# Some tips on buying karat scrap



## KCGreg (Dec 26, 2009)

I was just reading the threads on ‘Buying on Ebay’ and ‘buying on recycle.net’; I thought I would start this thread and offer some advice on getting scrap cheaply to those who are just starting out. Without the proper equipment and space it’s going to be difficult for the home refiner to turn a profit on large scale e-scrap. It would be much more worthwhile to scrounge or buy up small amounts of fingers and processors and use that as a stockpile. Craigslist ads for this can be quite effective. I tend to stay away from Ebay for the reasons listed in the other thread that more times than not it gets very close to or exceeds the value of the pure gold content. You also have to contend with sellers who might not give the fairest description of their item and then the other sellers who aren’t trying to be dishonest; they just don’t know what they have. If I can’t test it before I can buy it, I don’t normally want it unless I know who that person is and have done business with them before. Here are some ideas to get the most out of the gold business. 

Karat jewelry by far has the highest return so here are some ways to capitalize on it beginning with the tools you will need: First, the most reliable test kit you can get, I use 2 different ones. The first is an acid test kit. These are reliable, inexpensive and consistent. The second is a Kassoy gold tester. This tester is really worth its weight in gold. I bought a kit from Kassoy.com but let me tell you what happened when I decided to go the cheap route and get a Mizar24. I had used the Mizar a few times and had success with it so, I took it to a gold party and had a field day. I bought 6 ounces of 10-12k jewelry. I thought it was weird that most of it tested for 10k but I thought hey, it’s not impossible. When I took it to my refiner they melted it into a bar and poured a nice shiny 6 ounce tin bar. Yep, less than 3 grams of gold was in that bar. It was just over a grand (1k) I lost in investment. Only the few 12k pieces turned out to be actual karat jewelry. Don’t do this to yourself, buy the Kassoy first. In addition to a good gold tester you need a small metal file. I will not hesitate, with customer’s permission, to file into a piece that is suspect. You will also need a good magnet; I bought a small one that goes on a keychain at one of those discount tool stores….harbor freight I think. If the jewelry sticks to the magnet, it’s not gold. These items and a good digital scale will give you a strong advantage when buying karat scrap. 

The method I use involves a lot of hustle but offers a pretty good return. Again, I turn to craigslist. Before I start “shopping” I figure out what price I will pay per pennyweight of each karat. Then I start going through the ads line by line. I look at each one, I take a guess on how much I think that piece of jewelry will weigh. That’s a rough proposition at the start but it doesn’t take long before you can look at the ad (provided there is a pic) and tell whether or not you can get close to the sellers asking price. I don’t expect anyone to take a loss and I know that I am buying for gold content so if I don’t think I can’t get close of what the seller is asking, I usually don’t respond. But with a little experience it actually isn’t that difficult to make a good guess. This method takes some running around but like I said, it works. Sometimes I am wrong though and have to back out of the deal. If you have to back out of a deal, do it in such a way that you don’t burn the bridge. I will usually tell them that I can’t get close enough to their price; I will apologize for wasting their time but that I misjudged the size of their item. I will let them know that I buy it as a sort of ‘scrap’ and only for the gold content and that I think they can definitely get the price they are asking for by selling it to someone else as a wearable piece. Do that, and then leave them with a card and if they can’t sell it but have to have the money, they will call back. When you start getting a call back or two a week plus the searching you do on your own, you can have a really good week. Now, the trick to this is to avoid the temptation to refine it on your own at the start. You will definitely want to but if you can send it straight in to the refiner and get that check back quickly, you can get back out there and start buying again. Once you have a positive cash flow from it then you can take the extra day or two to separate the silver and the gold and give the gold a good single refining before forwarding it to the refiner. If you can dedicate a small amount of money to this project and just keep reinvesting the whole amount for a while it will build fairly quickly and then, you can start giving yourself a commission. One of the most important things you need to know when buying gold jewelry is, when to walk away. If you can’t make a profit on it, don’t buy it. If you’re not a 100% sure, don’t buy it. If you’re customer won’t let you test it, don’t buy it. Always make sure you meet people at a McDonalds or somewhere public, preferably somewhere with lots of cameras. I like to meet at a particular and popular gas station because there are always cops or an ambulance hanging out in the parking lot, there are always lots of people at any time of day and they have an ATM so I don’t have to carry cash. Security has to be at the forefront of your mind always, never meet someone in a questionable neighborhood or at their private residence. 

Every customer you meet should get a business card. It doesn’t have to be anything fancy, mine simply says “I buy GOLD” with a little more info and my number. I leave one with every customer and sometimes, when they are digging for more cash later on they will go back to the jewelry box and become a repeat customer. The next reason to hand out business cards is so the customer can call back to schedule their gold party…lol. I don’t tell every customer about this. I wouldn’t invite the guy selling his old class ring to host a gold party but I’m not leaving a soccer mom in the 'burbs without mentioning it. Gold parties are the fastest and easiest ways to accumulate large amounts of scrap quickly. Mine are few and far between but they are great paydays. Not only do you get to purchase large amounts of karat scrap but you are also going to find tons of plated and gold filled jewelry plus lots of silver. Here’s where you’re refining skills really come in handy. I offer somewhere around a buck a pound for plated scrap and I use a formula (located elsewhere on the forum) to figure gold filled value. When I am making on offer a mixed lot that contains karat, plated and filled scrap, I will place each type of scrap in it’s own pile, explain the differences to the seller and make an offer on the whole. 

I also want to share with those who don’t know how to figure it, what to pay for karat scrap. You can pay any percentage of the pure gold content you like but here’s how to get to the price associated with that percentage. First, figure the spot price per penny weight. Always use pennyweight because that’s how you will be reimbursed is by pennyweight, not by grams. There are 20 pennyweights per ounce so at 1108 per ounce that’s $55.40 per dwt. Next, let’s say you are looking at some 14k scrap, multiply that $55.40 by the 58.5% of pure gold in 14k gold. That’s $32.40 of pure gold per dwt of 14k. Next, multiply that by the percentage you want to pay, in my case 75%. That’s $24.30 per dwt I would offer to pay my customer and will give me a profit of 8$ per dwt. 

Price per ounce/20 * pure gold content * percent you want to offer 

Use this method and you will successfully buy and sell karat scrap at a profit. You will also accrue a lot of lower grade scrap such as plated and filled to ‘play with’; the latter two make an excellent savings account. So, don’t forget your refining skills and never stop learning but don’t forget you can bank a lot of gold by buying the scrap direct and turning it around quickly. Good Luck and Happy Shopping!


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## Anonymous (Dec 31, 2009)

KCG - thanks for the info, this is good stuff! As a newbie to the forum, my first and most obvious question is, how do you acquire enough of the "raw materials" or scrap to start the whole process. This seems like a good, safe approach. Much appreciated. 

BMag


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## Barren Realms 007 (Dec 31, 2009)

bmagnanimous said:


> KCG - thanks for the info, this is good stuff! As a newbie to the forum, my first and most obvious question is, how do you acquire enough of the "raw materials" or scrap to start the whole process. This seems like a good, safe approach. Much appreciated.
> 
> BMag



Just like eating an elephant one bite at a time. Go to yard sales, flea markets, just ask around if you ask enough you will hit some kind of pay dirt.


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## KCGreg (Jan 3, 2010)

I use Craigslist alot for this. I don't like to run ads online that I buy jewelry because that's an open invitation to thieves but I do sit down and take a look at whats on there for sale and started making calls. And, while I'm cautious about advertising, if you don't ad, you won't bring anything in. I went to this website: WWW.VistaPrint.com/sticky and bought a bunch of sticky notes that simply say, I buy gold with a list of different types of scrap that I'll buy, along with my phone number and then ran through parking lots in the stores of more middle income neighborhoods (lessens the risk of pro gangsters getting the ads) puttin them on windows. I think it cost me like 35.00 shipped for 1,ooo little post it notes. I run through those parking lots like mad with a pad in hand slapping them on the cars drivers side window. Once in a while I get someone calling and fussing about the inconvenience of having to pull the sticker from their window and throw it in the trash but, then I get some calls on gold too. In regards to the flea markets and yard sales, yard sales particularly, keep your eye out for bags of silver jewelry. Sometimes you get really lucky and there's white gold in it. You could also use your refining efforts to finance it. I use to go around to computer stores in town and pick up their scrap for them. I took whole pc's and scrap parts, everything but printers and monitors and then scrapped those out and recovered what PM's I could to help get some initial money together to go after the karat stuff.


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## Barren Realms 007 (Jan 3, 2010)

Yea I tried a similar trick as you with the sticky notes on a diffrent endevour. Had little success but got my foot in the door on some things. The E-waste is a lot of work but it does produce something to get you started. And if you can economicly do this stuff it will build a nest egg.


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## studio28 (Jan 20, 2010)

I like the sticky note idea for advertising gold parties. I just started my gold party business and I need to get parties booked here in Wisconsin. Here is a link to my website is anyone wants to have a look. http://www.metals2cash.com


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## Anonymous (Jan 30, 2010)

But the question is, What do you actually pay the public percentage wise for scrap? 70% 80%? I have a friend that owns a jewelery store and another that owns a pawn shop I usually give them 95%. if I buy it from john q public I try to aim for 80%. But also how much 14k do you buy that actually 14k? Most of what I've seen so far is 13k. so do you buy it at 13k or as its marked 14k? 

What are all of your thoughts? Especially you Harold!!! 

thank you

Brian


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## Harold_V (Jan 31, 2010)

Aerostar Driver said:


> What are all of your thoughts? Especially you Harold!!!


I'm pretty much neutral. If one has a conscience, you want to pay as much as you can, to be fair to the cutomer. By sharp contrast, if you don't have one and your objective is to make money, as is the case with many of the merchants, you pay as little as you can. I've read reports of sellers receiving as low as 15% of value, which is likely very common with some of the crooks that are making a killing. 

Aside from buying scrap such as eye glass frames, I rarely purchased gold. The frames I purchased came at exceedingly low prices, which I maintained by refusing to pay more. I used to buy 1/10-12KGF frames for as little as 10¢/pair, but would willingly pay up to 25¢ each. They generally came from second hand stores, where they were unloaded by people cleaning house. I felt perfectly justified in paying as little as I could, and almost all of the stores were happy for the sales, considering I'd take all they had. 

Once I started refining on a minimum basis, it took almost no time for me to draw certain conclusions, all of which proved to be correct. Here's some of my thoughts. 

Prospecting is a fun and healthy hobby, but only a fool prospects with the idea in mind that they will be successful. I accumulated more gold by refining than any reasonable person can hope to extract from a claim. 
Gold is expensive because, while being very widespread, is rare, and rarely found in volume. 
You most likely can't buy enough gold to sustain a small refining business. That's especially true when the shine goes off gold, often the result of a sharp price decline. Sure, it's cheaper, but no one is interested in selling any longer. 
You can't refine e scrap by conventional methods and make ends meet. Great hobby, but if you rely on paying the bills with that sort of an income, some of them are going to be paid late, if at all. 

My logic in refining came about quickly. Refine for those that use the metals you care to process. They become an endless supply stream, assuming you keep your nose clean and treat them fairly. You will process far more metal that way, taking a percentage as your payment. You are guaranteed you get paid, plus you develop ready contacts that often are in the market for new gold, so you can sell your spoils for full value, or even beyond. I was always happy to sell for spot, but that's me. YMMV.

Sorry I'm not more help. 

Harold


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## nickvc (Jan 31, 2010)

As usual Harold i agree with your views.When i was refining full time my customers were manufacturing jewellers and semi refiners who had a need for fine gold or carat products for some of their customers. While the price remains high refining will be a reasonable business but when the price drops i can see a lot of even large refiners failing as they dont have full access to the market as they dont have good delivery status and the value of the margins will diminish along with the amount of scrap coming onto the market


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## KCGreg (Jan 31, 2010)

The gold tester I have will indicate wether the gold is 13 or 14k pretty accurately. I learned rather quickly though that just because an item is marked 14k doesn't mean it's exactly 14k. And Brian, you are absolutely right that there is alot of gold out there that is under karat. The worst is Jostens, I've seen their rings marked 10k come out as low as about 6k. Harold is right in that if you have a conscience then pay them as fairly as you can, if you sleep better with more cash under the pillow buy it as cheap as you can. I change up what I pay sometimes depending on how my concience feels. case in point, this past month I bought a ring from a guy who was just selling the wedding band from his first marriage to make his new wife happy. He was asking 50, I could have paid 70 but he wanted 50 bucks so that was what I paid him. I've also met a lady this month, it was a real battle to hammer out a time to meet because she's a single mom with one kid and I had to meet her sometime between her first and second job while she was taking the kids from the day sitter to her parents house for them to watch her kids for the night. She wasn't complaining or making an issue she was just trying to get one more thing done and hoping she had an fair buyer. I paid this lady 90% for the little bit of jewelry that she had. 

And Harold, you confirmed something I an just beginning to learn since I started this post. You can make a lot more by refining and taking a little percentage than anything else, especially in silver. most of what I refine is processors and karat scrap but another refiner I know has been kicking me some of his gold filled and lower yeild stuff to work on for him and WOW! Man you can make some bank on that. Which worked out well because I'm not sure if there are a few other people on the forum and in KC that read my post because lately, there have been two other guys in town working their butts off calling craigslist ads...lol. Every time I get to one and meet them either one or both of these guys have already been there and looked at it. And Harold, I know you comparing the refining to mining but even when compared to buying scrap, there's alot to made in refining. 

Back topic though, one other idea I have been kicking around lately is direct mail. I ran an alarm company years ago and direct mail always worked well for me so I think I am going to try that again with gold. It will cost a little more but with Christmas over and it still being cold outside I just don't have the ambition to walk those parking lots anymore..lol. Direct mail will allow me to target neighborhoods that have low crime rates keeping my exposure to potential theives to a minimum and I can also target areas in the city that have been hit hard by the housing bubble and the economy. Those are things to consider whenever you are advertising for any product or service, who are your customers? Where are they located? Why advertise in a neighborhood where those living there can't afford extras like an extra box jewelry. On the other hand, in a neighborhood where people have been living above their means, they usually have extra gold they don't wear anymore. Even if they haven't been hit by the economy, I'll put it this way, I get quite a few rings that people were holding on to from their "first marriage" just because of the gold. You put an ad in front of their face, they might sell it to you.


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## user 12009 (Jun 10, 2010)

KCGreg said:


> The gold tester I have will indicate wether the gold is 13 or 14k pretty accurately. I learned rather quickly though that just because an item is marked 14k doesn't mean it's exactly 14k.


I bet you have one of the Tri-Electronic gold testers. I wouldn't leave home without my GT3000. I rarely see a marked 14K ring test at that, usually 13.5K or 13K




KCGreg said:


> I get quite a few rings that people were holding on to from their "first marriage" just because of the gold. You put an ad in front of their face, they might sell it to you.


Just last month (at a yard sale) I was testing and buying gold from this guy. He kept pulling out one piece at a time (including crowns and bridges) after a few rings his wife said "I didn't know you had these" He told her they were from his first wife. (made $600 profit on that transaction) 8)


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## Barren Realms 007 (Jun 10, 2010)

cyberdan said:


> KCGreg said:
> 
> 
> > The gold tester I have will indicate wether the gold is 13 or 14k pretty accurately. I learned rather quickly though that just because an item is marked 14k doesn't mean it's exactly 14k.
> ...



I wonder if his first wife was still alive or if that was what was left of her? :roll: :twisted:


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## user 12009 (Jun 16, 2010)

Barren Realms 007 said:


> I wonder if his first wife was still alive or if that was what was left of her? :roll: :twisted:


I have a feeling she was just ancient history. :| 

I went to another sale about a year ago. It was a big neighborhood sale. I always ask if any one has old jewelry. Most said no and I bought a few things. I go back to my car at the entrance of this gated community and as I am starting the engine I get a knock on my window. This guy asks me if I was the one who asked about old gold. I said yes and he said after I left his yardsale he remembered he had some. He had tracked me down about two blocks from his house. I ask him to get in and I drive to his house.

He pulls out a small box loaded with old gold and silver jewelry. We go through each piece, I notice he is a bit hurried. We make a good deal and I pay him and as I am putting things away this lady drives up and askes him what he just sold. Now I figuer out why he was in a hurry. This lady was at the yardsale earlier when I ask and he says no. This is his wife and she just got back from some shopping. I quickly leave as I can hear in a not so quiet voice "you sold what???" :x :x :shock: 

I hope he has someplace to stay that night.


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## Stevious (Oct 24, 2010)

Nice post and many good ideas...



KCGreg said:


> If the jewelry sticks to the magnet, it’s not gold.



Just a "heads up." Generally this statement is true, however during the 40's and 50's there was a type of white gold alloy that was mildly magnetic due to inclusion of about 1% cobalt. The rings (I have never seen anything but rings that did this) were filigreed, with fine detail, and properly stamped 14k. Using gold fingers and nitric acid with a bit of salt they tested out as 14kt should. In 1985 I dissolved a piece of one and ran it though an AA (Atomic Absorption Spectrophotometer) and it assayed properly. Cobalt in gold is commonly used on certain gold electrical contacts and will also be mildly magnetic (paramagnetic). The cobalt does not blend in with the gold--what occurs is essentially a nano-composite that has numerous minute grains of cobalt within the gold alloy. In contacts they add tremendous resistance to friction wear, so if you come across gold contacts that, for instance, are used on a rotary device, if they are magnetic, don't assume that they are junk. 

I have only seen two rings though, and both were of the similar fine filigree variety. If you come across one, that is magnetic but fits the description, you might want to keep it.

And by the way, you guys can keep all your testers... I'll stick to my goldfinger/touchstone/acid test--I've never been burnt. 

For those who might not know goldfingers are a set of "fingers" of brass, tipped with 10k, 14k, 16k, 18k, 22k and 24k. You take a coarse stone provided with the kit and making sure you get beneath any gold-filled coating on a ring, rub a 1/16th inch strip about an inch long on the stone. If you suspect it is 14k you then use the 10k and the 14k and the 16k to make adjacent lines. Take a drop of conc Nitric acid (a glass dropper comes in the kit) and swipe it across all the lines. If your line disappears it is not gold. Then with the glass "dropper" make a drop of Nitric acid, and add a few grains of salt (really...just 5 or ten grains is enough) mix with the glass tipped rod a bit, then pull this across the gold lines.

In 30 or so seconds the 10k should disappear, in about a minute the 14kt will disappear and so on... If your line is still there and where the acid/salt crossed the 16k line, the ring is probably 18kt, so make an 18 and a 22k line and retry. 

For the newbies, beware of sterling items that are filled. Candlesticks (or parts of candlesticks), knife handles are often filled with a plaster/pitch substance! Bash them on an anvil with a hammer and the item will break open, and the filling will fall out (use a respirator and eye protection).


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