CIBJO releases Gemmological Special Report: considers process of separating measurable facts from opinion; See Gemological Articles below.
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 Post subject: buying scrap
PostPosted: Fri Aug 14, 2009 6:43 pm 
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How much off (percentage) of spot gold value should a jeweler pay for scrap gold from the public? When does it become a "scam" like the cash-for gold-guys on TV? How many of the jewelers who buy scrap are following the legal rules that apply to buying estate jewelry; various in different states but generally drivers liscence, car make & description, and thumb-print in some states. Also, there is usually a waiting period (one month or more) before reselling or scraping, and copies of the information must be sent to the police.
There are pleanty of jewelers struggling right now, should they pay 30%, 50%, 70% of spot value when buying from the public? When does this become unethical. Should that matter?

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PostPosted: Fri Aug 14, 2009 10:16 pm 
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monsterslayer.com advertises that they pay 75% of spot on day received. I get about 70% at a local jeweler that I drive past to get to work, so I don't pay postage, etc.

John

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PostPosted: Fri Aug 14, 2009 11:32 pm 
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so that's about $12/gram for a 14k piece at $950 an ounce?


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PostPosted: Sat Aug 15, 2009 8:44 am 
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Thanks for the info gemlover. I suppose if the actual percentage-of-spot paid is disclosed to the client it will be an informed decision on their part, if they sell. The thing I fear is people thinking they are getting a great payoff when in actuallity, if they have enough gold and can pay the $100.00 refining fee, they can get spot value (very close to) from a refiner. I understand that for small amounts the trouble of shipping etc might be too much.

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PostPosted: Sat Aug 15, 2009 10:31 am 
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Richard,
Don't forget that when you're buying gold you're playing the market yourself. Most refiners I've dealt with have a settlement date, usually the second London fix the day refining is completed. You won't know how much you'll receive until then and if the market takes a big dip that particular day, too bad!

I've bought lots of scrap gold and silver over the years and have learned you have to build in a certain "safety factor" for that possibility as well as others. Unless you acid test every single piece you buy you'll make a few expensive mistakes. And don't forget that crooks can and do buy karat stamps.

I'm a strong believer in ethical business practices. But as a gold buyer you're offering a service and you need to be fairly compensated for your knowledge, financial risk, expenses and work.

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PostPosted: Mon Feb 08, 2010 12:51 am 
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70% is the norm for most. (My own experiences.) If a customer wanted a custom piece made, and they have scarp gold, I take the scarp and give them 80% credit to the new ring. This method for me has worked to help gather business.


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PostPosted: Mon Feb 08, 2010 1:35 pm 
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Well, after buying scrap from the public for about 3 months I can say "what a pain!" Most of the time they come in with baggies full of junk; gold plated, costume, dental, 10kt etc. It all needs to be sorted and the larger pieces tested. About 10% of the large, stamped 14 karat "Italy", chains we are offered are fake (green bubbles with acid). Quite astounding! We could have lost our shirt a couple of times without testing. Also be sure to wash your hands after handling the stuff, yuck. We fill out all the appropriate forms for the police department, keep the items 3 weeks, get ID and signatures; description of the car they are driving etc. I know we are making money but it takes about 15 minutes for each buy. If this keeps up we will hire someone who gets a lower wage than myself or the manager to handle this new aspect of the business. Its a different approach too; when they give us money and we give them jewelry they are the customer. When they give us jewelry and we give them money we become the customer. Strange eh?

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PostPosted: Mon Feb 08, 2010 2:54 pm 
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:lol: customers will bring their dental work also for cash? :lol: (and as you said, richard, yuck!) :wink:


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PostPosted: Wed Feb 17, 2010 7:01 pm 
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Ok...here is an update. I just purchased $486.00 worth of scrap from a client. He went all over town and the next highest offer for the same scrap was $325.00. We are now paying 60% of actual spot value. By my calculation the next highest bidder is paying only 40% of spot value. the "Cash for Gold" dude's (big signs and TV ads) offer was even lower; so he is paying around 30% of spot. Jeeze! This is a smallish town;175,000 people, possibly in larger urban areas there is more competition and people are paying more. Possibly... And here I was feeling guilty for only paying 60%. Seller Beware!

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PostPosted: Thu Feb 18, 2010 9:55 am 
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Richard wrote:
Seller Beware!


There are a few more variables to enter into the equation to calculate the percentage paid. It's one thing when you're just brokering all the gold, but if you're the refiner you also get to play Buyer Beware. For instance we base our buying prices on .555 gold for 14K, not .585 or even .5833. The reason is that even with best efforts, .555 is what we normally realize out of the melt by the time 10K solders were used on the jewelry, different jump rings or clasps, and maybe the occasional mistested piece slips by. It's not a huge difference, but it does change the perceived percentage paid.

About 40% of spot is as much as I ever pay on gold from an individual.

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