Selling Your Scrap Jewelry

1/1/2016

The term 'scrap' means the item will be refined, not resold as a second hand piece. There are 4 main components to figuring the price to be paid for your scrap. 
  • Karat / Fineness
  • Spot Price
  • Weight
  • Expenses and dealer profit margin
Karat 
The word karat generally applies to gold jewelry and is the ration of pure gold to metal alloys. All buyers use the following formula to determine how much pure metal is in your item. 
  • Karat / 24 = Purity 
  • Purity X Gross Weight = Pure metal content (PTO)
Simply put,  the above formula would tell you how much pure gold remains after the refining process separates out the alloys. My math teacher always told me I'd need algebra later in life. To make it easier for you, I've done the math for determing purity:
  •   9 K = 37% - seen in vintage European jewelry
  • 10 K = 39% - typical of American jewelry produced before 1996*
  • 10 K = 41% - typical of American jewelry produced after 1996
  • 14 K = 56% - typical of American jewelry produced before 1996*
  • 14 K = 58% - typical of jewelry produced after 1996
  • 18 K = 73% - typical of American jewelry produced before 1996* 
  • 18 K = 75% - typical of jewelry produced after 1996, standard European & Asian jewelry
  • 21 K = 90% - seen in many gold coins world wide
  • 22 K = 91% - seen in standard Asian jewelry
  • 23/24K = 96/99% - specialized Asian jewelry

Generally, platinum and silver jewelry are not marked as karat, but by it's purity as a  decimal. In the US silver is marked by most manufactorers, 'Sterling',  92.5% pure silver.  Precious metal jewelry and other items from other countries can be tricky.  Some countries may use a decimal to represent fineness or a combination of pictograghs, numbers or letters to mark purity and manufactor.

* US Bureau of Weights & Standards esablished in the early part of the twentieth century, jewelry manufactorers were allowed a half karat tolerance on karat markings. As technology improved, mixing and alloying became more accurate, the government revised tolerance limits to zero on karat in 1996.  As such, each karat mark must be full karat or plumb. 

Spot Price 
It is a benchmark to establish a base for pricing products. The term is derived from the COMEX spot month contract. Which means it is the current price of an ounce of precious metal for immediate delivery. As in, right here, right now! More reading is available in our Precious Metals 101 Series - Spot
The COMEX precious metals markets are actively traded 8:20 am to 2:30 pm Eastern Time. The price you see in your daily newspaper is the previous day's closing price. To get current active prices, one may call their broker or access numerable websites or applications.  

Weight 
Precious metals are based in troy weight. What is a troy ounce? It is roughly 9.7% heavier than a postage ounce; which translates to 14.58 troy ounces equals a US standard 16 ounce pound. Depending on what part of the country you are in or how long your buyer has been around, scrap items are weighed in either grams (31.1 grams to the troy ounce), pennyweights (20 dwt to the troy ounce), or Troy ounces ( t.o.).  

Thus, your item(s) are weighed; then multiplied by purity to determine the amount of available pure  metal; and then, multiplied by spot price to get what we call in the industry 'Full Melt'.
  • Gross Weight X Karat X Spot = Full Melt

Expenses and Dealer Profit
 
Let me say it now, you are not going to get full melt for your scrap. There are many direct costs related to handling scrap metal. First, there are the refining and shipping costs. Also, many principalities require the merchant to hold scrap metal from 5 - 30 days before it can be refined. So the merchant is exposed to market risk. Lastly, the merchant adds their profit margin.  

A fair dealer will generally set their profit margin based on the product volume and metal type. One tiny charm is not going to get the same rate as several ounces of rings and chains  or a complete set of flatware. Generally, the discount to full melt is 30%-40% for small lots and up to 15% for large lots. So, if spot gold is $1500 per troy oz. and you have 14 karat scrap jewelry, full melt is $870 per troy oz., you can expect to get a net price of $435  p/oz. for a small lot up to $740 per troy oz for a large lot. You can further divide the  net price by penneyweight (20) or gram (31.1) depending on how the buyer calculates your items. Don't forget the dealer has to cover their expenses and make a fair profit. 

Due Diligence, Pitfalls and Tricks 

Before you sell your items check out the dealer. A good place to start is your Better Business Bureau office or the local office of the dealer's trade organization (coin, jewelry, or pawn association).
  • Check the scale read-out when your item is actually weighed 
  • Ask if  the weight is in pennyweights (Dwt) or grams (Gms) or ounces (Oz)
  • Ask how much the per unit price is (Dwt, Gms, Oz; any one is acceptable). A reputable buyer is happy to explain how they arrived at the price.  
  • Double check the math, even a reputable dealer can make an unintentional mistake. It happens. 
Ask if there is a different price for cash payment vs. check payment.  It is not unusual to see a price differential. Some quotes can be up to 10% different, if it is a large lot. There are pros and cons to both forms of payments.  If there is no difference in price and the dealer wants to pay by check for larger purchases, make sure the check is drawn on a local bank so that you have the option of cashing the check or converting it to a cashiers check.

Finally, the bottom line is, who pays the most for your TOTAL lot. There should be very little variation in the overall price. Shop around and don't be afraid to say no. And now we come full circle... Do Your Due Diligence! 
Good Luck!