The nitty gritty details, tips, and dirty little secrets about everything related to gold value will be covered later, for now we just need a solid base of knowledge from which you can build on with time and experience.
Let's get to it...
To Figure out the Current Gold Value of a Piece of Jewelry (SIMPLE):
Gold Value = Item Weight * Gold Purity * Current Gold Price
DETAILED VERSION:
In order for the above equation to work, the Item Weight and Current Gold Price MUST represent the SAME WEIGHT UNITS.
Example, if you weigh a piece of jewelry in grams (most jewelry), the Current Gold Price should represent PRICE PER GRAM, not the typical PRICE PER TROY OUNCE that most places quote.
NOTE: To convert a gold price per ounce to price per gram, divide the per-troy-ounce price by 31.1. (If Gold is at $1,250.00 per troy ounce, the price per gram would be: $1,250 / 31.1 =~ $40.19 per gram).
Step 1: Weigh the Piece of Gold Jewelry
Digital scales in all ranges of price and quality abound, but since you're dealing with valuable items, it makes sense to spend a little extra money and buy a RELIABLE and ACCURATE digital scale. You can most likely find a good digital scale for less than $25US, and trust me, the price is well worth it.
When buying a digital scale, look for these minimum requirements:
- Capacity of AT LEAST 100 Grams (Higher capacity scales can weigh heavier items such as silver dishes -- but at the cost of less accuracy. For gold jewelry, you want accuracy!)
- TWO Digit Accuracy Reading (in Grams) - Being able to weigh gold jewelry to the hundredth of a gram will give you a very accurate number when finding the gold value and this extra accuracy doesn't cost much.
- Weight Unit Options - This is a personal preference since any scale that will weigh in grams can be used to determine gold value but depending on your preferences / needs, having a scale that will weigh in other units such as ounces, troy ounces, pennyweight (dwt), and carats can prove highly useful.
Once you've got an accurate and reliable digital scale (and have calibrated it), weigh the piece of jewelry and write the number down. For simplicity sake, we'll use GRAMS for the weight measurements and current gold price.
Example: Say we have a 14k gold wedding band that weighs 5 grams.
Step 2: Turn the Karat Purity into a Decimal
Now that we know the weight, we need the decimal equivalent of the karat purity. In the example above, the wedding band is 14k gold: 14k / 24k = 0.58333. Most people round off to either 0.583 or 0.58 (The more digits used, the more accurate your results will be but also the more time consuming to remember and calculate).
Step 3: Ensure Weight Units Match and Multiply 3 Numbers
The last number needed is the current gold price. Since we weighed the wedding ring in grams, the current gold price should also be represented in grams. (If Gold is at $1,250.00 per troy ounce, the price per gram would be: $1,250 / 31.1 =~ $40.19 per gram).
Now we just plug the numbers into our Gold Value equation...
Current Gold Value = 5 (Grams Ring) * 0.583 (14k Purity) * $40.19 (Gold Price Per Gram)
Current Gold Value =~ $117.15
You can use this same equation for any piece of gold of any purity -- so long as you are able to determine the purity and current gold price.
The equation and example above returns a value that is 100% of the gold (melt) value. Due to refining fees, premiums, spreads, and many other variables, this number should be considered a "base value" instead of a "how much cash can I get" value. Determining the "How much cash can I get" value is a subject we'll cover very soon.
