# Buying Jewelry Scrap



## Anonymous (Jul 28, 2007)

Hi Everyone:

I'm thinking about getting into precious metal refining as a second business.

My question is this; When buying gold jewelry, is their some formula that's used to set a price. Spot gold price alone can't be used- can it? If so- how does one make their money? Just from refining and keeping the leftover silver? 


Thanks

Bob


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## goldsilverpro (Jul 28, 2007)

Catfish is probably the best member to answer your questions. Also, go to his profile and look at his posts, especially his earlier ones. He pretty well outlined his methods in these posts.

The pricing depends on who you're buying from and how much you're able to sell it for. If you buy from the public, the profit margin is much greater than if you buy from pawn shops, coin stores, jewelers, or other buyers. However, both are lucrative if you get your numbers straight. Buying from the buyers is lower margin but higher volume.

Although some would disagree, I think more money can be made on karat gold by simply buying and selling, without refining it. In my experience, the secret is to turn your money as often and as many times as possible per unit time. The refining process slows this down considerably. Also, by turning the metal fast, you are not as affected by daily changes in the market price. If you get to the point where you're doing big volume, that's when you MIGHT consider doing your own refining.

When I bought and sold karat gold, I sometimes quoted how much I was paying, per gram or pennyweight, for 10Kt, 14Kt, 18Kt, and 22Kt, based on a certain percentage of the market price. I never mentioned the market price - only what I was paying. These numbers change daily and sometimes hourly, depending on what the market is doing. You really have to keep on top of it. Another way is to keep silent about what you paying until you have evaluated and weighed the material. Then you say something like, "I will give you X dollars for this bunch of material." When buying from the public, they will usually take what you offer, unless they've been shopping around. If you quote on the low side, you can always negotiate and increase your offering price. A friend of mine, who owns a scrap metal yard, often says, "It's not my job to educate the public." When buying from buyers, they are more savvy and will often ask what you are paying for 10Kt, 14Kt, etc.

You can usually buy from the pubic at somewhere between 50% to about 80% of spot. If you buy from buyers, you will pay from about 80% to 90% of spot. Whatever the traffic will bear. When selling your karat gold, the price you can get depends on volume, the honesty of the buyer (or, refiner), how you have prepared the scrap, and how well you've covered your butt. When selling small amounts, you'll usually get somewhere between 93% and 98% of spot. For very large amounts, you might get over 99%. Always shop around when looking for a buyer. Also, don't forget that, when you buy, you're paying cash and, when you sell, you usually get a check. Catfish may disagree with these numbers. I haven't done this in awhile and different strategies are needed in different markets. As in all things, buy low and sell high but, don't price too low or, you'll price yourself out of the market. There is plenty of competition out there.

You will have to go through a learning curve on how to determine the karat of gold objects. Some gold is not marked and, even that that is marked can be marked wrong. Catfish tests everything, even if it's marked. This is a very good idea.

When I was manager of a refinery in Hong Kong, I once asked the owner of the largest Hong Kong gold exchange what he thought the gold market was going to do. He said that there were only 2 great experts in this field. One thought the market was going to go up and the other thought the market was going to go down. I have never forgotten this. In other words, when buying and selling, never worry about the market. Just make sure the proper buying/selling spread is present, on every deal, and turn your money as fast as possible.

This is only the tip of the iceberg and these things are only my ideas. I'm sure that Catfish can provide much more info than what I've given you.


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## aflacglobal (Jul 28, 2007)

When selling small amounts, you'll usually get somewhere between 93% and 98% of spot. For very large amounts, you might get over 99%

I remember the guy i sold my space junk to gave me 95 % spot for anything under 1 oz. Anything over that was 98 % spot.


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## catfish (Jul 28, 2007)

Hunchback:

I just got back from buying some karat gold, and saw your post. Goldsilverpro has pretty well told you all the important steps in buying karat gold and also his recommendations on refining it.

I agree with him totally. I have been in this business for a little over two years of buying karat gold and reselling. First as Criss said, you don’t want to refine karat gold for there’s not enough money in it. I will give you my buyer’s name and web site that buys all my gold. He pays 98% world spot for all of it. First you will not get much more for your gold even if you refine it. It would have to be assayed if it has been refined, and then it would have to be at least 99.95% pure. Assaying cost money too. The difference is just not there, when you can sell it in karat form for 98%. You would have to have very large amounts of karat gold to even break even refining it and assuming you could get the required pureness and then find a buyer for pure gold.

Now as far as buying karat gold, you need to be fairly good at testing gold. Just because it is hallmarked as karat gold doesn’t necessarily mean that it is karat gold. There are as many dishonest folks in the precocious metals business as there are in the used car business. I test for visual hall mark stamp of karat gold marking. You have to watch, sometimes it will be marked 14k RPG, HE, GF, KGF, 1/10 12K or 1/20 14k.and other similar markings. When you see any of these markings, this tells you this is not pure karat gold. Don’t turn this type of gold down, for if you are in the refining business, this is the very best for refining. Only you don’t want to pay much for it. I buy gold filled gold items for about $9.00 per ounce. This is about 60% of the actual gold content if it is 1/20 GF, now 1/10 GF is more. I have developed a spread sheet that updates automatically every day in accordance to the gold prices at the World and New York spot buy prices. I base all my buy prices at 60% of 30 day average spot prices. You don’t want to buy on one day’s spot price for the price of gold fluctuates from day to day. I like a running average of about 30 days.

As for as testing gold, this take a lot of experience and hands on. Just briefly how I do it is I put all the scrap in a pile and take a cheap magnet and go through it. This will separate all ferrous from the non ferrous metal. I then take the remainder and check it with a 10 X jewelers loop for hall mark stamp. Identify all pieces as stamped and non- stamped. I then take the non stamp pieces and test them with an electronic gold tester. (This test sets works on a capacitance effect of the gold.) I put all the gold in different groups. As stamped rating and tested rating. I then tell the customer that if these items test for the amount of actual gold as stamped or tested, that I will give them so much money for in cash. Always try to keep your dollar amount offers in total amounts. This is a buying technique. Just the opposite as selling techniques by keeping your selling amount separate and in smaller amounts. (Part of the game).

After a tentative agreement with seller I then take a small rat tailed file and file a notch at least 1/16th inch in the metal. I then take nitric acid and test it for gold pureness. If it is gold plated, rolled or filled it will show up in this test. As I said before, you may still want to buy this gold that tests as gold filled or plated but at a different price.

At the present time I am paying about $400.00 per ounce or $20.00 per penny weight for pure gold. You want to keep your numbers simple and round off if you can. Remember that I said before that I have a spread sheet with all the numbers. The customer is only interested in how much is it for 10k, 12k, 14k and 18k per penny weight/ounce. The spread sheet does all this for you.

You can get in to this business with very little capital. The most important thing is to be able to test the gold accurately. You make one bad deal for gold that is plated or filled, and you lost your entire profits for the next three good buys.

Hunchback, as you can probably already tell, I am a numbers guy and when you can turn your money over fast and clear 40% profit, you will do good. Grocery stores only make 2 to 3% on their money but the key is to turn it over fast many times. If you PM me I will also hook you up with my buyer too. They are a small recycler in Dallas Texas and very reputable. My son has been dealing with them for many years and I have for over two years my self and have never had any problems. I always know exactly how much gold I send them and what to expect. It has worked out perfect every time.

I know this is lot to digest, but I strongly suggest you study this business and become very proficient at it before you sink a lot of money into it.

I just bought $164.00 worth of Karat gold this morning, from the same lady I bought $71.00 yesterday. Not bad for about an hours work to make about $140.00. Once your customers learn they can trust you they will call you back and refer you to their friends.

Lots of luck

Catfish

Added
I buy from private indiviguals at 60% and sometime from pawn shops, but usuall at 75%. I make more money from private indiviguals, but as I said earlier you can get larger amounts from the shops. Some times I buy several ounces from a pawn shop and send it to Dallas the next day. I usually send 5 to 10 ounces of pure gold or 10 to 20 ounces of karat to buyer. They will take any amount, but you got to take into consuideration the shipping and insurance cost. This can add up.


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## AuMINIMayhem (Aug 8, 2007)

Here's a really nice little scrap gold spot calculator that seems to work pretty good. http://www.jackhunt.com/gold-calc.html

I noticed that there isn't enough of a difference between about 21K and 24k to even bother with refining. It all depends on your interests. I'm more interested in recovery and then selling what I get. ... eventually..LOL!... 

In my humble opinion, if you're looking to make a business out of it, buy karat gold from cheap sources.. garage sales, estate auctions, "shady" pawn shops (not the ones in the "good" section of town.... ahem..) and then throw them up on ebay as "scrap for gold recovery".. there's quite the booming biz on there for scrap and I've noticed by uing the above calculator that people are paying AT or ABOVE SPOT!.. I'm assuming these are amateurs such as myself whose math isn't all that great. Eventually I predict that market will soften a bit, but there's a ton of cash to be made there for now. the key is to get it cheap though..  (Just key in scrap gold for recovery and then look at some of the sellers' histories.. the story says it all.. they wouldn't keep doing it if they weren't turning a decent profit... right?)

just my input.. been a while since I've been here so I thought I'd chip in a bit..


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## Anonymous (Apr 6, 2008)

on karat gold how do you know your gettin 98% spot price do they melt assay then payout or are they caculating from the 14kt stamping and paying from that...I buy alot of scrap gold (jewelry) and was wondering if I should refine myself then sell to the "refiner" so that way I know almost exactly how much actual gold I'm giving them that way they can't "rip"me off as I was told alot of them do .... question...20 dwt of 14kt gold , does that equal 11.7 dwt of pure ,I took 20 and multiplied by .585 (14kt) to reach that figure (when you give to the refiner they always say your gold came back 12kt)


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## Noxx (Apr 6, 2008)

Are you kidding me ! :shock: :shock: :shock: 

What a nice lot you have there !

Back to the topic, you can use my spreadsheet calculator for pure gold calculations.
Here's the link: http://goldrefiningforum.com/goldpricelist.htm

20dwt of 14k gold would equal to: 14/24 * 20 dwt = 11,66dwt pure gold.

Gold refining company are paying based on what they get after refining. They do not calculate with the hallmarks.


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## Anonymous (Apr 6, 2008)

the thing is you never know what your going to get for your gold it's what they tell you it came out to be how can you be sure your getting the fair amount and not being taken?


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## Noxx (Apr 6, 2008)

Exactly... 
You can be sure if you refine it yourself


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## Rag and Bone (Apr 6, 2008)

"how can you be sure your getting the fair amount and not being taken?"

A good answer to that question is in this post.


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## Harold_V (Apr 7, 2008)

Noxx said:


> 20dwt of 14k gold would equal to: 14/24 * 20 dwt = 11,66dwt pure gold.



Correct! In theory, anyway. You're unlikely to achieve the calculated yield, however. 

It's no secret that marking laws allowed for error in alloying, and it was greater for soldered items than for cast items that had no soldering involved. Fact is, it used to be perfectly legal to deviate a full karat and still mark it as it should have been. Don't think for a moment that large jewelry manufacturers didn't take advantage of the laws to conserve gold. Only when gold is marked .583 can you assume it is, indeed, 14K.

The laws pertaining to marking gold changed some time ago, so I'm not abreast of the current requirements, but old gold objects may or may not be alloyed as marked, and usually are not. I've posted on this very thing before----having run pounds of class rings at one time. The yield was slightly better than 9K----and perfectly legal. 

Don't assume gold is as marked, especially when you're buying. /a smart buyer will allow no less than ½K for under karating. It's very common. It's likely you'll take a bath if you don't. You should also reflect that in the price you'll receive if you sell. 



> Gold refining company are paying based on what they get after refining. They do not calculate with the hallmarks.



That's correct, and they tend to have fees that often make you sorry for using their services. 

Harold


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## Ageo308 (Apr 8, 2008)

As im starting my own refining i also dabble in the scrap business. What i do thow is buy at a fixed price and on sell for another fixed price (fixed price meaning both are locked on the spot bar any price movements). I normally sell to chain makers & jewellery manufacturers (we roll our gold into karat gauges so they can work on it). Basically for 2nd hand gold if they can get it 50c or so less spot price they are happy since they are usually paying well above the spot price.

I also have small scale buyers who buy it straight off me with no work required, so 30min to go in a buy (test) and 30min to sell.

Good way of doing business


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## Harold_V (Apr 8, 2008)

Ageo308 said:


> As im starting my own refining i also dabble in the scrap business. What i do thow is buy at a fixed price and on sell for another fixed price (fixed price meaning both are locked on the spot bar any price movements).


In my years of selling gold, the price for both buyer and seller was the fixed price at the moment of the transaction, and was the spot price. What ever happened to the price after that deal was struck didn't matter. There is no other fair way to deal with a commodity that is as volatile as gold. 

Everyone understood that a deal that was struck had to be concluded, otherwise, they were excluded from any future transactions. I was lucky to have worked with a bunch of honorable people. I never had a moment's worth of trouble, and never did a check bounce. 

Harold


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## Ageo308 (Apr 10, 2008)

Harold_V said:


> Ageo308 said:
> 
> 
> > As im starting my own refining i also dabble in the scrap business. What i do thow is buy at a fixed price and on sell for another fixed price (fixed price meaning both are locked on the spot bar any price movements).
> ...



Yep i cant agree more, its a nice clean way of making some cash.


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## Husker (Aug 7, 2008)

catfish said:


> Hunchback, as you can probably already tell, I am a numbers guy and when you can turn your money over fast and clear 40% profit, you will do good. Grocery stores only make 2 to 3% on their money but the key is to turn it over fast many times. If you PM me I will also hook you up with my buyer too. They are a small recycler in Dallas Texas and very reputable. My son has been dealing with them for many years and I have for over two years my self and have never had any problems. I always know exactly how much gold I send them and what to expect. It has worked out perfect every time.
> 
> I know this is lot to digest, but I strongly suggest you study this business and become very proficient at it before you sink a lot of money into it.



I would also like to start grading/purchasing/quick selling of karat scrap. What you have listed in this post was very eye opening. I have sent you a PM with several other questions (along with a request for your purchaser's information). 

Finding this site has been a TREASURE TROVE of very valuable info. I have a couple hundred pounds of computer scrap I have collected over the last couple of years, and have cherry picked the best stuff (fingers / pins / cpus), and now with this site, I have the information to make me confident enough to actually process.

I had not looked at eScrap being anything more than a "hobby". However, it looks like karat scrap could possibly be a hobby that could be turned into something more than that. I am looking forward to the information about different tools and techniques needed to successfully work in this trade.

Again, thanks all 

Jim. 

PS, my intro post  I have been sponging the data off of this fabulous site for a while. I would much rather read 100's or 1000's of posts (which I have actually read), and soak in the information, instead of simply posting total uneducated n00b questions right off the bat. Prior to this (several years ago actually), I had spent about $50 on Megan's little kit and pamplets about flee market gold mining. I was just not able to do too much with it, due to many issues, and simply not enough information. However, this site has REALLY filled in many of the questions I had (along with many techniques needed)

PPS, I have downloaded the Hoke book pdf from this site, and am about 1/4 through it. Is the PDF the same (or a scan) of the hard cover book? It looks like it, but I would rather ask people who know.


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## Harold_V (Aug 7, 2008)

Husker said:


> I have downloaded the Hoke book pdf from this site, and am about 1/4 through it. Is the PDF the same (or a scan) of the hard cover book? It looks like it, but I would rather ask people who know.



It is a direct scan, as far as I know. You are wise to read and absorb its contents. Even if you don't use the exact procedures, the knowledge contained in the book will enlighten you in all areas, often with the result that what previously was confusing, now makes sense. 

No one in their right mind, barring those with a proper education, should refine without a copy of Hoke at their disposal. 

Welcome to the forum.

Harold


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## Husker (Aug 7, 2008)

Thanks for the welcome Harold. 

I am an engineer (computer, but still have the same compulsively anal mentality, as any good engineer has), so having a "bible type" howto book available like Hoke is a god send in my opinion. I am the type that would rather read specification type documentation than about anything else. I figure if that one book contains all the information one really needs, that reading it a couple times, and then starting to work through it again, but applying the procedures, and I should have the knowledge and skill needed. 

I figure I will not be doing "too" much backyard refining, simply because of the volume of material vs the time I have to put in. But I will continue to pick the low hanging fruit (such as fingers, pins and CPU's, AL heat sinks, AL drive bodies, drive platters, etc), and refine every once in a while when I get enough material. 

But the collection and resale of karat (and collection of cats), is something where there is actually potential (in my mind), to become much more than a hobby.

Jim.


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## Harold_V (Aug 8, 2008)

Husker said:


> But the collection and resale of karat (and collection of cats), is something where there is actually potential (in my mind), to become much more than a hobby.
> Jim.



You likely have not read my previous ravings, but from Hoke's book I learned enough to found a refining business that supported me comfortably until it was sold and I retired. The book is good, very good, although not necessarily state-of-the-art technology. Bottom line is, with the information it provides, you can function perfectly well as a refiner for the jewelry industry, which is what I did. 

For the record, I am a retired tool maker. Talk about being anal! :lol: 

Harold


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