KCGreg
Active member
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!
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!
