How to Price Scrap Gold
Most companies ask you to send your scrap gold pieces to them for analysis. Once they determine a value, they send payment. Before you mail away your gold, though, you may want to determine for yourself what the melt value—the market value of the gold contained within the piece—should be.
To calculate the melt value of a gold piece, it's important to understand how gold is rated for its purity, how it is measured, and how it is priced.
The quality of gold is indicated in karats, which measures the gold's purity on a scale of 1 to 24 and normally is recorded directly on a piece with a stamp indicating, for example, 10k, 14k, or 22k. In order to determine a percentage purity, you must divide this number by 24. This means 12k would be 0.5, or 50% pure, and 24k would be 1.0, or 100% pure. The piece also may be stamped with a number, such as "375," meaning 37.5% gold content, or 9k.
Once you've determined the purity of your gold, you need to measure it on a scale. Gold prices usually are quoted per troy ounce, which is equal to 31.1 grams, so you can easily divide the current gold price by 31.1 to get the price per gram.
Look-up the current gold price, then calculate the melt value of your piece by simply multiplying the three factors you've identified: (1) the weight of your piece, measured in grams, (2) the purity of your piece, measured using percent, and (c) the current price of gold per gram.
For example, if gold is selling for $1,200 per troy ounce, the value of a 10-gram piece that is 12 karats would be calculated like this:
- Weight: 10g
- Purity: 50% (12k = 12/24, or 0.5)
- Price per gram: $38.585 ($1,200/31.1)
- Calculation: 10 x 0.5 x 38.585 = 192.925
The calculation provides us with a melt value of $192.92 for this piece.
Consider a second example of a 22-gram piece that is 14 karats, with a gold price of $1,600 per ounce:
- Weight: 22g
- Purity: 58.3% (14k = 1424, or 0.583)
- Price per gram: $51.447 ($1,600/31.1)
- Calculation: 22 x 0.583 x 51.447 = 659.859
The calculation provides us with a melt value of $659.86 for this piece.
How to Get the Most Money
You can't realistically expect to get the market rate for your gold pieces, especially if you are dealing with a mail-in, cash-for-gold company, a pawn shop, or even a jewelry store. They won't be able to sell that gold for more than its market rate, which means they need to buy it for less in order to make a profit. As well, since the price of gold changes daily, and they won't be turning around and selling it the same day they buy it, they need to protect themselves against the market rate dropping between the time they buy it and the time they sell it.
The two things you need to do to maximize your returns are to monitor the gold market and to shop around as much as possible. By monitoring the market, you can better gauge when gold is selling high in order to increase your chances of getting the best possible price. By shopping around and speaking knowledgeably about your gold and current prices, it's less likely that someone will try to take advantage of you with a lowball offer.