Who Buys Scrap Gold?

By Carole Vansickle

  • Overview

    Whenever the price of gold rises, the value of scrap gold also climbs. Scrap gold--small pieces of gold from jewelry, dental work or old coins--can be melted down after purchase and used to create gold for investing. If you have enough scrap gold, you can make a sizable profit by selling it. However, in order to sell your scrap gold, you need to be very clear on who will buy it from you and how the process should be handled.
  • Function

    Scrap gold is bought by scrap gold dealers. They may be independent dealers or may work for a larger corporation that has licensed them to buy scrap gold on its behalf. While most jewelers do not buy scrap gold, they can usually recommend a reputable dealer who will either appraise your gold for you personally or send it for an appraisal. If you have to mail it away, you should have a special envelope that requires multiple signatures for delivery.
    Scrap gold is any type of pure or nearly pure gold that can be melted down for reuse.
  • Types

    There are several different types of scrap gold dealers. Some melt down the gold and sell it for investment purposes. Others are "recyclers" who use the gold for repairing other jewelry or making new jewelry. Scrap gold dealers can be independent investors who are using their own money to acquire gold, or they can be dealers for larger corporations who use the company's money to acquire gold and receive a commission on each acquisition.

  • Considerations

    When you're looking for someone to buy your scrap gold, shop around before you settle on a dealer. Some dealers will accept 18-carat gold; others only take 22- and 24-carat. Generally, a dealer will offer between 50 percent and 70 percent of the gold's market value by weight, so you may wish to have your gold appraised ahead of time. Remember that the gold market fluctuates from day to day, and the price of scrap gold reflects this fluctuation.
  • Misconceptions

    Many people think that pawn shops are licensed to buy scrap gold. Although they will purchase old jewelry, they are generally not buying it for scrap gold--and if they are, they will not give you anywhere near what a dealer will give you when it comes to a high or fair price. Pawn shops are officially in the business of lending, which means that they have to ensure that they can recoup their "loss" if someone does not return for an item. As a result, their offers are much lower, sometimes less than 10 percent of the gold's value.
  • Potential

    If you are interested in becoming a scrap gold dealer, you must be trained or certified in this business in order to ensure you provide a fair price to sellers and allow yourself room for profit. Many people have made fortunes investing in scrap gold. If you want to learn how, find a reputable company to help you get certified.
  • Warning

    Scrap gold dealers are investors, and it is their job to try to make a profit on the purchase of your scrap gold. Therefore, it's your responsibility to understand about how much a fair price should be and not rely solely on the dealer to be fair with you. Also, you might want to check scrap gold dealers' references before you send them your gold--and always make sure that you can get your gold back if you don't like the ultimate price you are offered.
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