Melt Value vs Spot Price vs Dealer Payout, Explained
Three numbers are routinely confused in gold selling, and the confusion costs sellers money: spot price, melt value, and dealer payout. They are related, but they are not the same number, and a seller who expects one while being offered another will always feel short-changed — even when the offer is fair. This guide defines each term, then works one item through all three, so the gaps become visible instead of mysterious.
Spot price: the wholesale benchmark
Spot price is the wholesale market price for pure gold, usually quoted per troy ounce in US dollars. It is the price for large, institutional-grade bars, not the price for a single chain in a shop. Spot is the starting point for every other calculation, but it is not a price at which a consumer can buy or sell a small item with no other costs.
Spot also moves, and it is quoted in a currency and at a time. A spot figure without a date, currency, and unit (per ounce, per gram, per kilo) cannot be checked. If a calculator or a price page shows a figure without that information, treat the figure as unverified, however precise it looks.
Melt value: what the gold content alone is worth
Melt value is spot price converted to your item’s weight and purity. It answers: “If this item were melted down, what would its pure gold content be worth at spot?” It does not include making, design, brand, stones, or any buyer’s costs. The formula is weight × purity factor × price per gram.
EXAMPLE ONLY — not today’s price, using $100 per gram for 24K gold. A 12-gram 18K bracelet: 12 × 0.75 × $100 = $900 melt value. That is the theoretical value of its gold content at the example price. It is a useful benchmark, but nobody is obliged to pay you melt value for a small consumer item, because turning that item back into tradable gold costs money.
Dealer payout: what you actually receive
Dealer payout is melt value minus the buyer’s costs and margin: testing, assay, refining, overheads, risk, and profit. Different buyer types take different cuts, which is why the same item gets different offers in different shops. The existing selling-fees guide gives typical ranges — refiners 90–95% of melt for large lots, local buyers 75–85%, pawn shops 60–75% — but those are ranges for comparison, not promises for any single item.
Apply them to the bracelet example. At 90% payout, $900 melt becomes $810. At 80%, it becomes $720. At 70%, $630. All three can be “the market” on the same day, from different buyer types for different lot sizes. The question is never just “what percentage did they offer?” but “what percentage, from what buyer type, for what lot, with what itemised deductions?”
One item, three numbers
Take a 10-gram 14K chain in the same example. Melt value: 10 × 0.5833 × $100 = $583.30. A local buyer at 80% offers $466.67 before any flat assay or handling fee. If that buyer also charges a $25 flat fee, the payout falls to $441.67, or about 75.7% of melt. A seller who only heard “80% of melt” and then received $441.67 might think $25 vanished — it did not vanish, it was a flat fee that was never itemised in the headline percentage. Always ask for the final amount you will receive, in writing, with every deduction listed.
Why retail price is higher still
A new piece of jewellery is priced above melt for the opposite reason: making, design, distribution, brand, and tax are added on top of metal. A chain with $583 melt value in the example might retail for $1,200 or more when new. That does not mean a buyer should pay $1,200 for it second-hand, and it does not mean a $467 scrap offer is a scam. It means retail value, melt value, and payout are three different measurements, and only one of them — payout — is money in your hand.
How to compare offers fairly
First calculate melt value yourself, with a stated price basis. Then, for each offer, record the buyer type, the weight and purity they used, the price basis they used, the payout percentage, any flat fees, and the final amount. Compare final amounts, not percentages, and compare like with like: a refiner’s 90% on a 100-gram lot is not comparable to a pawn shop’s 70% on a single chain, because lot size, testing cost, and speed are different services.
Use the Melt Value Calculator for the benchmark, then the Scrap Gold Calculator to apply a payout rate and a refining fee and see the net figure. If a buyer’s final amount is far below your net calculation, ask which input differs — weight, purity, price basis, or deduction. The answer to that question is more useful than arguing about a headline percentage.
Frequently asked questions
Is melt value the same as spot price? No. Spot is a per-ounce wholesale price for pure gold. Melt value is spot applied to your item’s actual weight and purity.
Should I expect 100% of melt value? For a large, clean bullion lot sold to a refiner, close to it is possible. For small jewellery lots sold to retail buyers, expect a deduction — the question is whether it is reasonable and itemised.
Why do two buyers offer different amounts on the same day? Because they have different costs, lot-size thresholds, and business models, and because they may be using different price bases or weights. Itemised quotes reveal which factor is driving the difference.
Does melt value include stones? No. Stones are not gold. Remove them or value them separately; do not let stone weight inflate a melt calculation.
Estimates only. A calculator result is metal value, not a dealer payout or a retail price. This article is general information, not personal financial advice.
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