Hi All,
Ok, I have been thinking of taking partial payment or full payment
for new jewelry in old jewelry scrap from some customers. I have not
done this much over the years, but now that gold is going up, a few
customers have asked me if I would take their old scrap gold pieces
in trade. So, the question is simple, what is the current rule for
valuing scrap gold? 1/3 the cost of New? Less? More?
Silverfoot-
Hi,
Scrap gold is valued at day prices with deduction of costs
(refinement etc).
Alain
when I worked at a store a few years back we used a formula from
some trade mag. the formula was the following. TEST the Gold, [invest
in an acid test kit]. Then give them 65% of its scrap value in TRADE.
Since you are, I hope, getting a good markup on your work you will
make money.
The other thing to do is be sure and use a reliable refiner for your
scrap. I use Pease and Curren. I always tell them exactly what I am
sending them even if it is all in a big bag of scrap. You really
should take the time and weigh out what you know to be 14k, 18K
etc., then you can get a better idea if you are getting a good assay.
You can also get 24K casting grain back from Pease and Curren instead
of selling the gold to them. Their fees are very competitive. Then
you can mix your own alloy and not pay someone else a premium to do
it for you. Actually, I have my caster do it, they don’t charge me
much. Why sell Gold and then buy more? Especially now that it is so
high.
Good luck, Dennis
Scrap gold is valued at day prices with deduction of costs (refinement etc).
Well actually that may be how it’s valued but the question was what
should the jeweler should pay the customer for the scrap which is
quite different. The factors that have to go into that equation
include: when is the metal actually going to be scrapped (in other
words if you don’t have enough to make it worthwhile to send into
the refiner until the following month—or months—the actual value
of the scrap might be quite different); how certain are you that the
metal is stamped accurately (if it is 13 1/2 kt gold instead of
14kt–as some manufacturers used for quite awhile this makes a big
difference in actual value); how much loss will there be (no matter
what there will be a certain amount of loss in the scrap burnout
process); how much does the refiner you use charge for their
services; how much is it costing you to take in scrap instead of
money when you might not see the money for the scrap for weeks at a
minimum and up to a year at the maximum–which means your money can
be tied up for a significant period of time (and yes it does cost
you to have your money tied up for a period of time in something you
can’t actually use); how much will you take in that isn’t what the
quality stamp actually claims (it may be stamped 14kt but is it
really?)–or how much time and money do you spend testing the scrap;
how much risk you are assuming (gold may be $500/oz today but might
be $350/oz by the time you send it in); how much time you spend
dealing with the scrap itself (weighing in, checking what it is,
preparing for the refiner, etc.); and do you want to include a
profit for yourself on this SERVICE that you are offering the
customer. When you factor all of these items into the equation it is
my belief that you should never pay much more than 25-30% of what you
are paying for gold currently. The only exception I personally offer
to this rule is if the customer has a big enough pile of scrap to
ship into the refiner in a worthwhile manner and then I would take a
commission of between 15-25% of whatever the actual payout is.
Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
617-234-4392
@Daniel_R_Spirer
Silverfoot-
When I was with Nordstrom we where always being asked to actually
make the customers new jewelry using the old scrap jewelry gold. It
was very hard to explain all the problems in casting and
manufacturing that would often entail. (Pits, Porosity, uncertain
karat grade) But as long as no one was asking for that I was willing
to give them up to 1/2 the spot market rate. But 1/3 would be an even
better deal for you!
The spot market is always based on 24k price. You can get it from
the London Stock Exchange or some refiners list it on their websites.
Then you will have to plug in the percentage of how much pure gold
is in the 14k or 18k scrap. 58% for 14k or 75% for 18k. I would always
separate the karat grades, weigh the scrap by karat grade, and divide
the weight by the percent of pure gold in that particular karat. I
was trained using Pennyweights (dwt) but it works equally well and
probably more accurately with grams or grains.
Once I had a dollar value, I would just subtract that amount from
the customers total bill. Sometimes sentimental value was more than
the dollar value and the customer would ask for the item(s) back. Be
prepared for that and don’t melt anything down. Unless you want a
tear stained apron :~{
If the scrap is not stamped, you’ll have to get out a touchstone and
acids to test it. If you don’t know how to do that, Rio Grande has
testing kits and videos.
Be especially careful of gold filled and plated items, you don’t
want to pay gold prices for base metal. If something looks 18k yet
feel light, file a notch in it to check how far down the gold goes.
Hallmarks like 1/20th 14kGF will indicate a gold filled item that is
of little value when refining.
Precious metal clay was never an issue for me but I have seen the
Gold version and it feels very light in the hand. And I don’t know if
anyone using that product would know enough to stamp the stuff
correctly (no offence meant) But be aware that it may cause confusion
with identification.
Good luck!
I Hope this helps,
Nanz Aalund
First, make sure you know how much you can sell the scrap for. Then
always, always, always pay less than what you can get out of it. The
amount you pay for scrap has nothing to do whatsoever with the price
of the item you are selling/trading. Or with the price that you would
pay for new material. Currently, I am paying/trading, over the retail
counter, at about $8/dwt for 14k, and $7/dwt for 10k. But I can sell
currently to a major refinery, for a price in the neighborhood of
$13/dwt. Also, the larger the lot of scrap that you sell to a
refinery, the higher the $/dwt you will receive.Most major refineries
pay maximum $/dwt for 1000 dwt or more batches. If the scrap has low
end diamond melee, don’t pay much for the diamonds because it takes a
fair amount of time to remove it, and since time is money, the melee
is worth less to you. I usually pay 1/2 or less than the wholesale
price of equivelant melee, when I need to spend the time to remove it
from the old mountings. Diamond melee that I might normally buy new
for $15 each, I will pay $5 each in scrap purchases. Always remember
that most people who inquire about selling their old scrap jewelry,
have no idea what they should receive for it, and since we are
supposed to be the pros, make sure you know what is profitable for
YOU. If they refuse your offer, that’s alright, because if you cant
make a profit, you wont be in this business much longer. Run your
business like a business, and you will still be in business next
year.
Ed in Kokomo
Hi Silver
This is definitely not an easy question cause its not about how much
do you pay for scrap gold it’s about can you make that sale or not
with the trade. I would proceed on this with caution because you
might make the customer feel insulted. The gold value in a piece is
usually less than 40% of the retail value so you would offer less
than that. A normal customer for some reason believes that his gold
jewelry holds up its value, if he or she has paid $50.00 he must get
back the 50 or may be 45, you have to give reasoning why you are
paying only $15 or $20 for something he paid $50.00. I make atleast
two trades everyday successfully, come up with a complete scenario
as what you will pay for an item lets say retail value $50.00 what
the customer might say and what your answer will be. think of
atleast five different scenarios when you offer that little bit of
money to the customer compared to what he paid. I am sorry to say
but most good jewelers are not good sales people. Some customers
just like to buy jewelry form real jewelers just because they know
that a jeweler would have more knowledge that themselves this should
not be miss understood of being a good sales person. good thought
but proceed with caution or you might loose a customer or two.
Gary
When you factor all of these items into the equation it is my belief that you should never pay much more than 25-30% of what you are paying for gold currently.
Thanks, Daniel, what you say makes a lot of sense. And I wonder if
you could clarify just a little.
Do you meran 25-30% of the price of the gold fraction of the scrap?
In other words, say you are buying, to make round figures, 10 oz of
12k jewelry and the price of gold is $500. That means the scrap
contains 5oz of gold (supposedly). Are you saying you would pay
25-30% of $2500 (5 oz x $500), or about $640-$750?
If not, then what?
So far, I’ve only been asked to accept dental gold-- complete with
teeth, tossed down in front of me like dice. I’m not terribly
squeamish, but, yuck!!! I passed on that deal (and still got the
commission). But these days, it seems wise to be prepared.
Noel
In taking payment from a refinery, also consider taking payment in
gold coins, such as Krugerrands, Maple leafs, etc, especially when
the market is still trending to the upside, as you can still sell
your coins later even easier than selling your scrap, as the coins do
not require assaying before receiving payment. I think when I sell my
next batch of scrap I am going to purchase a wax modeling machine
with part of the payment, keep part in cash, and part in coins. I
have been anticipating the recent uptick in the gold market for a
couple years, so I have been stock piling scrap for a while. I end up
with a lot of mtgs, broken chains & bracelets, from remount jobs,
trade for work and jewelry, and just keep throwing it in coffee cans
in the safe. I alot myself a set dollar amount per month that I will
spend in cash on scrap purchases so that I dont interfere with my
stores cashflow, since I was stockpiling the scrap.
Also make sure you are aware of your state and community laws on
buying and selling ‘used’ merchandise, (pawn shop laws can apply
here too) because as soon as word gets out that you are actively
buying scrap, alot more sellers will begin to show up on your
doorstep, and a fair amount of them will be offering goods from less
than legal sources. You definitly do not want to be mixed up in any
way shape or form in these sordid peoples stories when they go down.
Ed in Kokomo
we usually give 75% and have used Hoover and Strong for over 20
years. Buying scrap is a very good way to get people into the store
and you can get some interesting resaleable items well below
wholesale. ***Check you local laws about receipts for purchases,
Identification of sellers, how long it has to be held, etc. It is
very easy to buy stolen goods if you are not careful.
mike
First let me thank everyone that has contributed their $.02 so far. I
think I have my starting point. However, a few of you made a couple
of suggestions, which while valid for most, might not be valid for
me. Let me explain: I do not have a retail business. Almost all my
sales are done over the net, and my customers are from all over the
world. I doubt I will be reporting anything to any law agency, cause
really, who would I report to? Its not like my local police will have
records about jewelry thefts in Australia or England. I expect this
is going to get a little tricky, but I imagine the way this is going
to work is that my customer will place his order and send me his gold
scrap to evaluate against his purchase. I will evaluate the scrap and
make him an offer. If the offer is accepted, then I will deduct the
value from his purchase. If the offer is rejected, then the scrap
will be sent back to the customer and they can pay with other
means… The primary goal of this endeavor is to make it easier for
my customers to buy that $1000 or $2000 item without feeling like
they are draining their bank accounts… and at the same time give me
some extra gold at a fraction of what I would have to buy it new for.
The scrap I receive will be melted down and cast into findings for
pieces I make. Doubt any of it will ever see a refiner or be put up
for resale.
I know some of you will be cringing and thinking “Man you are just
opening yourself up to be screwed.” Perhaps, but I have a very unique
customer base. These people are the best and most loyal customers I
could ever ask for. I have been in business since 1989 and have been
making items for this niche market since about 1992. I have never had
a charge-back, and I have never had a bounced check that was not
repaid. I have had very few returns (normally size issues), and no
unhappy customers. (knock on wood that this continues and my business
grows)…
Silverfoot-
Noel,
As an addendum to my previous response to this:
So far, I've only been asked to accept dental gold-- complete with teeth, tossed down in front of me like dice. I'm not terribly squeamish, but, yuck!!! I passed on that deal (and still got the commission). But these days, it seems wise to be prepared.
You should be glad they’ve only asked you to scrap this stuff. I’ve
had two customers who I actually set human teeth into jewelry for
(AND three who had me set puppy teeth, one who had me set a t-rex
tooth, one who had me appraise the damage done to a monkey skull in
shipment, one who had me set rock from the top of Mt. Everest and one
who had me set a piece of the Berlin Wallalright the last two
weren’t so disgusting, just kind of interesting.)
Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
617-234-4392
@Daniel_R_Spirer
What I usually come up with is like cars, steel is at $50 per ton
most small cars weight is 3/4 ton so that is $40 the salvage yards
pay $35 for that same car, but the dealer still wants $18000 so what’s
it worth? sorry but all you have is $12 of pure gold. like cars the
rest is manufactures manufacturing price,
Don in Idaho.
Noel,
I meant that I wouldn’t pay much more than 25-30% of whatever I
would pay for that metal. If 18 kt is costing me 22/dwt at the moment
(about what it is) I wouldn’t pay more than $6-7/dwt for 18k scrap.
If 14k is costing me $18/dwt I wouldn’t pay more than $5-6/dwt for
14k scrap. Hope this helps.
Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
@Daniel_R_Spirer
A normal customer for some reason believes that his gold jewelry holds up its value,
For this reason I usually overpay if I consider the seller a real
customer. If someone I have never met before wants to sell some
gold, I offer what the material is really worth to me. If I have an
ongoing retail relationship with the seller I am really giving the
customer a discount. The good will from this is usually worth it and
sometimes I get something that has value beyond the scrap value,
that can be resold.
A situation that I often get is the return of a wedding ring after
several years, either because of divorce, damage or drastic size
change. Since I know this is already my alloy, I find it very easy
to give the customer generous credit. After all, the actual cost and
time to replace a cast ring when you already have the mold and you
are casting anyway, is not that great. Becuase of the nature of my
designs it is easier to re-cast than to cut a ring to resize.
Another thing I frequently do is cast customer’s gold, usually old
sentimental jewelry, into new pieces. I explain all about how the
alloy might not mix well with the extra gold I add and how the karat
might not be plumb. If they are doing this for emotional reasons,
they usually do not care that much about how little they save. If a
customer who cannot really afford what they want, this can also be a
way to disguise the discount that makes the purchase affordable.
Before Christmas a friend who is terminally ill wanted me to remount
the diamond from an earring into a ring for her husband. She really
is very hard up and even paying $100 would be beyond her means. She
did have some old gold jewelry she could bring to the trade. Not
enough to cover my regular price, but it is not always about money.
As far as she knows the trade was a fair one and she does not
consider herself a charity case, and that is just fine by me.
Not quite off-topic. Several months ago I started a thread about
legacy diamonds. I am very happy to report that I was able to sell
one of the stones to a woman who was glad to have it because of who
it had formerly belonged to. She had the stone made into a ring for
her husband. As a child and then as a younger woman she had been
friends with the deceased former owner of the ring. I also used the
gold from the ring to cast the new ring.
Stephen Walker
There are a few good ways to do this. Your math must be right, you
can give more value in store credit than cash obviously. But I have
an even better idea. Some refiners offer "small batch/same molecule"
gold return. Let the customer pay the refining fee (usually a nominal
% unless its a very small batch) and actually provide the close to or
full value for the metal. Most of you make the real money on your
work and the stones. Take advantage of that fact if it applies to
you.
The point Gary made about insulting the customer or their goods is a
great one- Avoid this by pointing out that fine jewelry has enough
labor and design skill costs that when you remove those factors by
melting the gold itself-The gold is not the biggest part of the
price. Explain how pure gold coins have so little labor cost and
essentially no design cost at all! That’s why a Maple Leaf coin is a
little over spot gold and a finished fine jewelry piece is far over
the spot gold value. This properly stated does not diminish the value
of the item in their mind, it upgrades the value of design and
manufacturing costs in the mind of the customer. Remember, the only
other place that will buy their gold is a pawn shop. They pay as
little as they can. Your offer is likely to be generous by comparison
and that makes you look good.
I have taught store owners and staff how to do this in an
appropriate way. Before I worked for PMWest I had a store, back in
the days of $700 plus gold. Getting some gold below spot really
helped the repair department stay profitable. Scratch stone anybody?
Or go electronic, those machines have really gotten good in recent
years. Within one karat in my experience, and I have both scratch
stones and the Tri-Electronics estimator.
Daniel Ballard
PMWest
The primary goal of this endeavor is to make it easier for my customers to buy that $1000 or $2000 item without feeling like they are draining their bank accounts...
First of all the customers are going to have to have a whole pot
load of gold scrap to make much of a difference on a $2000 piece. I
know this because my average price point is in the $2000 range and in
all the years of doing business I can’t ever recall anyone coming in
with that much (or even half that much) in jewelry gold scrap (I’ve
had people show up with that much in other forms, but not in actual
jewelry) and actually making much of a dent in the cost of what they
are purchasing from me.
Secondly:
The scrap I receive will be melted down and cast into findings for pieces I make. Doubt any of it will ever see a refiner or be put up for resale.
You had better have some pretty sophisticated refining methods
available to you in your workshop if you are going to melt the stuff
yourself, recast it and then resell it to someone (even if it’s only
as parts of things)—and unless you’re talking about making a whole
lot of findings to put in pieces that only you will be wearing
personally— then it will be resold… There is almost always solder
in jewelry and if you simply repour it and make it up into stuff you
can no longer legally identify it as 14kt (or 18 kt) or sell it as
such. Also since you won’t be sure of the exact amount of gold in
what you are buying (most testing kits available for small jewelers
are notoriously inaccurate)–even if the stuff really doesn’t have
solder in it—you will be breaking the law by reselling it as 14 kt
or whatever because you won’t be SURE that you are selling that. The
stuff will simply not assay out at the point you need it to be in
order to legally sell it with a quality stamp on it.
Third:
Since when is selling on the net not selling retail? By selling to
the general public you are selling retail and while the net may be
underpoliced at the moment it is no excuse to do things illegally.
Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
@Daniel_R_Spirer
i can not imagine walking (or rolling in my case) into a jewelry
store and offering anything but cash, credit card…ok, old gold but
not expect huge funds…have i been under a rock somewhere, or is
barter, or trade or offers of other goodies in lieu of money to
purchase jewelry.the norm?
pat
The scrap I receive will be melted down and cast into findings for pieces I make. Doubt any of it will ever see a refiner or be put up for resale.
Boy are you trusting. You say that you have been in business with
these people in the past. How long? I think that you are really
asking for trouble. How do you know that someone hasn’t infiltrated
your customer base. You may well end up selling stolen goods on as
international level, haven’t you every heard of Homeland Security?
Have you ever been in the same room with these people? Just how much
have they purchased from you that you think that they are your
friends? I can go on but my advice to you is don’t get involved in
this. Your business model seems to me to be the perfect opportunity
for crooks. Let them sell their scrap in the own country or theri own
town. They can take it to a pwon shop. You are heading for a lot of
headaches. Why should you really care if they feel they are draining
their bank accounts? This is a business not a friendship.
Good luck Dennis
I will try to help you get to the point!
Gram Weight X .03215 X Purity (10k: 0.4166, 14k: 0.5833, 16k: 0.666,
18k: 0.75) X Price of Pure GOLD= 100% =/- what it is worth.
EXAMPLE: 14k yellow gold wedding band, weight: 12.0 grams 12 X 0.03215
X 0.5833 X $542.40 = $174.31
Now what you need to consider is 1)refining cost 2) is the metal
really 14k? and 3) turn around time for your money.
By the way, the .03215 is the factor to turn grams into ounces.
GOOD LUCK!