells gold jewelry and get a firsthand experience on the subject.
MEASURING THE GOLD’S VALUE
The first thing to do is to find out the % of gold in any scrap gold jewelry pile. It will require a little math, but it’s really easy to calculate.
Karat will give you the percentages:
24 karat gold is 99.9% or higher gold
22 karat gold is 91.6% gold
21 karat gold is 87.5% gold
20 karat gold is 83.3% gold
18 karat gold is 75% gold
15 karat gold is 62.5% gold
14 karat gold is 58% gold
12 karat gold is 50% gold
10 karat gold is 42% gold
09 karat gold is 37.5% gold
08 karat gold is 33.3% gold
24, 22k, 18k, 14k and 10k are commonly found in the USA, and are considered pure gold, but in Europe some 8k and 6k items will also be considered pure gold.
Here is where the math gets a little tricky; when you take your scrap gold jewelry to a jeweler, they will weigh your gold by troy ounce.
Some call it pennyweight;
Basically 1 pennyweight is 1.555 grams. You’ll then have to divide the spot price by 31.1 to get the gram price, or by 20 to get the pennyweights price. Multiply that with the percent of gold and you have your scrap’s value.
Let’s assume that the spot price is $500; divide that by 31.1 which will give you $16.07/gram, or $25/pennyweight. You know that the value of 24k is 100%; take that and multiply by the % of your gold. Let’s also assume that your gold is 10k, which means it’s 42% pure.
Multiply the number you got before by that to get your own gold’s value. 16.07 * 0.42 = $6.75/gram
Multiply your scrap gold’s weight by that; say you have 10 grams, and you’ll know what it’s worth today. In our example it’s 6.75 x 10 = $67.5.
Now you can compare the quotes you get to that number to know if you have a good deal or not. Since most jewelers will want to make a profit, they will buy this at 60% or even 50% or less. So be sure not to accept the first offer you get, and try to haggle a little.
DIFFERENT KINDS OF SCRAP GOLD:
Old or used gold can come in many shapes and sizes; the most are gold chains, watches, and old jewelry. Bracelets, pins, brooches, rings, wedding or engagement rings, and other bent precious metal items are seen ever so often.
LICENCE TO TRADE:
Anyone who wants to sell scrap gold jewelry can do so by simply showing a valid ID for the records, but if you want to buy and trade scrap gold jewelry you’ll have to get a license. These licenses are given to individuals or businesses.
If you do not wish to have a personal license now, you can get a part-time job with a broker or a gold buyer and use their business license.
GOLD MEASURING TOOLS:
There are a few tools that will help you measure your scrap gold’s purity and determine its value. They are very specialized but not that expensive. All the instruments should cost you around a total of 40 Singapore dollars.
Paper money: scrap gold is a cash business; you’ll need at least 700 Singapore dollars in your pocket to pay your clients.
Testing Kit: these kits will test the true karat or % of pure gold that you’re about to buy; they contain a myriad of acids and other tools to do the job.
Professional scale: will measure the total weight of the gold; a digital food scale is good to start, but you may lose some valuable milligrams of gold in the process, so you should get a professional jeweler’s scale.
Good magnet: since gold doesn’t stick to a magnet this will help you see if a pile of scrap is actual gold or just gold plated (GP or GF). But be aware that brass will also not stick to a magnet, and sometimes people fake the K stamp on it to make more money.
Fine file: the easiest way to find a GP is to file a little part of it, and see what’s inside the scrap you’re going to buy.
Magnifier Loupe: will help you see many things, from the karat and hallmark engravings to scratches, or inspect if it’s still gold under them. You can also use it to find green spots where gold plated items may have corroded.
Putting ads in the paper and online is still the best way you can let many people know that you’re looking to buy their old and used gold jewelry. You can stick a flier on your workplace’s bulletin board, advise your friends and family and ask them to ask around. Or you can do a social media blast and post on Facebook and other platforms.
You can print business cards and distribute them at any gathering you attend; they are mini-fliers that people will remember when they decide to sell their old jewelry.
If you decide to take the plunge, but on someone else’s dime, you can take a part-time job with a pawnbroker; they will teach you some marketing methods that you’ll use as part of your training and job. Radio and television are not out of the question either.
Later on you can think about building a website, and funneling all your marketing material through there; that will generate more sales as it would show people your legitimacy.
SETTING UP A GOLD JEWELRY PARTY
If you’ve done your marketing properly and spread the word, after a little while you’ll have enough interested parties that you’ll be able to setup and host a scrap gold jewelry trading party. People will come in larger groups and evaluate their gold with you; then they can decide if they want to sell their gold jewelry for cash on the spot.
If not, you can give them your card and they can get back to you after they give it a thought. In the meantime, the horde effect will drive the sales up, since they will see other people walking away with cash money. Pawnshops and unfamiliar brokers will off-put many people as they would think that they are being scammed, and this is a nice chilled and friendly environment to talk and trade gold jewelry.
You can also partner with someone and can share a percent of the profit with them; 10% is a good amount to consider for their part.
Make sure to reserve the names and contact information of all the people you’ve dealt and traded with, and anyone else you’ve contacted about your business, even only for inquiries. This way you’ll have a good database of all your contacts, and you can use them later for any advertisement blasts or other marketing purposes.
IS IT WORTH IT?
A well-known broker will buy gold at 40% up to 60% of the value. Pawn shops will try to pay less, about 30% up to 35% of the value, as they prey on people that are desperate for cash. That’s why in most cases it’s recommended to deal with a well-known dealer. Most buyers will take their purchased gold jewelry and smelt it, refine it and mold it into pure ingots before they sell it.
If you sell the refined gold jewelry directly, you might get a better value for it, but that depends on the availability of refineries who actually deal with the public. After a short while, when you learn the ins and outs of the business, you may be on your way to a successful career in the precious metals industry. But until then, if you have some scrap gold jewelry you’d like to sell you can contact us by signing up to our mailing list below.