Scrap Gold
Also: Broken gold, Second-hand gold, Old gold
Scrap gold refers to used or damaged gold objects – jewellery, dental gold, coins and industrial residues – that are melted down and refined to recover the fine gold content they contain.
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 term is not legally defined, but has become established in the precious metals trade for the following categories:
| Category | Typical fineness | Examples |
|---|---|---|
| Broken jewellery | 333–750 | Rings, chains, earrings with scratches or breakage |
| 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 & filings | variable | Forging and milling residues from goldsmiths |
The most common sources for private individuals are jewellery items that are no longer worn or that retain little resale value as objects of use, as well as dental gold from removed dental prostheses.
Melt Value: the Decisive Figure
Before scrap gold is sold or submitted to a refinery, the melt value (also: material value) should be determined. It results from gross weight, fineness and the current spot price:
Melt value = Gross weight (g) × Fineness (‰ / 1000) × Gold price (€/g)
A ring weighing 5 g gross with a 585 stamp (= 58.5 % gold) contains, at a gold price of 85 €/g, a calculated:
5 g × 0.585 × 85 €/g = 248.63 € melt value
You can quickly determine this value with the melt value calculator – simply enter weight, alloy and unit.
Purchase Price vs. Melt Value
The purchase price actually paid out always lies below the theoretical melt value, because buyers price in the following costs:
- Refining charge – costs for melting and refining (typically 5–15 %)
- Assay costs – fineness determination via X-ray fluorescence analysis or sampling
- 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 provider, quantity and purity. Comparing is worthwhile: refineries usually pay more than pawnbrokers or jewellers, because they operate directly in the market. Estimate the expected payout amount with the purchase price calculator.
Determining Fineness – Before You Sell
The stamped fineness mark (carat or per-mille hallmark) provides information about the gold content. If the stamp 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 at reputable buyers
- Cupellation / wet-chemical analysis – destructive, highest accuracy, for larger quantities
Alloys such as white gold, rose gold or old dental casting alloys contain other metals besides gold (silver, copper, palladium, platinum); their content influences the total value, since refineries sometimes also pay for the secondary metals.
Dental Gold as a Special Case
Dental gold rarely consists of a single alloy. Typical are gold contents of 60–90 % (stamp 600–900), mixed with silver, palladium, platinum and copper. Dental gold buyers analyse the entire alloy and pay for all precious metals. The dental gold calculator gives an initial idea of what share 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 advantageous compared with primary mining: processing scrap gold consumes considerably less energy and produces no spoil heaps or chemical effluents like the open-pit and leaching processes in gold mines.
Tax and Legal Notes (Malta)
Private individuals in Malta who sell scrap gold from their own household do not charge VAT, as they are not acting in the course of a business. Malta levies no capital gains tax on private disposals of movable assets such as precious metals: Maltese CGT applies only to specific assets defined by law – notably immovable property, securities and business interests. There is no holding-period requirement comparable to a speculation period. Note, however, that the investment-gold VAT exemption (Directive 2006/112/EC) does not apply to scrap or jewellery that is not investment-grade bullion. Dealers buying scrap must comply with Malta's anti-money-laundering obligations, including customer due diligence above the statutory thresholds. This text does not replace tax or legal advice – if in doubt consult a professional. Sources: cfr.gov.mt, legislation.mt, eur-lex.europa.eu.
In Brief
Scrap gold is not waste but a measurable raw material: the melt value can be calculated exactly from weight, fineness and the current gold price. Those who know the material value before selling and compare several buyers achieve considerably better results than by accepting the first offer.