What Do Cash-for-Gold Shops Actually Pay? (And the Three Better Options)

If you've inherited jewelry, sold off a coin collection, or simply decided to liquidate some gold, you've probably seen the signs: “We Buy Gold — Highest Prices Paid.” The bright storefronts at strip malls. The pawn shop counter. The mail-in envelopes advertised on late-night TV.

None of them are going to pay you what your gold is worth.

That's not an accusation of fraud. It's how the cash-for-gold business model works: buy at a steep discount, melt, refine, and resell at something closer to spot. Understanding the spread between what your gold is actually worth and what a cash-for-gold operation will pay is the difference between being ripped off and getting a fair offer.

The three channels for selling gold — and what each actually pays

Suppose you have a 14-karat gold chain weighing 20 grams. Let's work through what each channel would realistically pay, with gold spot at roughly $5,100 per troy ounce.

Step 1: calculate melt value.

• 14k gold is 58.3% pure gold
• 20 grams × 0.583 = 11.66 grams of pure gold
• 11.66 grams ÷ 31.103 (grams per troy ounce) = 0.375 troy ounces
• 0.375 × $5,100 spot = $1,913 pure-gold content at current spot

That's the theoretical maximum value of the metal. No buyer will pay exactly that — refining, margin, and risk all get subtracted. But it's the starting point for evaluating any offer.

Channel 1: Strip-mall cash-for-gold shop or pawn shop

Typical payout: 40%–60% of melt value — roughly $765–$1,150 on our $1,913 melt

Channel 2: Local coin or precious metals dealer (buying for melt)

Typical payout: 75%–90% of melt value — roughly $1,435–$1,720

Channel 3: Online bullion dealer buyback program

Typical payout: 85%–95% of melt value — roughly $1,625–$1,815

Channel 4: Private buyer (online marketplace, collector)

Typical payout: 90%–105%+ of melt value, depending on design, brand, and collectible premium

The difference between the worst channel and the best — same piece of jewelry, same day — can easily be $900 or more on a single item.

Why the spread is so wide

Cash-for-gold storefronts rely on three factors to profit:

1. Sellers who don't know melt value. Most customers walk in without having calculated what their gold is actually worth. The counter employee offers a number; the customer accepts or negotiates within a narrow range the employee controls.
2. Emotional pressure. Sellers who are liquidating because they need the money quickly are the most price-insensitive customers. The entire business model is built around this segment.
3. Volume and refining margin. Shops ship bulk quantities of scrap gold to refiners who pay closer to 95% of spot. The shop's profit is the spread between what they paid the customer and what the refiner paid them — typically 30%–50% on each transaction.

None of this is illegal. It's a market where the seller is usually less informed than the buyer, and pricing reflects that imbalance.

The sales tactics that expand the spread

Even within cash-for-gold shops, pricing is not fixed — and several tactics are designed to make the initial offer lower than the shop's actual walk-away price:

• Lowball opening offer. The first offer is often 50%–60% of what the shop will actually pay if you push back. Counter with a specific number based on your calculated melt value, or walk.
• “Testing” the karat down. A 14k piece might be tested and called 10k, reducing the calculated melt value by 30%. Ask to watch the test. Pieces stamped 14k or 585 are 14k; the stamp is the starting point.
• “Scrap pricing” language. Describing your jewelry as “scrap” lets the buyer apply a lower percentage of melt, framed as industry-standard treatment of damaged or broken pieces. Intact jewelry is not scrap.
• “Today only” pressure. The same line used by every other commission-based sales environment. A fair offer on Monday is still a fair offer on Friday. Walk and come back if you need time to compare.

“We pay 90% of spot” — what this actually means

Some cash-for-gold and online buyers advertise payouts as a percentage of spot. Read the fine print carefully. “90% of spot” usually means 90% of spot on the pure gold content, which is the same as 90% of melt value — not 90% of the total weight of the jewelry.

On our 20-gram 14k chain:

• 90% of melt: 0.90 × $1,913 = $1,722
• 90% of the total gram weight at spot (a misleading calculation no one should accept): 20 grams × $164/gram (spot in grams) × 0.90 = $2,952 (not a real offer — used only as illustration)

Always verify the buyer is applying the percentage to the pure-gold content, not simulating a higher rate based on meaningless math. Confirm in writing before you ship or hand over the item.

What to do before you sell

Five steps that separate sellers who get fair offers from sellers who don't:

1. Weigh each piece separately on a gram scale. Accurate weight is the foundation of every calculation.
2. Identify the karat stamp — 10k (41.7% pure), 14k (58.3%), 18k (75%), 22k (91.7%), 24k (99.9%).
3. Calculate melt value using the current spot price for each piece separately, then sum.
4. Get at least three quotes — one local coin dealer, one online bullion buyback program, one cash-for-gold shop. Compare against melt.
5. For pieces with potential collectible or designer value — branded jewelry (Tiffany, Cartier, David Yurman), older estate pieces, or signed designer work — get an appraisal before melting. Melt value may be well below resale value.

The entire process takes an afternoon and typically results in offers 30%–80% higher than what you'd get from the first cash-for-gold counter you walked into.

When cash-for-gold shops make sense

They have a place. If you need funds today, don't want to ship or wait for online buybacks, and your pieces have no collectible value, a cash-for-gold shop is a legitimate option — just not at the shop's opening price. Counter-offer at 75%–85% of your calculated melt value. Many shops will meet you there if you've demonstrated you know the math.

They are not the right channel for: branded or designer jewelry, collectible coins, signed estate pieces, or any situation where you have time to get competing offers.

Frequently Asked Questions

Where should I actually sell my gold jewelry to get the best price?

For non-collectible, non-designer pieces: an online bullion dealer buyback program or a local coin/precious metals dealer will typically pay 75%–95% of melt value. For collectible, branded, or designer jewelry: an appraisal followed by a sale through a specialist dealer or auction house often recovers more than melt value. Cash-for-gold shops and pawn shops are a last resort that typically pay 40%–60% of melt.

What does “we pay 90% of spot” actually mean?

It generally means 90% of the melt value of the pure gold content, not 90% of some inflated calculation. Multiply the gram weight by the karat purity percentage, divide by 31.103 to convert to troy ounces, then multiply by current spot to get melt value. 90% of that number is the actual payout. Confirm this calculation with the buyer before transacting.

How do I calculate the melt value of a gold chain or ring?

Gram weight × karat purity percentage = grams of pure gold. Divide by 31.103 to convert to troy ounces. Multiply by the current spot price per troy ounce. For a 10-gram 18k ring with spot at $5,100: 10 × 0.75 = 7.5 grams pure gold ÷ 31.103 = 0.241 troy oz × $5,100 = approximately $1,229 melt value.

Are mail-in gold-buying services legitimate?

Some are, some aren't. The best-known national mail-in services typically pay 60%–85% of melt — wider spread than local dealers, with convenience as the tradeoff. Before shipping, research the specific company's complaint history and read their fine print on how the final offer is calculated and your right to have items returned if you decline the offer. Reputable services fully insure the shipment and allow free return of declined items.

Should I melt down old gold jewelry that belonged to family?

Only if the pieces have no other significance — sentimental, artistic, or collectible. Melt value is almost always less than what a well-preserved, designer, or antique piece sells for intact to the right buyer. If there's any chance a piece is worth more than its metal content, get an independent appraisal before selling it for melt.

Looking to sell to a dealer you can verify? Our directory lists precious metals dealers with buyback programs, including their payout rates where published.

GoldSilverSelect.com is an independent directory of local and online precious metals dealers. We do not sell gold or silver, and we do not receive compensation from any dealer listed on this site. This article is for educational purposes only and does not constitute investment advice.