Definition of Scrap Gold
The term “scrap gold” refers to gold that is sent to a refiner to be melted down and recycled.
The term “scrap gold” refers to gold that is sent to a refiner to be melted down and recycled.
Therefore, any item that contains gold and is meant to be reprocessed can be considered scrap gold.
For example, if you sell your old jewelry to a gold dealer, who will send it to a refinery, the items you sell will be bought as scrap gold.
How Scrap Gold Is Weighed and Measured
When bought and sold, scrap gold is often weighed in troy ounces: 1 troy ounce is equal to 31.1 grams (1 gram = 0.032 troy ounces).
(1 regular ounce is equal to 28.34 grams; conversely, 1 gram is equal to 0.035 ounces.)
Another common unit of measure for scrap gold is pennyweight (abbreviated as “dwt”).
1 pennyweight (1 dwt) is approximately equal to 1.555 grams, 0.05 troy ounces, or 0.055 ounces. Alternatively, 1 gram equals 0.64 pennyweights, 1 troy ounce equals 20 pennyweights, and 1 ounce is equal to 18.23 pennyweights.
An important characteristic of scrap gold is its purity, which tells you what percentage of an item is made up of actual gold and how much of the piece is made of other metals.
Purity is measured in karats, and the maximum gold content an item can have is 24 karats, which is the karat number of pure gold.
To convert karats to a percentage, simply divide the karat number by 24. For example, a 14-karat (or 14K) ring contains 58.3% pure gold (14 divided by 24).
Value of Scrap Gold
The value of scrap gold depends on two main factors: weight and purity. Therefore, if you know the price of gold per unit of weight and you also know the karat of a piece of gold jewelry, you can estimate its value as scrap gold.
As an example, if you have an 18K piece that weighs 100 grams, then the actual gold content of the item is 75% (18K divided by 24), or in other words, you have 75 grams of pure gold.
All you need to do is multiply 75 grams by the current market price of gold per gram, and the result will give you an estimate of how much the gold in your jewelry is worth.
This doesn’t mean that you’d be able to get that price if were to sell. Most gold brokers will buy your old gold at a 20%-40% discount to the market price to cover their melting, refining, and other operating costs.
You can check current gold market prices here and here.
Selling Scrap Gold
There are many scrap gold dealers that can buy your gold jewelry.
However, keep in mind that none of them will pay you as much as your jewelry is worth at the store – scrap gold buyers care about the value of the metal in your items, not about the value of their design.
If you estimate the value of your scrap gold based on current market prices, remember that a buyer will most likely pay you less than your estimate since dealers work to make a profit on reselling your gold.
Keep in mind that different scrap gold buyers may offer different prices for your jewelry depending on what they will do with it and whom they will resell it to. This is why you should research various options and review a number of offers.
But as a rule of thumb, most scrap gold buyers will buy your gold at 60% to 80% of the market price — the high end of the range is usually offered to people that have a lot of gold to sell.
So, for example, if you have a 14K gold ring that weighs 10 g (excluding stones and non-gold clasps), you actually have 5.83 g pure gold (remember that 14K divided by 24K is 58.3%).
If the market price per troy ounce is $1,200, this means that each gram of pure gold sells at $38.58 per gram (remember that 1 troy ounce = 31.1 g), so you have gold worth about $225 on the market (5.83 g x $38.58).
However, since most scrap gold buyers will offer 60% to 80% of the market price, you’ll get between $23.15 and $30.86 per gram, which translates to $134.96 to $179.91 in total for your item (a price closer to the high end will likely only be offered if you have hundreds of grams to sell at once).
So suppose a gold buyer says, “We offer $23 per dwt for 14K gold.” How do you know if you’re getting a good deal?
First, this means that the price per gram is $14.79 ($23/1.555 g since 1 dwt = 1.555 g).
However, since one gram of 14K gold only contains 0.583 grams of pure gold, the price per gram of pure gold is actually $25.37 ($14.79/0.583 g). Compare this with the market price of gold per gram.
Let’s assume again that the current market price is still $1,200 per troy ounce (31.1 g), or $38.58 per gram. So at a purchase price of $25.37 per gram of scrap gold (pure), the gold buyer actually offers you about 65% of the market price.
Is this a good deal? It fits in the usual offer range of 60% to 80% of the market price, so let’s just say this is an okay price.
You’re unlikely to get more than 70% of the market price unless you sell at least couple of hundred grams of gold. But if you’re selling just a couple of small rings or a light necklace, most buyers’ offers will be in the 60%-70% range.
You can always try to negotiate, and some buyers are indeed open to negotiations, but set your upper limit realistically — most gold dealers won’t pay more than 80%. Those that pay more are few and are usually large operations that often also own metal refineries.
The exception to this rule is a buyer that doesn’t buy the gold jewelry for scrap but for its value as jewelry. Those buyers usually base their valuations on the design, brand, and age of the jewelry, so if you have designer items and antique pieces, you might be able to get a better price for them than if you sold them as scrap.
Worked Example: How to Calculate the Value of a Scrap Gold Necklace
To calculate the weight of the gold in a scrap gold necklace, first you need to figure out what its gold purity is, and then you can find out how much pure gold you have to value it at current prices.
14-karat gold Figaro necklace
Figuring Out the Purity of a Gold Necklace
To find out the purity of a scrap gold necklace, first look closely at it, and see if you can spot any karat marks, such as 10K, 14K, 18K, or 20K.
If you can’t see any karat stamps, you will need to have the necklace tested for purity. Most jewelers can do that for you. You can also test your scrap gold necklace for karats at home – you will just need to buy a gold testing kit.
After you’ve figured out the karat number of the gold necklace, you can convert that value to a percentage. Simply divide the karats by 24 and multiply the result by 100. For example, a 20-karat gold chain contains 83.3% pure gold (calculated as 20/24 x 100).
If the marks on the chain are not the standard 2-digit numbers but instead have 3 digits, then its purity is most likely expressed as parts per thousand. To convert such a number to a percentage, simply divide by 10. Thus, a mark that reads “833” means that the chain contains 83.3% gold. The most common parts-per-thousand numbers you are likely to see are 417, 583, 750, 833, and 917.
Determining the Weight of Pure Gold in the Necklace
After you have determined the percentage of gold content in your necklace, you can find out how much pure gold it contains in grams or ounces. All you need to do is weigh the necklace on a precise scale. Be sure to remove any parts that are not gold so that you don’t include their weight, e.g. pendants made of another material or gemstones.
When you know the weight of the scrap gold necklace, simply multiply that number by the purity of the gold alloy.
As an example, let’s assume that you have a necklace that weighs 10 grams, and you have determined that it is 18 karats pure. We know that 18 karats translates to 75% gold content, so we can calculate that out of the 10 grams gold alloy the necklace is made of, 7.5 grams is pure gold.
Determining the Value of a Gold Necklace
Now that you know how much pure gold there is in your necklace, you can estimate its value.
Dealers that buy scrap gold will quote you a price per gram or ounce, and you can look up their quotes on some of their websites to calculate how much you can get for your gold.
Alternatively, you can estimate the value of your scrap gold necklace based on current gold market prices.
You can assume that a gold dealer will pay a price per gram of pure gold that will be about 60%-80% of the price the metal sells for on commodity exchanges.
