I have not personally used Midwest, though my gold refining mentor uses them almost exclusively for powders as he feels they do him the best service. Their rates are on par with most medium size buyers.
You can make good money with a 98% spot buy. You have to have cash flow, and good analytical capacity to know what you are buying. One, there is silver in karat gold....two, you will likely get silver and low grade gold from the same sellers. Silver payout is usually only 90% of spot, and low grade gold (gold filled) is even lower. You don't make that money by buying 1 oz of karat at a time, but you also don't turn it away or treat it like !!!!. Not a lot of people know PM buying/selling, and your best advertising is word of mouth. Plus, you never know when a guy selling you an ounce of gold is going to come back with ten pounds of sterling...so from a business standpoint, it's best not to insult the customer.
In the end, you only get paid on what's in the final ingot, but there are a lot more diplomatic ways of communicating that. As it was said, it is a hard business...because you often end up disappointing people.
So I hope this isn't considered advertising...because frankly, it's still a hobby for me. My gold refining mentor is a buyer in SE MI. If anyone local needs a place to sell PM's, I can introduce you. He regularly pays 98% on karat gold with no melt or assay fees. Melted in front of you, assayed in front of you. If you don't like the offer he gives, you leave with your ingot. It's another family owned business that very purposely has no web presence. If you've got a little bit but not a lot, I'm a buyer as well, but at a little lower rate (but still better than the coin shop)
With that said, there are mom and pop melt shops like this all over the place, but they are hard to find. They serve as an intermediary between the pawn shops, karat buyers, jewelry shops, etc...and places like metalor or midwest. You have to look pretty hard to find them. When you sell to the big guys, you really are sort of a pain...they still want to provide a good service to you, but it is harder to get a good melt on 30 grams than it is 300 grams.
With small amounts, you'll almost always get spot or above on Ebay, but then have to deduct the final value fees.
Now, for any metal sale, you should be getting three numbers. You should be told your total before melt weight, your after melt weight and your purity. I personally ask for a copy of the XRF as well, since I find it interesting. You are only paid on your after melt weight obviously, but you shouldn't lose much weight, even with most stones. My guess is that it was a cold melt, and there was a bead in the slag...it very well could have been an honest mistake, with a really crappy delivery.
To better explain that, when you melt the gold, you will add borax and a little bit of lime. These will dissolve any impurities, and they will float on top of the gold. When you go to pour your melt, if the slag is not liquid enough, or if you aren't fast enough, sometimes you can get a majority of the melt in one pool, and another small pool (or multiple) hung up in the slag. You won't see it as the slag is often dark colored.
So, there's my introductory post. I'll make an introductory post elsewhere tomorrow.