A long time ago, I used to scrap gold as a hobby. That’s right. Before the cash for gold craze went viral, I was on the scene, tirelessly scouting flea markets and antique stores for scrap gold. Given the extensive experience I acquired, you would think that I have a tip or two about gold scrapping. And I do.
First, if you are currently contemplating scrapping gold or other precious metals as a hobby or a business, don’t do it. The space is absolutely overrun with competition today. There is a cash for gold kiosk or a pawn shop sitting on every other street corner these days. And they have been busy separating desperate people from their gold jewelry for more than a decade at this point. In many less fortunate neighborhoods there probably isn’t that much gold left to scrap anyway.
But it didn’t use to be that way. Back when I was prospecting, in the late 1990s and early 2000s, nobody scrapped precious metals. Why not? Because gold and silver were only $300 and $5 a troy ounce, respectively! Everyone was too busy driving their massively oversized SUVs to their ridiculously huge McMansions, while being fabulously wealthy, to worry about scrapping gold.
Perhaps an anecdotal story will best exemplify the conspicuous waste during this time. My mother’s friend threw away a complete 12 place setting sterling silver service she had inherited just because she felt it was outdated. She thought it was ugly and didn’t want it anymore, so into the trash it went. Can you believe that? A perfectly good 50, 75 or 100 troy ounce set of sterling flatware thrown into the trash heap! Stories like this are fascinating as social commentary while also exemplifying the horrible wastefulness of the era.
But for an amateur gold scrapper like me, the late 1990s were a literal golden age. I remember gleefully picking through boxes full of junk jewelry in antique stores at that time. Each piece of jewelry might cost you anywhere from a quarter to a few dollars. But sterling silver was common and karat gold could frequently be found.
I think the deals were so great because nobody could be bothered to scrounge around for the few dollars available from gold scrapping. Antique dealers were doing well selling collectibles to Baby Boomers for outrageously high prices. They didn’t need to squeeze the last dollar out of a few pieces of junk jewelry.
It takes some time to identify karat gold and individually price it. For most dealers, $300 an ounce gold just didn’t justify the effort. If a dealer was shooting for maximum turnover, it was simply easier to throw the jewelry in a communal bin and slap a nominal, one-size-fits-all price on it. Despite the low precious metal prices – or perhaps because of them – it was an ideal environment for gold scrapping and I took full advantage of it.
One time, I even scored a 14 gram (0.386 troy ounce) pair of solid 14 karat gold cufflinks at a flea market for a mere $2. Gold was trading around $350 at the time, so the scrap value was about $92. That translated into an instantaneous 4,500% return on my initial investment!
Of course such phenomenally great deals were rare, even in the good old days. And the days didn’t stay good forever. As the price of gold and silver inexorably rose, the supply of cheap, overlooked junk gold jewelry gradually dried up.
As it became progressively harder and harder to find gold jewelry to scrap, I gradually abandoned my lucrative hobby. Even though the price of gold increased substantially during the early to mid 2000s, the amount of scrap gold I found dropped so drastically that it didn’t make any financial sense to pursue gold scrapping.
The magic in gold scrapping was gone. In many ways, I feel that 2006 was the death knell for the part-time precious metal scrapper. In that year, the price of gold shot above $600 a troy ounce and has more or less stayed above that level ever since. The increased recognition of gold’s scrap value quickly led to an explosion of scrap for gold companies and a simultaneous emptying of antique store display cases. If you find a piece of karat gold jewelry in an antique store today, it will undoubtedly be priced two or three times above scrap value, even if it is damaged or otherwise junk.
