There’s Gold in Them Thar Drawers

With the price of gold at $958 an ounce (as I type) you can get some much needed cash by selling broken jewelry, gold cuff links from the back of a drawer, or, for me, my long forgotten high school ring . . . if I could find it. It's not an heirloom to anyone and I HATED high school.

Before you run off to sell your "scrap gold," here's what you need to know:

The price of gold rises and falls, much like the stock market does. Right now, it's hovering around record levels. Will it be better in a month? I have no clue! If I could predict commodity futures, I'd be walking along a beach, far away from the snows of upstate New York. But it's safe to say that now's a very good time to sell, and it's certainly a good time to get yourself educated about selling scrap gold.

Who wants your old gold?
Maybe you've seen the ads online or in your local newspaper – for example: "The Highest Prices Possible,""We Buy It ALL$," "Have Gold? Want Cash?" While some of these dealers may be reputable, as always, it's much better if you work with a well-established dealer. Get recommendations from local reputable jewelers (some of whom may offer to buy your scraps), then check with the Better Business Bureau. Be very leary of fly-by-night dealers who advertise that they'll be at a local motel for the weekend.

Before you trade-in your high school ring or old gold tooth for cash, "comparison sell" by looking up the price of gold. Then call around to find out what dealers are paying. While there are many places on the 'Net that will buy gold, I think it makes a lot of sense to eyeball someone. Chose a dealer who you'd be comfortable asking to match or beat the best prices being paid nearby.

What will you get?
If your collection of old jewelry weighs an ounce, will you get $958? Sorry to bust your balloon, but the answer is no – for two main reasons:

1. Gold jewelry isn't pure gold. It's mixed with other metals, usually copper. You'll only be paid for the portion of your scrap jewelry that's actually gold.

Gold quality is expressed in "karats." Pure gold is 24 karats or 24K. Here is the purity of other common grades of gold.

Karats            % Pure

18k                    75%

16k                    67%

14k                    58%

12K                    50%

10K                    42%

2. There are many mouths to feed. Once the dealer buys the gold from you, it will be sold to other dealers or directly to refiners who will melt it down and remove the impurities. This process costs money, and there has to be a little something in it for everyone who will handle your gold along the way to the refinery and then off to whatever it will become next.

The upshot is that you can expect to be paid around 50% or 60% of the day's gold price – assuming we are talking about something that's 24K gold.

How does it work?
Precious metals are bought and sold by weight. Your gold will be weighed by the dealer in "Troy" ounces, which are 10% heavier than what we think of as ounces – 31.1 grams as opposed to 28.3 grams. So if you weigh your gold on a weight-watchers' or postal scale, deduct 10% to find the number of Troy ounces.

Troy ounces are further broken down into pennyweights (PWT). There are 20PWT in each Troy ounce of gold.

Let's say you know where your high school ring is, you're thinking of selling it, and want a sense of what you'd be paid for it. Here's how to figure that out:

• Check inside the ring for a "gold mark." It may say 10K, which means your ring is about 42% pure. (Some rings are 14K, 18K or not gold at all.)
•  Weigh your ring. Using your kitchen scale, it might weigh 0.5 ounces (half an ounce), which translates to 9PWT if you do the math (.0.5 x 0.9 = 0.45 x 20 = 9PWT).
• Check the gold price. We'll use today's $958 price for a Troy ounce.
• Divide the price by 20 to get the PWT price: $47.90 for each pennyweight of pure 24K gold. Assuming your ring is 10K, the top price for each pennyweight is $20.12. If  you get 60% of that from the dealer, or $12.07 per PWT, your ring would fetch $108.64. (If there's a stone, it'd be a little less.)

Not bad for something you no longer care about, huh? So gather up all the scrap gold in your life, sell it, and use the money to pay down some pricey credit card debt – it's a "golden" investment opportunity!

Please let us know if you sell off some scrap gold . . . and what you do with the money.

Nancy Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent the last 23 years teaching people how to get out of debt, save money, and live better on less. She writes on all these subjects for CreditBloggers.com.

Comments

[Ellen]

I had no idea it could be worth this much...gotta dig out the old jewelry!

[Nancy Castleman]

Gold just hit $1,000 an ounce!