If the price of gold is tempting you to sell unused jewelry, countless companies are looking for ways to get their hands on that unwanted gold.
Companies like U.S. Gold Buyers and others ask you to send your scrap gold pieces to them for analysis. Once they determine value, they send payment. Before you mail your gold away, you may want to determine for yourself what the melt value—the market value of the gold contained within the piece—should be.
To calculate the melt value of a gold piece, it's important to understand how gold is rated for its purity, how it is measured, and how it is priced.
The quality of gold is indicated in karats, which measures the gold's purity on a scale of 1 to 24 and normally is recorded directly on a piece with a stamp indicating, for example, 10k, 14k, or 22k.
To determine a percentage of purity, divide the number of karats by 24. This means 12k gold is 50% pure, 24k gold is 100% pure, and so on.
A piece also may be stamped with a number, such as "375," meaning 37.5% gold content, or 9k.
Once you've determined the purity of your gold, you need to measure it on a scale. Gold prices usually are quoted per troy ounce, which is equal to 31.1 grams, so you can easily divide the current gold price by 31.1 to get the price per gram.
Determining Melt Value
To determine the melt value of your gold piece, use the weight of your piece, measured in grams, the purity of your piece, measured by percentage, and the current price of gold per gram.
Current gold prices can be found by searching "spot gold" on any site that tracks commodities prices. It will be listed under the ticker symbol "XAU." This represents the price of gold at that moment, per troy ounce.
For example, if gold is selling for $1,200 per troy ounce, the value of a 10-gram piece that is 12 karats would be calculated like this:
- Weight: 10g
- Purity: 50% (12k = 12/24, or 0.5)
- Price per gram: $38.585 ($1,200/31.1)
- Calculation: 10 x 0.5 x 38.585 = 192.925
The calculation provides us with a melt value of $192.92 for this piece.
Consider a second example of a 22-gram piece that is 14 karats, with a gold price of $1,600 per ounce:
- Weight: 22g
- Purity: 58.3% (14k = 14/24, or 0.583)
- Price per gram: $51.447 ($1,600/31.1)
- Calculation: 22 x 0.583 x 51.447 = 659.859
The calculation provides us with a melt value of $659.86 for this piece.
You can't realistically expect to get the market rate for your gold pieces because that rate reflects what consumers are willing to pay. If you are dealing with a mail-in, cash-for-gold company, a pawn shop, or even a jewelry store, they need to buy the gold at less than the market rate in order to make a profit when they sell to consumers. As well, since the price of gold changes daily and they won't be turning around and selling it the same day they buy it, they need to protect themselves against the market rate dropping between the time they buy it and the time they sell it.
If shopping around at pawn shops or jewelry stores in person, visit the store at least once to get a quote before accepting any offer. In addition to gauging prices, you also can get a feel for who is willing to negotiate and who is least likely to try and take advantage of you. For example, shops might be offering about $265 for your gold piece with a melt value of $659.86. After shopping around, you might have success by returning to those shops and offering to sell it for $330. You might not get that much, but you'll be more likely to find someone willing to increase their initial offer.
The two things you need to do to maximize your returns are to monitor the gold market and to shop around as much as possible. By monitoring the market, you can better gauge when gold is selling high to increase your chances of getting the best possible price. By shopping around and speaking knowledgeably about your gold and current prices, it's less likely that someone will try to take advantage of you with a lowball offer.