How Gold Buying Works

Many are beginning to realize the immense value of unwanted, broken or unused gold. Jewelry store owners, coin dealers and even individuals are making investments, even as the economy continues to sour. However, to those that are new to gold-buying, one question still remains: Why would someone want to spend money on junk metals? After all, to acquire gold one must purchase jewelry that is old and useless.

This is not to say that resalable jewelry doesn’t have a market, but when it comes to gold, most buyers are looking for the cheapest prices. Jewelry that is broken, outdated and even turning can qualify, provided that it contains some form of real gold. Even costume jewelry can work, as these pieces are sometimes gold-plated. Ultimately, if your jewelry contains any speck of gold, it can be sold. In fact, with the current state of the economy, there are even more gold buyers than before. As the stock market continues to plummet, investors want to turn to other sources for making money. They feel that gold is relatively safe, since it will always maintain its value. The gold content in most jewelry ranges from 10 to 14 karats. The more karats a piece of jewelry contains, the more money you will make when you sell it. To calculate the worth of a particular piece, dealers consider: how pure the gold is, the weight of the item and how much gold they will acquire after the items are melted down.

If you would like to make these calculations yourself, you will have to figure out how many karats the piece contains. To do so, you must first separate your pieces by their karats. Now weigh them on a scale. Make sure the scale’s accuracy is at least one gram. If you want the best results, you can even weigh it at one tenth of a penny weight, but this might be a little complicated for beginners. In any case, after you weigh your items, use a site like Kitco to determine the market value of your gold.

Now convert the weight of your gold into troy ounces. If your scale is set to grams, you have to divide your current figure by 31.3; if it is set to pennyweights, you must divide by 20. If the scale is already set to troy ounces, you won’t have to do anything.

To finish your calculations, use the following formula:

[the weight of your gold in troy ounces] X [the percentage of gold in your jewelry] X [the estimated market value of your gold]

For the second figure, be aware that the percentages of gold usually go like this:

• 10 karats contain 10% gold
• 14 karats contain 58% gold
• 18 karats contain 75% gold
• 24 karats contain 99% gold

It is rare that your jewelry would contain more or less than these amounts, which is why the numbers given above should be quite helpful when figuring out the spot price of your jewelry.

Of course, be aware that this formula only provides an estimate of how much you will earn. The price could be more or less depending on how much gold the dealer receives after the jewelry is melted. If the piece contains stones, pearls and other adornments, your calculations may not be completely accurate. In addition, some refineries may charge a commission before melting a dealer’s jewelry. As such, most dealers will factor all that in before giving you a final estimate.