Most of you know me for my books about selling on eBay and Amazon, but I have done a lot of other things in my life too. One of them is buying and selling scrap gold.
When I first got into this business gold was selling for around $300 an ounce. Gold went as high as $1900 an ounce and today gold is selling for over $1,200 an ounce and experts forecast it to go higher – much higher! I have seen forecasts by reliable writers that Gold could reach as high as $5000 an ounce in coming years.
The United States is the largest jewelry market in the world and millions of Americans have old, broken or just out-of-fashion pieces of jewelry sitting in their jewelry boxes. Just last week my wife came across a single 18K gold erring. She lost the other earring in the set about ten years ago and the remaining earring has just been sitting in her jewelry box since then. I put the earring on my gold scale and it weighed 8 grams. At today’s prices that one earring was worth over $300 –which is more than she paid for the pair ten years ago.
There is literally a fortune in gold –billions of dollars worth, sitting around collecting dust. But the high price of gold today is bringing it out of the woodwork. And all you have to do to get your piece of the pie is to ask.
You might be wondering how long this business can last. I recently spoke with the owner of a large gold refining company and I asked him how long this business could continue. He said:
“Every year all the refining companies in the US combined refine less than one percent of all the scrap gold jewelry in the country. And new jewelry sales grow over five percent a year. So there is pretty much an endless supply. We have been in this business for 33 years and we expect to be doing this for at least another 33 years.”
Unscrupulous gold dealers like the ones that advertise on radio and TV ask you to mail your gold in to them. They typically pay between 10% and 20% of the value of gold. Most pawnshops pay about 30% to 35%.
Legitimate dealers pay between 40% and 65%. 40% to 65% may seem low to you, but remember, the gold you buy has to be smelted, refined, assayed and poured into ingots before it can be resold. Refiners who do this will pay you between 85% and 92% of the spot price of gold.
Lets look at a typical sale. The average person tends to bring in three or four items that altogether weigh about 2 ounces. Most items people bring me are 14K gold which is 58% pure gold and the rest is alloys to lend gold its color and hardness.
Two ounces at 58% works out to 1.16 ounces of pure gold. Lets say for example you pay that person 50%, which is typical of most legitimate gold dealers. At $1400 an ounce, that comes out to $812. Now you send the gold to a refiner who will pay you 95% of the spot price. I will let you do the math, but this works out to a very nice profit from just one transaction. Many experts predict that gold will go as high as $5000 an ounce. I don’t know if that will happen, but imagine how profitable this business will be if it does.
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