Why gold recycling prices differ between buyers

The spread is structural before it is anything else

Send photographs of the same 40 grams of mixed 9ct and 18ct to five UK buyers and you will get five different numbers back. People reasonably assume the low quotes are the dishonest ones. That is sometimes true and often not. The wholesale gold price is national and public, so no buyer has a secret source of cheaper metal. What differs is everything that happens between your drawer and a refined bar, and each of those steps has a cost that somebody pays. The figure to compare any of them against is the fine-gold price on the day, which you can read from any public market data feed.

There are five variables that explain almost every honest gap. Once you can name them you can ask a buyer about them directly, and the answers tell you more than the headline figure does.

Variable one: how many hands the metal passes through

Refineries that produce investment-grade bars work in kilogram quantities and deal with a small number of accredited suppliers. A domestic parcel of broken jewellery does not arrive at one directly. It travels a chain, and the length of that chain is the single biggest driver of the price you are offered.

A typical high-street route runs: seller, to shop, to a regional consolidator, to a refiner. Each link takes a margin, and each margin comes out of the same gram of gold. A postal buyer that assays in-house and ships aggregated lots straight to a refiner removes one or two links from that chain. That explains much of the difference between a counter offer and a postal offer, and it has nothing to do with anyone being generous.

Variable two: lot size, and the fixed cost per parcel

Processing a parcel costs roughly the same whether it holds 3 grams or 300. The postage in, the postal cover, the XRF assay, the weighing, writing up an itemised offer, the bank transfer, the identity check, and the tracked return if you decline: none of those scale down with weight.

That fixed cost has to be recovered from the metal in the parcel. On a heavy lot it disappears into a fraction of a per cent. On a very light one it is a meaningful share of the total. Buyers handle this differently. Some apply a minimum charge, some quietly widen the per-gram margin on small lots, some absorb it. A buyer who quotes one rate for everything is averaging, which means light parcels are being subsidised by heavy ones or, more commonly, heavy parcels are paying for light ones.

The practical consequence for a household is simple: send everything in one parcel rather than posting three small ones. The gold does not care and the arithmetic improves.

Variable three: whether carats are separated or blended

This is the difference that costs sellers the most money and is the hardest to spot, because it is invisible unless the offer is itemised. A mixed parcel contains different alloys. Valued properly, each carat is separated at assay, weighed on its own and priced at its own rate. Valued lazily, the whole lot is weighed together and paid at a single blended figure that is closer to the lowest carat present than to the highest.

The size of the effect is easy to see. Take 10 grams of 9ct and 10 grams of 18ct in the same bag.

The gold in the bag is identical in all three rows. Only the method changed. Any firm offer depends on inspection, item weight, purity, hallmarks, stones, condition and the live precious-metal market, but the structure of the point holds at any price level. If an offer does not show a line per carat, you cannot tell which row you are in.

Variable four: what is deducted, and whether it is itemised

Not everything in a parcel is gold, and the non-gold mass is not paid for by anyone. Stones, steel earring posts, base-metal spring rings, watch movements, magnetic clasps, filler inside hollow pieces and the occasional lead weight in a bangle all come off the weight. Solder at a repaired joint is frequently a lower carat than the body of the piece.

Two buyers can therefore deduct the same grams and describe it completely differently. One shows the gross weight, the deducted components and the net gold weight as separate lines. The other shows a single figure. Both may be correct. Only one lets you check. When comparing quotes, the itemised one is worth more than a slightly higher unitemised one, because you can audit it.

Why refining is a bigger drag on 9ct than on 22ct

Refining separates gold from the copper, silver and zinc it was alloyed with. The cost of treating a gram of material is roughly fixed regardless of how much gold that gram contains. So the same refining cost is spread over 0.375g of recovered gold in a 9ct piece and over 0.916g in a 22ct piece. As a percentage of what is recovered, low-carat scrap is simply more expensive to process.

That is why the per-gram gap between buyers is usually widest on 9ct parcels and narrowest on high-carat or bullion-grade material. A buyer quoting an unusually strong 9ct rate is either very efficient, running an aggregation model, or has a deduction waiting further down the process. The full journey is set out in what happens to your gold after you sell it.

The settlement lag nobody advertises

When a buyer pays you, they pay against today. The metal then travels, waits, is refined and settles weeks later, at whatever the market is doing by then. Somebody carries that risk. Buyers manage it by hedging, by holding inventory, or by building a buffer into the quoted rate. Hedging costs money; a buffer costs you money. Neither is dishonest, but they produce different headline numbers.

This is also why quotes have expiry dates. A figure quoted on a Monday and honoured on the following Friday is a promise about a market nobody controls, so it is either short-dated or padded. See how often the scrap gold price changes for the timing side of this.

How to compare two recycling quotes properly

1. Convert both quotes to pounds per gram, per carat. A total for a mixed lot cannot be compared with another total unless both were separated the same way.
2. Check whether the quote is on alloy weight or on fine gold content. Ninety-five per cent of the gold inside a 9ct ring is a very different number from ninety-five per cent of the ring.
3. Ask what is deducted and whether the deductions appear as separate lines on the written offer.
4. Ask how long the figure holds, and what happens if the market moves inside that window.
5. Ask what a decline costs. A quote that is three per cent higher but charges for the return of your items is not higher.
6. Do the underlying sum yourself: the market rate per troy ounce, divided by 31.1035, times the carat decimal, times the weight. That gives you the raw recovered-gold value to compare both offers against.

What an unusually wide spread usually means, and the limits of this guide

A quote far above the others is usually pricing on a different basis: fine gold rather than alloy weight, an advertised headline rate that is revised after inspection, or a figure that assumes the highest carat in the parcel applies to all of it. A quote far below the others is usually a long chain of intermediaries or a shop with high fixed costs. Neither has to involve dishonesty, but both are worth a question before you post anything.

The limitation: none of the above can be verified from a photograph, including by us. Purity, solder, hidden base-metal components and stone weight only become knowable once the items are in front of an assay machine. Any figure given before that, from any buyer, is an estimate. What you can judge in advance is the method, and the method is what this guide is about.