Why Scrap Gold Is a Valuable Commodity

Gold prices tend to cycle inversely with the health of the economy, meaning that gold prices go up when the economy slumps. This makes gold an excellent commodity for generating cash when times are tough. The scrap gold business particularly benefits from a depressed economy because financial stress is what motivates most people to redeem their scrap gold.

People sometimes assume that once gold is formed into a bracelet, ring or even dental fillings, or that once it is alloyed with other metals, it looses value. In fact, gold is relatively easy to melt and separate from other metals. The difference between the value of scrap gold and freshly refined gold is only the cost of the work required to re-refine the scrap gold. Additionally, gold is often alloyed with other precious metals like silver, platinum and rhodium, and these metals are also worth money.

The scrap gold business benefits both buyer and seller. If you need immediate cash, jewelry stores, pawn shops and mail-in services will assess the value of your scrap gold and offer you a price for it. When selling your scrap gold, make sure the dealer is a licensed dealer for gold and that their scales have been tested and verified accurate. (A certificate concerning the accuracy of the scales should be available for viewing.) Become acquainted with the gold measures---gold is measured in troy ounces, with 1 troy ounce equaling 20 pennyweights or 31.1 grams. Most importantly, show your scrap gold to several dealers for offers before selling it.

If you want to take advantage of scrap gold as a commodity, you can buy old gold and resell it in bulk to a refiner. Some people do this by adding a scrap gold buying service onto their existing retail business. Other people host home-based gold parties where guests bring their scrap gold to be weighed, analyzed and quoted on the spot. Often using a kit provided by a gold party company, the host of the party does the assessment of the scrap gold, determines the offer price, pays the party guest, then sends the gold to the gold refinery in order to receive payment.

If you are planning to attend a gold party, be aware that you may have no way of knowing if the scales are calibrated correctly and certified to be correct. Cheating the weight to the party host's advantage is very easy in this case. Also, even when the gold party host is scrupulous, they represent another middleman (in addition to the gold party company) between you and the gold refiner. Instead of receiving the typical 10 to 20 percent less than current market value, you'll receive about 25 percent less than market value for your gold. Considering the fact that so many other buyers are available for your gold, you probably can make a better deal.