Scrap Gold
Also: Broken Gold, Secondhand Gold, Scrap Gold
Scrap gold refers to used or damaged gold items – jewellery, dental gold, coins, and industrial residues – that are melted down and refined to recover the contained fine gold content.
Scrap gold is the collective term for all gold-bearing objects that have left their original purpose and whose gold content is to be recovered by melting and subsequent refining. This includes broken or worn jewellery, dental gold alloys, damaged old gold coins, gold-plated electronic components, and production residues from the jewellery industry. The current gold price is the decisive factor in determining when the effort of recovery is worthwhile.
What Counts as Scrap Gold?
The designation is not legally defined, but has become established in the precious metals trade for the following categories:
| Category | Typical Fineness | Examples |
|---|---|---|
| Jewellery scrap | 333–750 | Rings, chains, earrings with scratches or breaks |
| Dental gold | 585–900 | Crowns, bridges, inlays from dental alloys |
| Old gold coins | 900–999 | Damaged sovereigns, ducats, 20 Mark pieces |
| Industrial / electronic scrap | 0.5–999 (depending on fraction) | Contacts, bonding wires, circuit boards |
| Semi-finished goods & turnings | variable | Forging and milling residues from goldsmiths |
The most common sources for private individuals are jewellery pieces that are no longer worn or have little resale value as consumer goods, as well as dental gold from removed dental prostheses.
Melt Value: the Key Metric
Before selling scrap gold or taking it to a refinery, the melt value (also: material value) should be determined. It is derived from gross weight, fineness, and the current spot price:
Melt value = Gross weight (g) × Fineness (‰ / 1000) × Gold price (€/g)
A ring with 5 g gross weight and a 585 hallmark (= 58.5 % gold) contains at a gold price of €85/g:
5 g × 0.585 × €85/g = €248.63 melt value
You can quickly determine this value with the Melt Value Calculator – simply enter the weight, alloy, and unit.
Buying Price vs. Melt Value
The actual buying price paid is always below the theoretical melt value, as buyers price in the following costs:
- Refining fee – costs for melting and refining (typically 5–15 %)
- Analysis costs – fineness determination by X-ray fluorescence analysis or assay
- Trading margin – the buyer's profit mark-up
- Price risk – hedging against price fluctuations until resale
In practice, private sellers receive 70–90 % of the melt value depending on the provider, quantity, and purity. Comparison pays: refineries generally pay more than pawnbrokers or jewellers because they operate directly in the market. Estimate the expected payout with the Buying Price Calculator.
Determining Fineness – Before Selling
The stamped fineness hallmark (karat or per-mille punch) indicates the gold content. If the hallmark is missing or illegible, a buyer or a refinery can determine the fineness analytically. Common methods:
- Streak test – quick approximation, accuracy ±5–10 ‰
- X-ray fluorescence analysis (XRF) – non-destructive, very precise, standard with reputable buyers
- Cupellation / wet chemical analysis – destructive, highest accuracy, used for larger quantities
Alloys such as white gold, rose gold, or old dental casting alloys contain additional metals besides gold (silver, copper, palladium, platinum); their content affects the total value, as refineries sometimes also compensate for the minor metals.
Dental Gold as a Special Case
Dental gold rarely consists of a single alloy. Typical gold contents are 60–90 % (hallmark 600–900), combined with silver, palladium, platinum, and copper. Dental gold buyers analyse the overall alloy and compensate for all precious metals. The Dental Gold Calculator provides initial orientation as to what portion is attributable to gold.
Recycling and Market Significance
Scrap gold recycling is an important pillar of global gold supply. According to the World Gold Council, 25–30 % of the annual gold supply regularly comes from recycling sources – in years of high gold prices this share rises, because more holders are willing to sell hoarded scrap gold. This makes recycling an elastic buffer in the market: when the gold price rises sharply, more scrap gold comes onto the market and slightly dampens the increase.
For the environment, recycling is more advantageous than primary mining: processing scrap gold consumes considerably less energy and generates no waste dumps or chemical effluents like the open-pit and leaching processes in gold mines.
Tax and Legal Notes
Private individuals selling scrap gold from their own household generally realise a private disposal transaction (§ 23 EStG). If the holding period exceeds one year, the gain is tax-free; for shorter holding periods, a tax-free allowance of €1,000 applies (from assessment period 2024). If the total proceeds in a cash purchase exceed the statutory cash limit (currently €2,000), the buyer is required to carry out an identity verification of the seller under the Anti-Money Laundering Act (GwG). This text does not replace tax or legal advice – please consult a tax adviser if in doubt.
In Brief
Scrap gold is not waste, but a measurable raw material: the melt value can be calculated precisely from weight, fineness, and the current gold price. Anyone who knows the material value before selling and compares several buyers achieves significantly better results than with the first offer.