by Jeremiah Johnson, Ready Nutrition:

Investing in precious metals is a great way to diversify and preserve your wealth. You can even find it on eBay! While this article is by no means an exhaustive treatise on gold and silver buying, it is more of a “primer” to give you some basic information you need to get started (if you plan on going into this area) or to provide knowledge to arm you in your dealings with people. Some of this may be useful for you in purchases of precious metals, but the scope of this is mainly to cover things that you may find when out hunting in the flea markets, thrift stores, yard sales, or other areas of the “secondary shops.”

First, we’ll cover gold measured in terms of purity that is expressed in karats, symbolized by the letter “K” and “kt” with jewelers.

24 Karat – 100%, or pure gold

22 Karat – 91.7% gold

18 Karat – 75.0% gold

14 Karat – 58.3% gold

10 Karat – 41.7% gold

Now let’s cover silver, a metal marked with a purity mark. Here are the marks and their percentage of silver contents that correspond:

999 – 99.9% silver

958 – 95.8% silver

925 – 92.5% silver (known as Sterling silver)

800 – 80.0% silver

We are referring mostly to jewelry or decorative pieces and keepsakes here (such as silverware, candlestick holders, or other things that may bear a stamp to show their precious metal content). Coins are a little bit more involved and beyond the scope of this article, as there are too many to list here.

One of the problems that people run into with jewelry and their great-grandmother’s candlestick holders is that most businesses that buy them will usually pay according to their melt value. This is especially true with silver. Most of these dealers will estimate the silver content of your item by weight, and then will pay you roughly 15-25% under value to cover their handling and melting charges.

Learn how to test your junk gold and silver

For coins there can be a numismatic value attached to the coin…that is, its worth as a collector piece…that is greater than the melt value. There is also the little problem that although the coins are no longer in circulation, well…they are. All coins and currency are (technically) the property of the U.S. government…and to melt them down without proper authorization would be considered destruction of government property.

Jewelry doesn’t have that problem. The real problem is that you will receive a fraction of what it is worth when you take it to a dealer who will hand you nice, crisp, approved, Federal Reserve Notes in exchange for your silver or gold. Here’s how to figure out the “melt value” in silver:

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