It’s worth understanding how to calculate gold scrap value if you’re thinking about selling gold jewellery to benefit from high gold prices.
The gold price: where it’s headed in 2021
During the global pandemic and economic uncertainty in 2020, the price of gold rose by 32% (August 2020). It breached the US$2,000 mark for the first time.
This meteoric rise – alongside financial difficulties and job losses – confirms the traditional view of gold as a safe haven. It’s a reliable performer in times of uncertainty or trouble.
Some are now even predicting that by May 2021, we could see a gold price as high as US$2,300.
With the gold price so high, now is a good time if you’re considering selling gold jewellery.
Cash for gold dealers
Dealers offering quick cash for gold transactions are plentiful in South Africa. You don’t have to look far, online or offline, to find one.
With some exceptions, gold dealers are interested only in the value of the gold (and any other valuable materials, such as gems or other precious metals).
If you have an item of jewellery that’s unique because of its intricate workmanship or interesting history – for example, if it was owned by notable personages in the past – a gold dealer isn’t your best bet.
In other cases, selling jewellery for its scrap value may be a quick way of raising cash.
If you are considering selling your gold jewellery, make sure you know its approximate value so you can secure a fair deal.
What is gold scrap value?
When a dealer offers to buy old gold jewellery for cash it means he or she will be offering scrap value. Scrap gold is any gold that’s sent to a refiner to be melted down and reused.
Dealers want to make a profit, so the cheaper they can buy the gold from you, the more they can make.
If you have a good idea of the value of your gold before you go to the dealer, you’ll know if an offer is reasonable.
How to calculate gold scrap value
The value of your gold is based on its purity or karats. This is indicated by a stamp that bears a number followed by k. For example, 12k means 12-karat gold.
To work out the purity, divide this number by 24. Twelve divided by 24 is 0.5, which means it’s 50% pure.
Once you know the purity, you need the weight. Weight and purity determine the value.
If a 12-karat piece weighs 10 grams with a 50% purity, you have five grams of pure gold.
Other factors, such as the exchange rate, may impact the price you’re offered. To get an idea of what your gold is worth, work it out using the formula below. Online calculators can do it for you.
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Formula to calculate gold scrap value:
Grams of pure gold x purity of the gold x the current gold price per gram
Say you have 5 grams of gold with a purity, as calculated above, of 0.5 – and the current gold price per gram is US$59.97. The calculation will be as follows:
5 grams x 0.5 x $59.97 = US$149.93 (about R2,238, depending on the exchange rate).
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Remember, this is the actual value of the pure gold in your jewellery – now what you’ll necessarily get for it.
What is market value for gold jewellery?
The market value of gold is whatever the consumer is willing to pay for it. You’re very unlikely to get market value for your gold items.
This is because a dealer will need to buy your gold at less than market value to make a profit.
For example, if you sell your 5g of pure gold to a cash-for-gold dealer, you won’t get the US$149.93 we calculated above. You’ll get a percentage of that amount, depending on the dealer.
To get the best deal, monitor gold prices and shop around for the best offer.
Selling versus pawning gold jewellery
You do have the option of selling jewellery as an intact item and not as scrap gold. This is more time-consuming and a sale isn’t guaranteed, especially during an economic downturn.
Pawning the jewellery is also an option – and can be a much quicker way to raise funds.
There are pros and cons of selling gold jewellery versus pawning it.
The pros of selling gold jewellery as scrap include instant access to cash and a debt-free way to get extra income.
On the downside, you won’t be able to get market value instantly (if at all). Especially online, your piece will likely have to compete against hundreds or even thousands of other pieces that are on offer.
Also, you’ll no longer own the jewellery – so its value as an asset is lost forever.
The money you get is a loan and it will accrue interest.
However, pawning gives you near-instant access to cash and, once the loan is repaid, your jewellery is returned.
You can even pawn jewellery again in the future, without detracting from its value.
Asset-based loans with Lamna
We offer short-term quick loans based on the value of high-value assets such as gold jewellery. The loan amount is based on the value of the asset rather than your personal income or credit rating.
Once the loan is repaid, your asset is returned to you. Our loans are discreet and the application process is simple and transparent. We are a registered credit provider and fully NCR compliant.
At Lamna, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.
Client borrows R10,000 for 90 days.
Total Cost of Loan
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.