By Rocco Clayfield, trading as GoldPaid; the business incorporated as GOLDPAID LTD (company 17382540) on 5 August 2026 · Published · updated
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What is the spot price of gold?
The LBMA Gold Price benchmark is set in auctions administered by ICE Benchmark Administration, commencing at 10:30 and 15:00 London time on publication days. The live spot price moves continuously between fixes as banks, refiners and large traders buy and sell at wholesale. Most market data feeds show this live spot in US dollars per troy ounce. Convert to GBP using the live exchange rate.
A spot quotation is a wholesale market reference for a specified form, location and settlement basis; it should not be confused with a retail quote for any particular bar or a twice-daily benchmark. A homeowner with a 9ct ring is not in that market directly. The route to that market is the scrap refining cycle.
What is the scrap price of gold?
Scrap price is the figure a UK buyer offers per gram of your alloy, calculated backwards from the spot price after the buyer covers their costs. Those costs are: the refining process to recover the gold from the alloy, the recovery yield (the refiner returns slightly less than 100% of the theoretical gold content, depending on the metal), the dealer’s working-capital cost (the buyer pays you today and waits weeks for the refiner to settle), the dealer’s operating cost, and a modest profit margin.
Add those together and you get the gap between spot and the offered scrap price.
| Component of the gap | Typical size on solid carat gold | What it covers |
|---|---|---|
| Refining cost | Depends on feedstock, batch and contract | The chemistry that recovers pure gold from the alloy |
| Recovery yield | Depends on process and settlement basis | The refiner returns slightly less than the theoretical gold content |
| Working-capital lag | Feeds into the dealer margin | The buyer pays you today and settles with the refiner weeks later |
| Dealer margin | Set by each buyer, and the part that varies most | Operating costs, postal cover, free tracked returns and profit |
| Total gap below the gold content | No universal gap; compare the actual net terms | Ordinary plated base metal is excluded; confirmed silver bodies are assessed separately |
How much does refining cost?
A household seller should not infer a refiner’s charge from a generic percentage. Check the actual buyer’s net offer and any separately stated deductions. The full route from the sorting tray to a refined bar is set out in what happens to your gold after you sell it.
What is the recovery yield?
Physical recovery and the amount credited under a refining contract are different questions. The material, process, sampling and settlement terms matter. An unexplained deduction should not be justified by inventing a standard loss percentage.
Why does the working-capital lag cost the buyer money?
When a buyer pays you, they pay against the spot price now. The metal then sits in transit to the refiner, sits with the refiner during processing, and settles weeks later. During that window the price could move up or down. A buyer may manage market exposure through hedging and other arrangements; merely holding inventory is not itself a hedge. That cost feeds into the dealer margin.
What is a fair dealer margin?
The dealer margin covers the buyer’s rent, staff, XRF equipment, postal cover, customer service, the prepaid Royal Mail labels, the free tracked returns on declined parcels, and the profit needed to keep the business running. It is a real cost. A claim about zero margin needs its scope explained; compare the complete terms rather than inferring the economics from a slogan.
Dealer margins vary widely between buyers. Operating costs are roughly the same whatever a parcel weighs, so some buyers take a bigger share of a 5g parcel than of a 100g one. At GoldPaid, refining, assay, handling and margin together come out of the gap between the metal value and the figure offered, and the written offer shows the weight and purity behind it.
What does “we pay 98% of spot” really mean?
Advertisements that quote 95% or 98% of spot for scrap gold usually mean that share of the gold content, after the carat decimal, not of the item’s total weight. 98% of spot on the gold inside a 9ct ring is about 37% of the spot price per gram of the ring. Read the small print, then compare the offered £-per-gram by carat against the calculated £-per-gram by carat (spot ÷ 31.1035 × carat decimal).
How do you check a scrap offer against spot?
- Take the live spot in GBP per troy ounce from a market data source such as the LBMA or kitco.
- Divide by 31.1035 to get GBP per gram of pure gold.
- Multiply by the carat decimal of your piece (0.375, 0.585, 0.750, 0.916, 0.999).
- This is a theoretical fine-gold reference value per gram of the assumed alloy, before any assessment of actual recovery. A buyer’s offer sits below this figure once refining and costs are covered. Hold any offer up against the same number.
- Multiply by the weight of your piece for an indicative scrap gold value to compare with the written valuation. If you are not sure a piece counts, what counts as scrap gold sets out what does and does not.
Label every number before putting it into a calculation
A workable calculation begins with units. Write down whether the reference is pounds or dollars, per gram or per troy ounce, and for fine gold or a stated alloy. Then record its date and time. Two correct numbers can produce a wrong result when one is a sterling per-gram figure and the other is a dollar per-ounce figure.
If a feed already gives pounds per gram of fine gold, do not divide it by the troy-ounce conversion again. If it gives a buying rate specifically for 9ct alloy, do not multiply that rate by 0.375 again. Purity should be applied once at the appropriate step. A surprising result often comes from repeating a conversion rather than discovering an exceptional offer.
Keep the market reference separate from a buyer’s own rate. A page headed “gold price” may contain a wholesale indicator, an indicative purchase rate or a retail bullion selling price. Those figures answer different questions. Read the label and terms before using the number as the denominator in a percentage comparison.
A complete example using mass and percentages
Consider a separately established 12 grams of 18ct gold alloy, with no stones or other components included. Its nominal fine-gold content is 12 × 0.750 = 9 grams. That is a composition calculation. It does not supply a current buying price, predict a recovery result or tell you which commercial terms a buyer will offer.
If a hypothetical offer represents 90% of a correctly calculated fine-gold reference for that lot, the difference is 10% of that reference. The percentage applies to the gold content, not to a claim that the complete object is 90% gold. Keep the material standard and the commercial percentage in separate fields: 18ct describes the alloy, while the offered proportion describes a comparison with a price reference.
For an equal gram of 18ct alloy and fine gold, applying that illustrative 90% proportion after the 75% fineness gives 67.5% of the fine-gold unit reference. It would be incorrect to call the alloy 67.5% gold as a result. The actual nominal composition remains 75%; the extra multiplication belongs to the commercial calculation, not the assay.
Now change the physical example: the 12-gram object includes 2 grams of non-gold components, leaving 10 grams of confirmed 18ct alloy. Its nominal fine-gold content is 7.5 grams rather than 9 grams. Applying the original calculation to the complete object weight would overstate the fine-gold quantity by 1.5 grams before any buying terms are considered.
The lesson is not that one offered percentage is acceptable or unacceptable. It is that weight, fineness and reference must describe the same material before a percentage comparison means anything. An apparently precise percentage computed from an assumed gross weight cannot establish whether an inspected offer is fair. Resolve the quantity first, then compare the actual dated amount offered.
Convert dollars only when a sterling reference is not already supplied
For a dollar quotation, check the direction of the exchange rate. If the rate is expressed as dollars per pound, divide the dollar amount by that rate to obtain pounds. If it is expressed as pounds per dollar, multiply. The symbols on a currency feed are part of the calculation, not decorative labels. Reversing the operation can produce a plausible-looking but incorrect sterling result.
Use a consistent observation time for the gold reference and the exchange rate. A recent gold figure converted using an old currency rate is a hybrid calculation, not a fresh sterling market observation. Keep the source and timestamp for each input. If a feed already provides a sterling equivalent, check its stated basis before doing another conversion that would count the currency adjustment twice.
For the weight conversion, one troy ounce is approximately 31.1035 grams. That is a fixed unit relationship, unlike the market price and exchange rate. Check that the source uses troy ounces rather than ordinary ounces. Dividing a per-troy-ounce reference by that mass converts the unit; it does not apply a buyer margin or a carat adjustment.
If one source supplies a sterling figure, understand whether it is an indicative conversion or an executable buying price. LBMA distinguishes its benchmark auction prices and indicative currency conversions. Neither a currency conversion nor the benchmark itself is a promise that a household scrap parcel can be sold at that amount. Keep those limits attached to the calculation rather than presenting the converted result as an available offer.
Understand what the percentage does and does not prove
A percentage of a reference is useful for comparing the same material on the same basis. It does not prove that an item has been authenticated, that its stones have been valued or that its construction was assessed correctly. It also does not establish that the reference is the best alternative price available for a finished object.
An antique ring may have resale interest that is not captured by a fine-gold calculation. Conversely, a damaged ordinary chain may be assessed mainly for metal. Keep the question “what is the gold reference?” separate from “which sale route suits this item?” A mathematically clear metal offer can still be the wrong route for an object with supported specialist value.
Nor does the gap reveal the buyer’s profit. It may contain processing, handling, financing and other costs, but their amounts cannot be reconstructed from one final offer. A seller can compare net terms without inventing a refinery fee or assuming that the entire difference is profit. Ask about the actual offer rather than treating a generic percentage as an audited account of the business.
Reconcile the final statement without losing the assumptions
Once the inspected offer arrives, replace provisional assumptions with the findings actually stated. Keep the earlier estimate as a separate document. If the accepted weight or fineness differs, update that input explicitly and recalculate. Do not quietly change the reference price to force the original estimate to agree with the new figure.
Check whether any separately listed cost has already been incorporated in the amount offered. If an offer says the final payable amount is a particular sum, ask before subtracting an imagined standard fee. Equally, read any conditions attached to a headline rate. The useful outcome is a number you can explain from the document, not a calculation built on assumptions the buyer never made.
For a mixed lot, perform the calculation by identified group and add the amounts. A single average fineness is only meaningful when properly weighted by the quantities. The buyer comparison guide works through that distinction. Preserve uncertain or excluded pieces separately rather than assigning every object the most favourable stamp in the parcel.
Finally, record the scope of your conclusion. “This offer equals this percentage of this dated reference for this assessed weight” is precise. “This is the value of my jewellery” may imply much more. The calculation is a useful check within a sale decision, and it is strongest when its boundaries remain visible.
Why is the gap sometimes bigger than expected?
A bigger-than-expected gap usually has a reason: the piece is plated rather than solid, the carat stamp does not match the actual alloy, stones add weight that is not gold, watch movements or springs add non-gold mass, or the piece has been previously repaired with a different-carat solder. XRF reports composition at the points examined and needs to be interpreted with the object’s construction. The written valuation explains the deductions.
Where the buyer has applied a wider margin without explanation, that is the moment to walk away and post the parcel to a buyer who will show the maths.
Does selling by post close the gap?
A postal buyer has no shopfront or window stock to pay for, which is one reason a postal rate can sit closer to the metal value. The XRF test, the written valuation and the bank transfer route work the same. Your parcel travels on Royal Mail Special Delivery Guaranteed, tracked and signed for. Royal Mail cover may be available up to £2,500 depending on the postal method and cover level used. GoldPaid can confirm the appropriate postal option before you post. If the lot may be worth more than £2,500, tell us first and we can split it across more than one prepaid label at no charge. The postal format does not guarantee a higher offer, and GoldPaid’s written offer shows the weight, the purity and the figure behind it.
See how to sell gold by post and our gold price per gram by carat explained guide. Two honest buyers can still land on very different figures from these same components, which is set out in why gold recycling prices differ between buyers.
How should you read any gold offer?
Spot and scrap are two sides of the same market. One is the wholesale reference, the other is the retail offer after honest costs. The gap is not a trick. It is arithmetic. Once you can do the calculation, you can read any offer in any window in the country and judge it on the maths. That is the protection. Anyone who refuses to walk you through the components is not someone you should be selling to. If you are already holding a figure from a buyer and want to test it, was my gold offer fair runs the same arithmetic as a five-step check, with the percentage bands to read the answer against.