Scrap Gold
Also: Broken gold, Second-hand gold, Gold scrap
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 fine gold content they contain.
Scrap gold is the collective term for all gold-bearing items that have been retired from 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, old damaged gold coins, gold-plated electronic components and production residues from the jewellery industry. The current gold price largely determines when recovery becomes worthwhile.
What counts as scrap gold?
The term is not defined in law but has become established in the precious-metals trade for the following categories:
| Category | Typical fineness | Examples |
|---|---|---|
| Broken jewellery | 333-750 | Rings, chains, earrings that are scratched or broken |
| Dental gold | 585-900 | Crowns, bridges, inlays made of 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 pieces no longer worn or with little resale value as an object, as well as dental gold from removed dental prostheses.
Melt value: the decisive figure
Before scrap gold is sold or sent 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 with 5 g gross weight and a 585 stamp (= 58.5 % gold) contains, at a gold price of £70/g:
5 g × 0.585 × £70/g = £204.75 melt value
You can determine this value quickly with the Melt Value Calculator - simply enter weight, alloy and unit.
Buying price vs. melt value
The buying price actually paid out is always below the theoretical melt value, because buyers price in the following costs:
- Refining charge - cost of melting and refining (typically 5-15 %)
- Analysis costs - fineness determination by X-ray fluorescence analysis or sampling
- Trading margin - the buyer's profit mark-up
- Price risk - hedging against price fluctuations until onward sale
In practice, private sellers receive 70-90 % of the melt value, depending on provider, quantity and purity. Comparing is worthwhile: refineries generally pay more than pawnbrokers or jewellers because they operate directly in the market. Estimate the expected payout with the Purchase Price Calculator.
Determining fineness - before you sell
The stamped fineness mark (carat or thousandths hallmark) provides information on the gold content. If the stamp is missing or illegible, a buyer or a refinery can determine the fineness analytically. Common methods:
- Streak test - a quick approximation, accuracy ±5-10 ‰
- X-ray fluorescence analysis (XRF) - non-destructive, very precise, standard among 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 overall value, as refineries sometimes also pay for the base metals.
Dental gold as a special case
Dental gold rarely consists of a single alloy. Typical gold contents are 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 which proportion is 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 owners are willing to sell hoarded scrap gold. This makes recycling the market's elastic buffer: when the gold price rises sharply, more scrap gold reaches the market and slightly dampens the increase.
For the environment, recycling is advantageous compared with primary mining: processing scrap gold uses considerably less energy and produces no spoil heaps or chemical effluents like the open-pit and leaching processes at gold mines.
Tax and legal notes
In the United Kingdom, gains on the disposal of scrap gold may be subject to Capital Gains Tax where they exceed the annual exempt amount. Investment gold (bars of fineness of at least 995‰ and qualifying coins) is VAT-exempt under HMRC rules, but the exemption does not apply to scrap or jewellery, which are generally standard-rated at 20 % when supplied by a VAT-registered dealer. Buyers of scrap gold must comply with the UK Money Laundering Regulations, which include customer due diligence and identity verification. This text does not replace tax or legal advice - consult an accountant 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 markedly better results than accepting the first offer.