How to Figure the Value of Scrap Gold: Simple Step-by-Step Tutorial
Saving gold is one of the most popular investment strategies, and unlike stock trading it doesn't require any specialized knowledge other than the current price of gold and past price trends. Figuring the current value of your scrap gold, jewelry, and coins is easy if you know the weight of each piece and how pure it is.
For quicker calculations, you can use an online scrap gold calculator. This tutorial will show you how to calculate your gold's worth using pencil and paper. To make the most accurate calculations, you will need a finely calibrated scale that can measure the weight of your metal in troy ounces.
As a preliminary step, pick the weight unit you want to measure in to convert to troy ounces, the typical unit for measuring weights of precious metals such as gold, silver, and platinum. If your scale measures weight in other units, you can apply these unit conversions to determine the troy ounces:
1 ounce = 0.911458333 troy ounces
1 gram = 0.0321507466 troy ounces
For example, 786.44 grams = 25.28 troy oz.
First convert the karats or millesimal fineness units to a proportion. If the purity of the gold is measured in karats, then you divide by 24 to compute the proportion of pure gold. If the purity is in millesimal units (a number between 1 and 999) then you divide by 1000.
For instance, 18k gold has a purity ratio of 0.75, since 18/24 = 0.75. A gold bar stamped with the phrase "833 pure" has a purity ratio of 0.833, since 833/1000 = 0.833. Since gold is very soft, it is usually mixed with other metals such as copper to make jewelry harder and more durable.
Next, multiply the weight of each coin or piece of jewelry by its purity ratio to find the mass of pure gold in the piece. For example, if the piece weighs 0.13 troy ounces and it is 0.75 pure, then the total gold mass is 0.0975 troy ounces, since (0.13)(0.75) = 0.0975. This is the amount of gold you will be able to sell to a scrap buyer.
Take the sum of all the pure gold weights to find the total weight of gold you own. For instance, suppose you have 20 troy oz worth of cons that are 22k gold, and 15 troy oz worth of jewelry that is 18k gold. Your total gold weight is
(20)(22/24) + (15)(18/24) = 29.583 troy oz.
Finally, multiply the total gold weight by the price of gold per troy ounce. This is the scrap value of your gold. You can find the current price of gold on any website that tracks commodities, such as Bloomberg.com.
For example, if you have 5 troy ounces of pure gold and the current rate is $1600 per troy ounce, then your gold is worth about $8000.
Selling Your Gold and Getting a Fair Price
Keep in mind that these steps only provide an estimate, not an official appraisal. If you sell it to a large scrap gold buyer, they will take a percentage to recoup the cost of processing your jewelry and coins to extract the pure gold.
Many gold buyers who operate through the mail advertise the ease of selling your gold this way. Just stick your coins and jewelry in an envelope and they'll send you a check. Unfortunately, people often trust the buyer to come up with a fair price and neglect to make the calculations on their own to make sure they're getting the fair market value. Always figure your gold's value on your own before selling to a scrap buyer, that way you can negotiate a better price or know if you are getting ripped off.
Often times gold coins are worth more than their gold weight value because they are collectible. The same may be true of your old gold jewelry if many of the pieces are unusual or exhibit excellent craftsmanship. Rather than selling old coins and cufflinks for their scrap metal value, you may find success selling them on eBay to coin and jewelry collectors.