How to Make Money Buying Scrap Gold

Even though news reports say that the economy is recovering, the price of gold doesn't show it. It has been as high as $1800 an ounce, and now is a great time to get into the cash for gold business. To avoid being swindled, there are some things you need to know: what constitutes "scrap gold", where to sell it, who to sell it to, and the price you should get for the gold. 

What is Scrap Gold?

Before doing anything else, you need to know what scrap gold is. Strictly defined, it's any gold that has been discarded and is suitable for reprocessing. Any leftover gold that can be smelted and reforged is scrap, such as bent, broken and tangled jewelry, casting gold, cluster rings, dental work, gold dust and flake, pins, brooches, sheet, solder, and even gold-plated chips and CPUs.

Also Read: How Gold Buyers Make Money from Scrap Gold

How Much is it Worth?

To determine the value of your gold, you'll need your math skills and a scale (preferably one of the type used by jewelers, but a kitchen scale will work as well). Most dealers and refineries transact gold on a pennyweight basis, so if you're using a kitchen scale, you'll need to convert from grams or ounces. One ounce is the same as 20 pennyweights, and 1.5 grams is equal to one pennyweight. Once you have weighed your scrap gold, check the spot price. That figure is in ounces, so divide it by 20 for its pennyweight value or by 31.1 for its gram value. Keep in mind that the spot price is for pure gold; scrap is never pure (24 karats). You won't get the entire spot price, but you'll have a rough estimate of your profit. 

Selling For a Profit

Now that you've assembled your gold and figured its worth, you can decide where you'll sell it. There are two main places that buy scrap gold: dealers and refiners. Dealers are middlemen who buy gold and sell it to refineries, but you can avoid their fees by selling to the refiner directly. Refiners are those cash for gold companies we've all seen on television, offering to buy scrap and unwanted gold. Look in your local phone book for refiners; they are also readily available online.

When preparing to buy gold or sell it for a profit, remember to deal only with established, reputable companies. The importance of dealing with a good company is nowhere more apparent than when selling gold by mail. Most good companies will have a website with a gold calculator so that you'll have a rough estimate of how much you will make; the best companies even offer a price guarantee. Following the advice given above can help you avoid many of the traps and pitfalls of the "cash for gold" business. 

Also Read: 

How To Sell Gold For Dummies

5 Qualities to Look for when Buying Gold Earrings

Scrap Gold Buyers - An Overview