[Jewelry making - Article 00218] - Re: [Orchid] How to value customer's scrap on trade

[Daniel Spirer]

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>     Scrap gold is valued at day prices with deduction of costs
>     (refinement etc). 

    Well actually that may be how it's valued but the question was what
    should the jeweler should pay the customer for the scrap which is
    quite different. The factors that have to go into that equation
    include: when is the metal actually going to be scrapped (in other
    words if you don't have enough to make it worthwhile to send into
    the refiner until the following month---or months---the actual value
    of the scrap might be quite different); how certain are you that the
    metal is stamped accurately (if it is 13 1/2 kt gold instead of
    14kt--as some manufacturers used for quite awhile this makes a big
    difference in actual value); how much loss will there be (no matter
    what there will be a certain amount of loss in the scrap burnout
    process); how much does the refiner you use charge for their
    services; how much is it costing you to take in scrap instead of
    money when you might not see the money for the scrap for weeks at a
    minimum and up to a year at the maximum--which means your money can
    be tied up for a significant period of time (and yes it does cost
    you to have your money tied up for a period of time in something you
    can't actually use); how much will you take in that isn't what the
    quality stamp actually claims (it may be stamped 14kt but is it
    really?)--or how much time and money do you spend testing the scrap;
    how much risk you are assuming (gold may be $500/oz today but might
    be $350/oz by the time you send it in); how much time you spend
    dealing with the scrap itself (weighing in, checking what it is,
    preparing for the refiner, etc.); and do you want to include a
    profit for yourself on this SERVICE that you are offering the
    customer. When you factor all of these items into the equation it is
    my belief that you should never pay much more than 25-30% of what you
    are paying for gold currently. The only exception I personally offer
    to this rule is if the customer has a big enough pile of scrap to
    ship into the refiner in a worthwhile manner and then I would take a
    commission of between 15-25% of whatever the actual payout is. 

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
617-234-4392
daniel AT spirerjewelers.com
www.spirerjewelers.com

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