# Am I making the wrong calculations?



## AUH-R (Jan 19, 2013)

Hi, I'm looking to buy bits and pieces here and there to build up my electronics scrap to start refining as a hobby with a view to making some pocket money at a later date. I came across this auction on ebay this morning: http://www.ebay.co.uk/itm/Cpu-Processor-Lot-Gold-Recovery-Ceramic-Green-Scrap-Gold-Nice-Lot-/271138606950, so I made some calculations. I decided that only 15 of the chips would yield me about 0.2grams of gold each and the rest I may get 0.005grams from the pins each, if I was lucky. For a total of 3.06grams in this particular lot. One gram of gold in sterling is approx £34.14 at the moment. £34.14 x 3.06 = £104.46 if you could just magically look at them and the gold would appear. I then added the delivery of £6.50, £104.46 - £6.50 = £97.96. I then figured my time, acids, gas for melting and filter papers about £60.00. £97.96 - £60.00 = £37.96, So I thought I would bid £36.90 and no more but was outbid straight away, so I added the P&P and went to £43.25 as I figured I may recoup this back if the price of gold continues to rise. The lot sold for £82 + £6.50 P&P = £88.50. Total gold content £104.46 less cost £88.50 = £15.96. Have I got my maths all wrong? or can people seriously refine all those chips for £15.96 just to break even? 

Best wishes,
AUH-R


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## butcher (Jan 19, 2013)

People on ebay will way over bid auctions.

Shipping charges etc, it would be very hard finding a good deal on ebay.

Even with calculations, you really do not know how many chickens you have until the eggs hatch.

What was once considered trash is beginning to be more profitable selling, on ebay, especially when people will bid for the material much more than its actual value, thinking it is worth more than it is.

It is funny sometimes they act like this trash is pure gold.


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## element47.5 (Jan 19, 2013)

It's very common for ebay bidding to go way higher than intrinsic value. Think about it, it only takes 1 person whose math is wrong or whose assessment of reality is warped out...but if you have two of them outbidding each other, things can get silly. And yes, you are correct figuring in all your ancillary costs, for they are relentless. Not one of them cheapens what you bought for the purpose of turning it into something else. I have not checked your yield math, but if you yourself have faith in those numbers, then it's IMO entirely proper that you set a max price and stick with it. 

I did the functional equivalent buying sterling silver on ebay for several years, back at Ag $11-24. It became viciously competitive, it was rare that I could buy better than a buck under spot, ALL IN..including incoming freight and refiner's cut.....though it happened and happened more than a few times. But I lost dozens and dozens of auctions because I would not overpay.I DID like hunting the silver, somewhat, but ultimately sterling flatware is not that favored a form. Yes, it was quite fun to receive neat forks in the mail. Still: I would have done much better spending the hunt-and-hassle time doing something far more remunerative and simply buying the stupid bullion (as bars or rounds) where it would be in .999 bullion (tradable) from the beginning and would be that way today. (assuming the goal is to accum bullion) Another lesson I derived from that exercise is that *there is nothing more stupid than to overpay for a disfavored form. * In sterling, though, you see this all the time with newbie bidders thinking "Oh, it's worth .925 * spot silver plus the ten bucks silver's going to go up in the next month" and "I don't care what it costs to ship". If your goal is to become a competent backyard refiner, I suppose you could write off overpaying for initial batches of raw mat'ls as part of your education. So that's a little different. I was buying for bullion only. All that work just to save a buck or two...just go buy the real thing. 

The correct approach, IMHO, is to re-connect with the notion that in a buy-sell transaction, in most cases you make money when you buy. Not so much when you sell. Consequently, if you have all the buying competition, it may be better for the seller but it's generally worse for you as buyer. 

That doesn't mean you couldn't score the deal of a lifetime bidding for scrap on ebay where the whole world can see it, but somehow, this doesn't seem likely.


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## AUH-R (Jan 19, 2013)

Thank you for the replies. I'm just glad to know I was right in my thinking.

Best wishes,


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## kkmonte (Jan 30, 2013)

AUH-R, I was thinking and wondering the same thing. I search for gold scrap on ebay every day or two, and its amazing what people will pay for gold scrap. 

This is what I do, I have a figure in my head on what i'll pay for a lb of gold fingers. When I find a gold finger auction, if its for 1lb, i bid my max (or maybe $5 more) and that's that. If its for 1/4 lb i big 1/4 my max, etc. If I get outbid, I don't worry about it. There was an auction today for 3 oz of gold fingers, and i got sniped with 30 seconds to go, but luckily i wasn't sitting around waiting, i only noticed i got outbid like 8 hours after the auction ended.

By doing it this way, every now and again, I catch people sleeping (i guess) and I get lucky and get something for what i want to pay.

But I'm with you, why people pay $100 for escrap with maybe ~$100 in gold in it is beyond me. I'd rather just go by $100 in gold.


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## nickvc (Jan 31, 2013)

In my opinion you would be better off spending your time looking for a source of raw product the same as Joem does, hit the phone book and the streets and you never know what you might find but sit looking at e bay seems to be a waste of time when the prices can be so crazy compared to its actual value. It's the key to this hobby/ business a source of material to actually work with that can yield some return, you just have to put in the work and time to find it, talk to family, friends, work colleagues, anyone you never know where that break will come from.


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## MMFJ (Jan 31, 2013)

Some great advice in this thread - heed it well and you will do fine. Certainly taking the time as you did to compute your yields and costs is well worth the up front effort. Another 'temperature test' is to simply check the price of gold and see what the 'completed' auctions are going for. Then, watch the average price and you can come up with a ratio of what people are buying for - then put in your bid below that average. Now, this is not a 'guaranteed profit' scenario, but it is a simple way to learn the market prices, if for no other reason than to know what you could SELL stuff for that you acquire in other methods (yep, that is one of my 'secret formulas' - when you know where and what you can sell for, it makes it a lot easier to buy!).

Once you know the selling market, then you can make some calculations on your buying side. I buy material by the pound and tear it apart to get to the good stuff. I'm not a fan of scrap metal and dealing with all that, but, for me, I find that having people bring stuff to me and giving them a fair price for it (my spreadsheet calculates a payout of approximately 1/2 of what I know I can sell it for (btw, that is NOT the crazy ebay pricing above, though I do sell some stuff there) - that seems fair to me since I have to do the rest of the work, plus make some profit). I then take the gold bearing material and put it in a "GBM Box" (not too original, but the name is functional!) and sell the 'bulk' (scrap iron, plastic, various other metals plus the 'stripped' boards). Once I get enough GBM, it goes off to a refiner (several on the forum here that are worthy of dealing with). 

I pay much less for my 'free gold' by doing it this way than (to me, anyway) running around, burning gas, etc., looking for scrap bits here/there. I let others do that, then pay them for the stuff (very similar to a scrap yard model). Not that there is anything wrong about any method - the "best" one is the one where you get as much as you can and for a price (cash, time, etc.) that works for you (no matter how you get it, "free" gold, isn't..... - but it is fun to think of it that way!)


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## kkmonte (Jan 31, 2013)

Yea everyone is different. I do my ebay searching while i'm doing my other job (Work in IT from home). So i'm not "wasting time looking on ebay", i'm killing time. 

And i'd rather let someone else take the time of cutting up and seperating out all of the products. Of course there time is worth something, but not more then what the final finished product is worth.

I've been in the computer fixing/building business for 15 years and i've thrown away so much stuff, i only recently used this hobby as an excuse to clean out my entire shop, and all the gold fingers i got from all the isa/pci/agp, etc. cards came up to about 1/3 pound. Was a lot of work and at the time seemed kind of fun, but after all that work, I only ended up with about .5 grams of gold from it. So considering i'd like to be processing 2-3 lbs of fingers each month, that is way too much work for me to gather that amount of fingers!


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