When you decide to sell gold, understanding the difference between the spot price and the melt value is key to making sure you get a fair deal. It might seem confusing at first, but knowing what these terms mean can help you maximise your profit and avoid getting short-changed.
What is the Spot Price?
The spot price is essentially the current market price of gold at any given moment. It’s determined by supply and demand, global economic conditions, and even geopolitical events. This price fluctuates constantly, similar to how stock prices change. If you’re checking the price of gold online or hearing about it in the news, that’s the spot price they’re referring to.
So, if you’re planning to sell gold, you’d naturally think this spot price is what you’ll get paid. Well, not quite. The spot price is what large investors and institutions pay when they buy gold in bulk—think big gold bars or large quantities of gold on the stock market . For us everyday people with gold jewellery or coins, it’s a bit different.
What is the Melt Value?
The melt value is more specific to what you’re likely to get when you sell gold. It’s the value of the gold in your item if it were melted down and sold as raw material. Unlike the spot price, the melt value takes into account the purity of the gold you have. Gold is usually mixed with other metals to make jewellery stronger or change its colour. So, if you have a piece of jewellery that’s 14 karat gold, only about 58.5% of that item is pure gold .
To find out the melt value of your gold, you need to weigh it and then factor in its purity. For example, if you have a 10-gram gold necklace that’s 14 karat, only 5.85 grams of that necklace is actual gold. The rest is other metals. Multiply that 5.85 grams by the current spot price, and you’ve got your melt value.
How Spot Price and Melt Value Affect You When You Sell Gold
When you go to sell gold, you’re often quoted a price that’s somewhere below the spot price. This is because the buyer—whether it’s a pawnshop, jeweller, or a gold dealer—needs to make a profit. They’re not just paying you for the gold’s market value; they’ll also have to factor in their costs, whether it’s refining the gold or selling it on to other buyers.
The melt value is a closer reflection of what you can expect to receive when you sell gold jewellery or coins, but even that won’t always be the exact amount you get. It’s worth shopping around and getting quotes from a few different buyers to see who offers the best price.
Tips for Selling Gold
Know the purity: Understanding the karat of your gold helps you estimate its melt value before you approach a buyer.
Weigh it properly: Accurate weight is essential. Some buyers might even use a scale that reads light, so it helps to weigh your gold at home too.
Get multiple quotes: Not all buyers will offer the same price. Some might offer much closer to the melt value, while others might lowball you.
Check the market:
Since gold prices fluctuate, keep an eye on the spot price before you sell gold. You’ll have a better idea if now is the right time.
In short, the spot price is the broader market value, while the melt value is what your gold is worth based on its purity and weight. Understanding the difference can help you get the best price when you sell gold.
