Why Gold Buyers Offer Less Than Spot Price
Where the gap between melt value and your cash offer actually goes, and the percentage bands that count as fair by buyer type.
Updated June 20, 2026
What spot price actually is
The spot price is the price for immediate delivery of a standard quantity of already-refined, certified gold - typically 400 ounce London Good Delivery bars or 100 ounce COMEX bars - between institutions that trade with each other constantly. Your 14K chain is none of those things. It is an unknown quantity of unverified purity, mixed with copper and zinc, in a form nobody can trade. Turning it into something that trades at spot requires testing, refining, and moving it through at least one intermediary. That process has a cost, and the cost comes out of your price. This is why "why don't I get spot?" has the same answer as "why doesn't the supermarket pay me the commodity price for my wheat?" Spot is the price at the end of a supply chain you are at the start of.
Where the gap goes
Assay and testing. Determining actual purity costs money - acid testing is cheap and imprecise, XRF machines cost thousands, and fire assay is destructive and slow. Someone pays for it, and if the buyer cannot verify purity precisely they price in the risk of being wrong. Refining loss and cost. Separating gold from a copper-silver-zinc alloy is chemistry with real reagent, energy and labour costs, and a small percentage of metal is genuinely lost in the process. Refiners charge per lot and per gram, and small lots are proportionally more expensive. Logistics and insurance. Shipping a $50,000 parcel of scrap gold insured and tracked is not free, and neither is the safe, the security, the cameras or the bonding. Float and price risk. A buyer pays you today and settles with the refiner days or weeks later, carrying the price risk in between. Hedging that costs money; not hedging it means occasionally losing money. Overhead and margin. Rent, staff, licensing, compliance, payment processing, and profit. A storefront in a mall has a different cost base than a mail-in operation, which is most of why their percentages differ.
Typical payout ranges by buyer type
Refiners buying direct, and specialist mail-in buyers with volume, sit at the top - commonly around 80-95% of melt for clean, sorted, hallmarked material. Large lots do better than small ones because the fixed costs spread further. Independent jewelers and coin dealers with an established refining relationship typically land somewhere around 70-90%. A jeweler who can resell a piece intact rather than melt it can sometimes beat that, because they are pricing against retail rather than against spot. Cash-for-gold storefronts, mall kiosks and gold parties are usually below that band. Their cost per transaction is high and their customers are usually not comparing offers. Pawn shops are commonly in the 40-60% range for gold bought outright. That is not necessarily predatory - a pawn shop is pricing for resale in a retail case or for a defaulted loan, not for a refinery run - but it is the wrong venue if melt value is what you want. Treat all of these as orientation rather than quotes. They move with lot size, local competition and market conditions. What they are useful for is recognising when an offer is outside the plausible range for the type of business making it.
How advertised percentages mislead
"We pay up to 95%" is a ceiling, not a rate. It usually applies to large lots of high-karat, cleanly sorted, hallmarked material - which is not what most walk-in customers bring. "95% of gold value" is the more slippery version, because "gold value" is undefined. Some buyers compute it from spot, some from a stale daily fix, some from an internal base price that is already discounted. 95% of a number that is 15% below spot is 81% of melt. The counter is to ignore percentages entirely and ask three questions: what is your offer in dollars for this specific lot, what spot price did you use, and what purity did you assign to each piece. Any buyer who will not answer all three is telling you something.
What a fair offer looks like
Work out your melt value first so you have a number to anchor on. Then judge the offer as a percentage of that, against the band for the type of business you are dealing with. Good signs: testing done in front of you, ideally with XRF; each karat group weighed and quoted separately; a stated spot price you can verify; a written offer; no time pressure; willingness to explain the deduction. Warning signs: your gold taken to a back room; everything weighed as one pile at the lowest purity; refusal to state the spot price used; an offer that expires in ten minutes; pressure applied after you say you want a second quote; a scale you cannot see the display of. And the simplest lever: get three quotes. The spread between the best and worst offer on the same lot is routinely 30-40% of melt value, which is almost always more than the effort of two extra phone calls is worth.
When melt value is the wrong benchmark
For plain scrap, melt is the right frame. For anything with a name on it, it is not. Signed designer jewelry, antique and period pieces, gold coins with collector premiums, and watches can be worth multiples of their metal content, and a scrap buyer has no reason to tell you so. Bullion is its own case. Coins and bars trade at a premium over melt when you buy and usually a small premium or near-parity when you sell, so a dealer offering 97-100% of melt on a Maple Leaf is making a normal market. Do not scrap recognisable bullion coins. The rule of thumb: if the piece has a maker mark, a date, a matching pair, or is a recognised coin, get it valued as an object before you price it as metal. Melting is the one decision you cannot reverse.
Key points
Spot price is the wholesale price for large lots of already-refined gold. Assay, refining loss, shipping, insurance and margin all come out of the gap. Specialist buyers commonly pay 80-95% of melt; pawn shops often 40-60%. An advertised percentage is not an offer - always ask for a figure in currency.