Here’s a straight forward approach to maximizing your profits in the scrap gold business. If you’ve read our Book this may still be a good reminder. Of course our 90 page Scrap Gold Business Book teaches this in greater depth.

1) Determine the weight of the piece
2) Determine the purity of the piece
3) Determine the spot price of gold today

Gold is sold in Troy ounces. Troy ounces are divided into 20 penny weights (dwt). Small rings usually have 2 dwt – 5 dwt after removing any stones. You’ll need a small scale.

The karat value of the piece is the proportion of gold in the piece. 24 karat is pure gold. A 24 karat gold chain that weighs 10 dwt will contain 10 dwt of pure gold.

An 18 karat gold chain weighing 10 dwt contains 18/24 (75%) of pure gold.

A 14 karat chain weighing 10 dwt contains 14/24 (58%) of pure gold.

Valuing the piece:

Visit http://www.Kitco.com for today’s scrap gold spot price. Let’s
pretend it’s $1600 per ounce today to keep the math simple.

$1600 oz divided by 20 dwt per ounce = $80 per dwt.
Say we have a 18K gold chain weighing 10 dwt.
Since 18K = 75% pure gold = 10 dwt X 75% = 7.5 dwt pure gold.
7.5 dwt pure gold X $80 per dwt = $600 worth of gold in this example.

Refiners typically pay 92% – 95% of the pure scrap value to pay their fixed and variable overhead,make a profit and pay their taxes. So… a refiner might be willing to pay as much as $570 for this chain.

Gold party hosts/sponsors and retail gold dealers/pawnshops typically pay 30% to 60% for gold. Thus, this example chain might be worth $180 to $360 to them. They then sell it to a refiner for close to $570.

To make money in the scrap gold business, you have to learn how to profit with this “spread” – that is – the difference between how much you pay for the piece and how much you get from your refiner.

For a thorough discussion and graphics on “How to Start and Operate a Scrap Gold Business” consider our 90 page book at:
http://www.ScrapGoldGuru.com