Published 2 June 2026
What spot price actually is
The London Bullion Market Association sets a reference price for gold twice daily, at 10:30 and 15:00 London time. 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.
Spot is a wholesale price for delivery of 999 fine bullion in standard form factors (good delivery bars, kilo bars). A homeowner with a 9ct ring is not in that market directly. The route to that market is the scrap refining cycle.
What scrap price is
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.
The refining cost
For high-karat solid gold, the refining cost is in the low single digits per cent. For low-karat or plated material, it can be much higher per gram of recovered gold.
The recovery yield
Refiners recover slightly less than the theoretical gold content of the alloy. The losses are tiny (parts per thousand for solid karat gold) but they are not zero. For plated material the recovery yield is more variable because the gold layer is thin and inconsistent.
The working-capital lag
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. The buyer typically hedges this with a forward contract or by holding a small inventory, both of which have a cost. That cost feeds into the dealer margin.
The dealer margin
The dealer margin covers the buyer's rent, staff, XRF equipment, insurance, postal cover, customer service, the prepaid Royal Mail envelopes, the free tracked returns on declined parcels, and the profit needed to keep the business running. It is a real cost. A buyer claiming zero dealer margin is either not telling the truth or running an unsustainable model.
Honest dealer margins on solid karat gold are typically 3 to 7% of the recovered value. A 100g parcel of 18ct sees a smaller percentage margin than a 5g parcel because the operating costs are roughly the same regardless of weight.
Why "we pay 98% of spot" is suspicious
Advertisements that claim 95% or 98% of spot for scrap gold are almost always referencing the gold content after the karat decimal, not the alloy weight. 98% of spot on the recovered gold inside a 9ct ring is a very different figure from 98% of spot on the alloy weight. Read the small print. The honest comparison is the offered £-per-gram by karat against the calculated £-per-gram by karat (spot ÷ 31.1035 × karat decimal). Compare like with like.
How to check a scrap offer against spot
- Take the live spot in GBP per troy ounce from a market data source (LBMA, kitco, our /gold-price page).
- Divide by 31.1035 to get GBP per gram of pure gold.
- Multiply by the karat decimal of your piece (0.375, 0.585, 0.750, 0.916, 0.999).
- This is the raw recovered-gold value per gram. The honest scrap offer should sit a few per cent below this figure, not 20 or 30% below.
- Multiply by the weight of your piece for an indicative scrap value to compare with the written valuation.
When the gap is bigger than expected
A bigger-than-expected gap usually has a reason: the piece is plated rather than solid, the karat 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-karat solder. The XRF report shows the actual alloy. 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.
Postal valuation closes the gap
A postal buyer typically operates at a smaller dealer margin than a high-street shop because the property and footfall costs are lower. The XRF test, the written valuation and the bank transfer route work the same. Your parcel is insured up to £2,500 via Royal Mail Special Delivery. The figure you receive is calculated against the live market, with the components above explained on the report.
See how to sell gold by post and our gold price per gram by karat explained guide.
A final close
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.
Common questions
Is spot price the same as the price I should expect from a buyer?
No. Spot is the wholesale reference. The buyer offer is calculated backwards from spot after refining and dealer costs.
What is a fair gap between spot and scrap?
For solid karat gold, typically 3 to 10% depending on karat, parcel size, and buyer model. For plated or low-yield material, larger.
Does GoldPaid disclose the gap?
Yes. The written valuation shows the alloy, the weight and the offered figure. You can do the maths against live spot and compare.
Why do shops in airports or stations offer worse prices?
Higher rent and footfall costs feed into a wider dealer margin. The location is convenient but not cheap.
Is buying gold bullion the same maths in reverse?
Broadly yes. A bullion dealer adds a premium over spot for their costs and inventory. The premium is smallest on standard refiner bars and largest on small fractional coins.
Does the GBP-USD exchange rate matter?
Yes. Most market data quotes spot in USD. The GBP equivalent moves with the exchange rate, which can shift the offered scrap figure even if the USD spot is unchanged.
How quickly does the spot price update?
Continuously during global market hours. The published LBMA fix is twice daily but the spot trades around the clock.
What is the smallest parcel worth posting?
There is no rigid minimum. A small parcel may pay a modest figure once the operating costs are covered, so combining items in one envelope is more efficient than posting single grams.