While both terms relate to physical gold, they serve very different purposes and have distinct implications in terms of value, resale, and investment. In this article, we’ll break down the key differences between scrap gold and bullion, their uses, how they’re valued, and why understanding these differences is crucial for anyone interested in the gold market in the UK.
What Is Scrap Gold?
Scrap gold refers to any gold item that is no longer wanted in its current form and is typically sold for its melt value. This can include broken jewellery, outdated pieces, dental gold, old coins, or industrial components.
Common Sources of Scrap Gold:
- Broken or damaged jewellery (e.g. chains, rings, earrings)
- Gold dental fillings or crowns
- Old gold watches or accessories
- Unhallmarked gold pieces
Key Features of Scrap Gold:
- Sold for recycling, not for resale in original form
- Valued primarily for its gold content and weight
- Measured in carats (e.g. 9ct, 14ct, 18ct, 22ct)
- Prices fluctuate with the global gold market
Scrap gold value is determined by the purity of the gold and the current market price, minus any refining or dealer fees.
What Is Bullion?
Gold bullion is a high-purity form of gold used primarily as an investment asset. Bullion comes in the form of bars or coins, with clearly marked weights and purity levels, often certified by government or private mints.
Common Forms of Gold Bullion:
- Gold bars (also known as ingots)
- Gold bullion coins (e.g. Britannia, Krugerrand, Sovereign)
Key Features of Bullion:
- Sold for recycling, not for resale in original form
- Valued primarily for its gold content and weight
- Measured in carats (e.g. 9ct, 14ct, 18ct, 22ct)
- Prices fluctuate with the global gold market
Investors buy bullion because of its liquidity, recognisability, and direct correlation to the spot price of gold.
How Is Scrap Gold Valued in the UK?
In the UK, the value of scrap gold is determined by three main factors:
- Purity (Carat) – Common purities include 9ct (37.5% gold), 14ct (58.5%), 18ct (75%) and 22ct (91.6%)
- Weight (Grams) – The heavier the item, the more gold it contains
- Current Gold Price per Gram – This fluctuates daily based on the global market
Example Calculation:
If you have a 10g 18ct gold ring, you would calculate its gold content as:
10g × 75% = 7.5g of pure gold
Multiply that by the current gold price per gram and then subtract any dealer or refining fees to estimate its value.
How is Bullion Valued?
Bullion is valued much more directly against the spot price of gold – the current price for one troy ounce of gold on the open market.
However, bullion products usually include a premium above the spot price. These premiums cover:
- Minting and production costs
- Distribution and storage
- Dealer markup
Investing in Gold: Should You Choose Scrap or Bullion?
Bullion = Investment
If your goal is to invest in gold as a store of value or hedge against inflation, bullion is the more appropriate choice. It’s purer, easier to store securely, and generally more liquid in the global market.
Scrap Gold = Recycling/Resale
Scrap gold may be better suited if you have old or broken jewellery you no longer want, want quick cash without buying new gold products, or are not concerned with investing long-term.
Final Thoughts
Understanding the difference between scrap gold and bullion is essential for anyone looking to make the most of their gold holdings. While both forms hold intrinsic value, they serve different markets and purposes.
Whether you’re selling or buying, always deal with reputable companies, stay updated on market prices, and understand the value of purity, weight, and form.
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