How to Buy Scrap Gold: A Complete Beginner's Guide
Buying scrap gold is one of those businesses that looks simple from the outside. Someone sells you their old jewelry for less than the gold is worth, you sell the gold to a refinery, and you pocket the difference. The concept takes thirty seconds to understand.
Actually doing it well takes a bit more. You need to know where to find scrap, how to verify what you're buying, how to calculate what it's worth, and how to make an offer that's fair to the seller and profitable for you. This guide covers all of it — from zero experience to your first deal.
What Counts as Scrap Gold
Scrap gold is any gold item valued for its metal content rather than its design, brand, or collectibility. The most common types you'll encounter:
Jewelry — rings, chains, bracelets, earrings, pendants. This is the bulk of the scrap market. Most is 10K or 14K in the United States. Higher-end pieces run 18K. Indian and Middle Eastern jewelry is often 22K.
Dental gold — crowns, bridges, inlays. Usually high-karat (16K–22K). Less common than jewelry but high-value when you find it.
Watch cases — older watch cases were often solid gold. Modern ones are usually gold-plated or gold-filled, which has much less gold content. Know the difference before you buy.
Broken and damaged pieces — single earrings, chains with broken clasps, bent rings. Sellers often discount these heavily because they're not wearable, but the gold content is identical to an intact piece.
Gold-filled and gold-plated items — these are NOT solid gold. Gold-filled has a thin layer of gold bonded to a base metal. Gold-plated has an even thinner layer applied through electroplating. The gold content in these is minimal and usually not worth recovering unless you're processing large volumes.
Learn to tell the difference between solid gold and gold-filled early. It's the first mistake most beginners make.
Where to Find Scrap Gold
Pawn Shops
Pawn shops are the most consistent source for scrap gold buyers. They acquire gold through pawns and direct purchases, and they're motivated to move inventory that's been sitting. Build relationships with pawn shop owners — many will call you when they have a batch ready rather than dealing with walk-in buyers.
Start by visiting pawn shops in your area and asking what they have in scrap gold. Be direct about what you're looking for. Most pawn shop owners respect buyers who know their numbers and come prepared.
Estate Sales and Auctions
Estate sales often include jewelry lots. The advantage is that sellers are usually motivated to clear everything out, and jewelry is often priced to move. The disadvantage is competition — other scrap buyers attend estate sales too.
Arrive early. Inspect pieces carefully before bidding. Know your maximum buy price before the auction starts and don't exceed it in the excitement of bidding.
Facebook Marketplace and Craigslist
Online marketplaces are a growing source of scrap gold deals. Sellers post jewelry with descriptions like "14K gold necklace" or "gold jewelry lot." Some deals are priced well below melt value because the seller doesn't know what they have. Others are overpriced or misrepresented.
Always meet in a public, well-lit location. Bring your scale and testing supplies. Test before you pay. Never send payment before inspecting the piece in person.
Garage Sales and Flea Markets
Lower volume but occasionally excellent finds. Sellers at garage sales often price gold jewelry at what they think "used jewelry" is worth, not what the gold content is worth. A $5 ring at a garage sale might have $80 in gold content.
Word of Mouth
Once people know you buy gold, they come to you. Tell friends, family, and coworkers. Post on your social media. A simple "I buy gold jewelry — broken, unwanted, any condition" brings deals to your door over time. Some of the best margins come from personal referrals because there's no competition.
What to Bring on Every Buy
Show up prepared. Here's your buying kit:
Digital scale — accurate to 0.1 grams minimum. Calibrate it regularly. A $30 pocket scale works fine to start. Upgrade to a 0.01-gram scale when you can afford it.
Loupe or magnifying glass — 10x magnification. You need this to read karat stamps and inspect hallmarks. Stamps are small and often hidden on clasps, inside ring bands, or on bail loops.
Testing supplies — at minimum, a magnet. Gold is not magnetic. If a piece sticks to a strong neodymium magnet, it's not solid gold (with rare exceptions for certain clasps). Beyond the magnet, acid test kits are affordable and effective. Electronic testers are faster. An XRF analyzer is the gold standard but costs thousands.
Calculator with live spot price — you need to calculate melt value on the spot. A phone app that pulls live spot prices is essential. You cannot make accurate offers with yesterday's spot price.
Cash — scrap gold is a cash business. Sellers want to be paid immediately. Bring enough cash for the deals you expect to see, plus a reserve for unexpected finds.
Receipts — document every purchase. The seller's name, contact info, a description of the items, the weight, karat, and what you paid. This protects you legally and creates a paper trail for taxes.
How to Evaluate a Piece
Follow this sequence on every piece, every time:
Step 1: Magnet test. Hold a strong magnet to the piece. If it sticks, it's not solid gold — move on or test further. Some clasps and springs are made of base metal even on solid gold pieces, so test the main body of the piece, not just the clasp.
Step 2: Find the stamp. Look for karat markings — 10K, 14K, 417, 585, 750, etc. No stamp doesn't always mean it's not gold, but it's a warning sign. Stamps can also be faked, so a stamp alone isn't proof.
Step 3: Weigh it. Record the weight in grams. If the piece has stones or non-gold components, note that and adjust your estimate accordingly.
Step 4: Confirm purity. If you have testing supplies beyond a magnet, confirm the karat. Acid test, electronic tester, or XRF. The more you're spending, the more important verification becomes. Don't skip this step on large purchases.
Step 5: Calculate melt value. Weight (grams) ÷ 31.1035 = troy ounces. Troy ounces × purity × spot price = melt value. A scrap gold calculator with live spot does this instantly — tools like Nu Stack's Calculator let you enter weight and karat and see your melt value, buy price, and margin in seconds.
Step 6: Make your offer. Apply your buy rate to the melt value. If you buy at 78% and the melt value is $400, your offer is $312. Be ready to explain how you arrived at your number — transparent buyers build trust and get repeat business.
Setting Your Buy Rate
Your buy rate is the percentage of melt value you're willing to pay. It controls your margin on every deal.
New buyers often start at 70–75% of melt to build in a safety margin while they're learning. As you gain experience and confidence in your testing, you can move to 78–85% to stay competitive.
Your buy rate should account for refinery fees (refineries pay 95–98% of melt), shipping and insurance costs, and your time. If you're driving an hour each way to pick up a $300 deal at 80% of melt, your effective margin after gas and time might not be worth it.
There's no single right buy rate. It depends on your market, your competition, and whether the seller has other options. The key is knowing your melt value so your buy rate produces a price that's profitable for you and explainable to the seller.
Your First Deal
Don't overthink it. Start small. Visit a pawn shop, look at what they have, weigh a few pieces, calculate the melt value, and see if the numbers work. If they do, make an offer. If the shop wants too much, walk away — there will be other deals.
Your first deal might be a single 14K ring. The profit might be $30. That's fine. The point is to go through the entire process — inspect, test, weigh, calculate, negotiate, buy, document — so you know how it feels before you're handling a $2,000 lot.
Every experienced scrap gold buyer remembers their first deal. Make yours a small one, do it right, and build from there.