Gold & Silver FAQ’s

Grams vs. Pennyweights

Why will one place quote you an offer based on grams and another quote you an offer based on pennyweights?  Mostly, to confuse you, the consumer.

Gold is priced in ounces.  So why is it bought in grams?  Simply, there isn’t enough jewelry to make an ounce of gold in most any given piece.  Grams are convenient for smaller exchanges.  And much more understandable than the ‘pennyweight’ (dwt).

First, a little background on weights and measures.  The ounce that gold is measured in is not your standard ounce, it’s called a troy ounce.  A troy ounce is heavier than a common (avoirdupois) ounce.  The pennyweight is the fraction of one ounce troy (20 dwt per ounce troy).  There are approximately 1.55 grams per pennyweight, or 31.1 grams per ounce troy.

Just stick to the same measurement to make your comparisons.  Most everyone prices in grams now.  If they don’t, ask them to put it in grams.  If they won’t, go somewhere else.

‘Spot’ – What is it?

‘Spot’ isn’t everyone’s favorite dog from grade school! Spot is the going rate for a cash exchange of gold at that exact moment.  Furthermore,  Spot also means the value of the percentage of the gold in your jewelry at that specific moment in time.

Calculating spot is somewhat involved.  The fraction of gold by weight (14 karat, 10 karat, 18 karat) is determined by various physical tests, that fraction is usually converted to a percentage, then that percentage is multiplied by the market ‘spot’ for that moment times the weight (usually converted to grams for ease of calculation).

That’s Spot!  Get it?  No?  Ask for a price per gram in the various karat levels and compare that.  You should also take into account what price the world market is at when your quote is made.  The gold market is fluctuating WILDLY these days, and a $50 change per ounce is not unheard of inside the same day.

Gold purity tests

Gold jewelry is not 100% gold.  For that matter, even gold bullion coins are not guaranteed to be 100.0%.  What is considered fine gold is 999 parts per thousand, or 99.9% or better.  For all intents and purposes this is considered 24 karat, or pure gold.

The karat of gold is considered a fraction, parts per 24.  All karat markings can be converted into percentages, the most common being 14 karat (14/24 = .583, rounded up to 58.5%), 10 karat (10/24 =

.416, rounded up to 41.7%) and 18 karat gold (18/24 = .750, 75%).  The percentages of gold are by weight.  Gold, being dense, will actually contain more gold per volume in higher karats than lower karat gold.  The same ring that weighs 8 grams in 10 karat may weigh as much as 12 grams in 18 karat.

The Federal Trade Commission requires that gold that is stamped with a quality stamp (14kt, 585) also must contain a makers mark, a manufacturer’s logo, to trace back to the person who made the item.  That way, if the particular item in question turns out to not be as described, there is a way to get recourse from the manufacturer.

There are several different ways to determine if the jewelry actually contains the percentage declared.  The most effective and indisputable way is called a fire assay, in which a small portion of the item is melted and the gold content is determined by destroying it.

Non destructive tests such as a touchstone rub with acid, electric conductivity or spectrography are more common, with the touchstone/acid test and electronic conductivity testers being most common for storefront operations.

In a touchstone test, the jewelry is rubbed against a black stone, then lines of acid of various concentrations are drawn across the sample, and depending on how quickly the acid dissolves away the gold streak indicates the percentage of gold in the sample.  This test is usually done to confirm a quality stamp.

So, what’s my jewelry worth?

When you purchase jewelry from a jewelry store, you are purchasing much more than formed gold and diamonds.  You are buying:

-Gold
-Diamonds
-Designer’s creativity and time
-The craftsman’s skill and time
-Tools, equipment and depreciation
-The jewelry store’s overhead
-The jewelry store’s reputation.
-The jewelry store’s location and convenience.
-The jewelry store’s service after the sale.
-The jewelry store’s overhead and operating costs.
-The salesman’s knowledge and commission.
-The owner’s profit.

With this list in mind, what is being sold when you sell a piece of jewelry?

-Gold
-Diamonds (if they can be recovered)

Furthermore, you are selling it at a rate that the buyer can put additional labor into (removing stones, transport, legal documentation) and still sell it to a refiner for a profit.  By the way, refiners don’t pay face value of the gold, either.  That’s how they make money.

Traditionally, purchase for scrap has been approximately 50% of the melt value of the gold.  With higher volume and metal prices, this has gone up slightly, but bear in mind that it is unlikely you will get more than 65-70% of ‘Spot’ value.

So, what about Grandpa’s gold tooth?

Dental gold is gold, usually around 16 karat (67%).  Yes, the tooth crown, cap, bridge or prosthetic can be recycled.  No, you can’t make jewelry out of it, don’t even ask.  Please, don’t ask.

The biggest thing is to make sure there is no tooth or bonding cement still in the crown.  First, ew, and second, you will be deducted from the offer whatever the visual weight is of the remaining contact.  Make it as clean as possible for the most accurate estimate.  (Hint: dremmel is your friend.)

I inherited some silverware.

Yes you did!  And if it’s solid, you’ve got quite a treasure trove stashed away in that old curio cabinet.

The thing to look for is if it’s solid silver.  It may be stamped “sterling”, 925, heirloom silver or something similar.  It is fairly easy to do a web search for various patterns, see when yours was made, what it’s made of, and if it is actually solid silver and not silver plate.

If the flatware is silver plate, it has only rarity value, there is no inherent value that can be reclaimed from just plating.  If your pattern is old enough and rare enough that people need it to complete a missing set they have, you might be able to get something for it.  If it is a whole set in itself, you may be able to sell it to a dealer or another individual who will use it to eat with.  It has no scrap value.

Solid silver is another matter.  If it’s stamped ‘Silver’ it is probably around 90%.  If it is stamped “sterling”, it will be 92.5% silver.  Both of these are re-claimable.

A note about knives:  even in a set that is solid sterling silver, the knife blades are made of steel.  The blade, tang, furniture and filler take up the bulk of the weight of a knife.  Only the handle itself (and only the outside shell) is silver.  Somewhere between 20-30% of the weight of the knife is reclaimable.

What about my diamonds?

The sad truth is, unless a diamond is exceptional in quality and/or very large, the re-sale value is minimal.  Often, small diamonds are damaged in removal leaving them good only for industrial purposes.  Always, the realities of economics dictate that the diamonds will get very little consideration when selling jewelry to be recycled.  No jeweler will want to take the time to cut diamonds out of an old ring (at the same hourly rate as he would charge to set the same diamonds) when he could call his supply house, order exactly what he needs and have done with it.

Any diamonds removed from your old jewelry (with the associated labor charges) must then be sorted, graded, then offered to someone who will put them back in jewelry.  There is a lot of time, expertise and labor involved to reclaim your diamonds.  Thus, the price that can be paid for them is minimal.

Even larger, nicer diamonds are not as great a storage of value as you think.  Remember, in a scrap reclamation process, the diamond must be removed from its mounting, sent to a gemologist or diamantaire, evaluated for cut, clarity, color and carat weight, then offered (usually at auction) to wholesalers who will then sell it to a retailer who will sell it to you.  The offer you receive is at least 4 levels from the final consumer.  Realistically, this means you will get an offer between 10-20% of what you would expect to pay for the diamond.

If you can find someone closer to the final consumer, that percentage would go up, but never more than 50%.