When the company receives your gold items, they are tested to see what type of gold it is.  There are a number of ways to accomplish this.  Any or all of these may be used by the gold buying company.

The first method of testing is done by an electronic testing device.  A wire is attached to the customer’s item and it uses an electric current with a test solution to measure the quality of the gold.

Another method is to scratch the gold piece and apply a special solution to it.  The scratched area will interact with the solution and turn a different color.  This color is matched against known gold samples to determine the quality of the customer’s gold item.

The most accurate test is an X-ray fluorescence scan.  This requires a very expensive piece of equipment and involves X-rays and examining the wavelength dispersion.  This type of test will reveal the makeup of all the different metals in a specific piece.  It is the most expensive test to perform and is only done if an accurate measurement can’t be determined by the other methods.

The quality of the gold is measured in karats.  Each karat is 1/24th pure gold.  Therefore, the highest quality is 24 karat gold.  Gold jewelry can be anywhere from 1 karat up to 24.  It’s important to note that many pieces are engraved with the karat measurement (such as the inside of a ring stating “18k”, but these are not always accurate.  It is illegal to mislabel a gold piece in this manner, but it is done quite often.

Once the quality of the gold is determined, the piece is weighed on a very accurate scale.

Gold is a commodity that is sold on trading markets and it’s value is always fluctuating up and down.  Once the company has the weight and karat rating of the piece, they look up the current price of gold and determine it’s value.  They will then make you an offer for some amount less than that (after all, they have to make a profit).  You won’t get the full value, but unless you have access to the gold market, you have to use a third-party to make the sale.