Is Scrap Gold Real Gold?

Yes! Scrap gold is real gold. The term “scrap gold” is used to refer to gold coins, rings, bracelets, and old pieces of jewellery, or damaged gold items, like for example jewellery with a broken clasp or link.

Despite the word “scrap” making it sound inferior to “real” gold, it simply means items in the form of jewellery, coins, or other objects that have some gold content.

When you sell “scrap gold” you will only get the intrinsic value of the gold, there will not be an additional value because the item is a piece of jewellery or a watch for example.

People can find this hard to understand when they compare their item or heirloom to the prices of new rings, etc in a jewellers, but new gold items have to recover the cost of making the item, which will have been produced by a craftsman.

Additionally items can sit in stock for a long time, often many years if they ever sell again at all, so most jewellers and gold merchants will simply send all of the gold they buy to be melted down and purified, so the pure gold can be more easily sold into the gold market.

What’s The Difference Between Scrap Gold And Gold?

There is no difference between scrap gold and gold, except in terms of purity of the gold.

The prices quoted as the “spot gold price” or “todays gold price” refers to the value of 1 ounce of pure gold.

Pure gold is 24 carat, scrap gold has a value depending on the purity of the gold in the metal.

So for example 9 carat gold is 9 parts gold and 15 parts other metals (9+15=24), so is 9/24 or 37.5% pure. The purity of the different carats is in the table below.

Purity Of Gold By Carat (Karat)

Number of Karats (Carats) Parts Gold Gold Purity (%)
9K 9/24 37.5
10K 10/24 41.7
12K 12/24 50
14K 14/24 58.3
18K 18/24 75
22K 22/24 91.7
24K 24/24 99.99

If Gold is trading at $2000 per ounce and you had 1 ounce of 9 carat gold, your gold would be worth $2000 x 37.5% = $750.

Scrap gold is exactly the same as gold, it’s just that the gold content varies. You are not likely to find jewellery etc that is 24 carat, pure gold is far too soft and would be damaged easily, it is always mixed with other more hard wearing metals.

What Is Scrap Gold Used For?

Unless an old item is by a famous or valuable brand, or is a rare antique item that has a significant value above just the gold content, then generally speaking it is melted down and purified for re-use.

The jewellery industry buy gold to make new items plus of course it is used to mint new gold coins, so there is always a demand for pure gold, while there may not be a demand for out of fashion pieces of gold jewellery.

It may seem sad that pieces are sent to the melting pot when you consider the sentimental value of a gold item, but commercially this is the only was gold dealers can maintain a viable gold business.

Margins tend to be wafer thin (if you’re dealing with a reputable dealer), so they cannot afford to sit on old pieces of jewellery, especially since the value of gold can swing rapidly.

They could easily end up with items worth less than they paid for them, and so the aim is to buy large quantities and process it quickly.

What Other Use Is Scrap Gold?

Gold is also extensively used in electronics and other industrial processes, so there are many ways that re-purposed scrap gold finds it’s way back into the marketplace.

Think about your laptop or tv for example, it might well contain gold that originally was in a Victorian gold coin, or a wedding ring!

Gold is not only a valuable metal that has a very limited supply, it is also extremely versatile and has very desirable properties in terms of electrical performance, and resilience to oxidisation and other chemical reactions.

So basically yes, scrap gold is indeed real gold, it just varies in purity depending on the carat.