How Gold Value Is Determined By Internet Buyers

By Author: Joe Montes
Total Articles: 3
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Internet buyers of precious metals, receive many questions about how they determine the current value of the gold, platinum and silver items that they receive. It is clear that sellers need to understand what seems to be a confusing subject.

Many sellers seem to be puzzled about just how much actual gold their jewelry contains and how buyers determine what its worth. There are two major factors involved: The first is what a Troy ounce of gold is worth at any given time and the second is just how much pure gold does their jewelry items really contain.

Determining Gold Value

Gold is a commodity traded worldwide and the price at any given time is a matter of supply and demand. In general, when the demand exceeds the available supply, the price goes up; when the supply exceeds the demand then the opposite is true. Supply and demand are affected by numerous factors including the value of the U.S. dollar; the price of oil, inflation, etc., factors that are too complex for this discussion. Currently, gold is valued at record-high prices. And while the actual price varies over any given trading day, this price ...
... has remained high for many months now.

Actual Gold Content

When an Internet buyer receives a seller's gold items, they must be assayed to determine the purity and weight. Most jewelry is marked with a symbol such as 24K, 18K, 14K or 10K. This indicates just what percentage of the total weight of a setting is pure gold. The rest is other alloys added to improve the hardness and durability of the jewelry. Buyers only pay for the gold content because the other metals have little if any value. Here's an important point: Precious metals are measured in Troy Ounces which is a bit more (1 Troy Ounce = 1.097 Avoirdupois ounce) than the familiar ounces we use in everyday life. Therefore, if the current spot market price is $1,150/ounce it is a Troy ounce. Also, while there are 16 ounces in each pound under the Avoirdupois system, a Troy pound contains just 12 ounces.

A Troy ounce is often broken down into Pennyweights expressed as (DWT). Here, 1 Troy ounce contains 20 DWT. That means, for example, that at $1,150/Ounce, each pennyweight is valued at 1/20th or $57.50. Thus, if a seller sends-in a heavy gold chain that contains 25 DWT of 24K gold (99.99% Gold) it would have a total current value of $1,437.50.

One primary factor is important during the assay process: The actual percent of pure gold content in a given piece of jewelry. If an item of gold jewelry is marked 18K ,it contains 75% gold; 14K contains 58.33% gold; 12K has 50% gold and 10K has 41.67% gold. Therefore, if the gold chain mentioned above was marked 18K instead of 24K, it would be worth 25% less or $1,078.13. As the Karat number goes down, the percentage of gold goes down and the value drops accordingly.

Internet buyers of precious metals purchase gold of any age, type or place of manufacture and they also buy platinum and silver, which are valued through the same process. Sellers then receive some percentage of the actual total value of the property they send in, and this can vary widely from company to company.

What sellers should look for and expect from their buyer is the highest-possible percentage of the actual value of their property, less a modest deduction for company overhead and a small profit. Keep in mind that any buyer has overhead and should make a profit on every transaction in order to remain a viable business entity. The smart seller will avoids dealing with buyers that have many unresolved complaints listed with the BBB and Internet complain websites such as Rip Off Report. They also should not be afraid to ask a buyer just what percentage of actual total value of his property he will be paid and at least receive a ballpark reply.