Mall kiosks and mail-in services that buy scrap gold produce offers that seem far below the price of gold. The calculation behind them is systematic, and each deduction corresponds to a real step.
Karat purity comes off first
Jewelry gold is alloyed, and the karat mark states how much of the piece is gold. A common American ring karat is substantially less than pure.
The buyer converts gross weight into fine gold content using that fraction, and everything afterward is calculated on the fine content only.
Sellers who anchor on the gross weight against the pure gold price begin the conversation with an expectation that no buyer will meet.
The refiner pays less than the full price
Refiners quote a payable percentage of the metal's value, keeping a portion to cover melting, assay and separation of the other metals present.
Smaller lots draw less favorable terms because the fixed cost of processing a batch is spread over less material.
That refiner payable, not the headline gold price, is the true ceiling on what any intermediate buyer can offer.
Freight, insurance and testing are real costs
Scrap must be shipped to the refiner under insurance, and the buyer bears that cost along with the testing equipment and staff time used to evaluate each piece.
Testing matters because plated and filled items enter the pile constantly, and a buyer who pays gold prices for plated brass does not stay in business.
Those costs are largely fixed per transaction, which is why small lots are quoted proportionally worse than large ones.
Margin varies enormously between buyers
After all deductions, what remains is the buyer's margin, and this is the component that differs most across the market.
High-overhead operations with heavy advertising need wider margins than a low-traffic shop that buys scrap as a sideline.
Comparing several offers on the same day isolates this variable, because purity, refiner terms and freight are broadly similar across buyers.
Stones and findings are handled separately
Gemstones are usually valued at nothing by scrap buyers, since removing and reselling them is a different business with its own costs.
Clasps, springs and pins are often base metal, and their weight is deducted rather than paid for, which sellers frequently do not expect.
Anything with collectible or designer value is worth establishing before selling by weight, because melting removes that value permanently.