Calculation of melting margin and repurchase

At a glanceThe melting margin (technically known in Swiss and German bullion trading as Schmelzabzug) is the percentage deduction applied by refineries, scrap gold buyers, and precious metal dealers from the theoretical market spot value of your scrap gold and silver. It covers the industrial refining costs, physical melt loss (merma), and the buyer's commercial margin. This guide details how it is calculated and what constitutes a fair rate in Switzerland.

Anatomy of the Scrap Deduction: Why You Never Receive 100% of Spot

When an individual or jeweler sells scrap gold (broken jewelry, workshop bench sweeps, dental gold), the payout never matches the exact fine gold weight multiplied by the live market spot price. The transaction incorporates four essential economic components:

• Physical melt loss (Merma): During crucible melting, non-metallic contaminants (polishing paste, skin oils, casting investment plaster) burn away, volatile base metals vaporize, and copper oxidizes into the borax flux. This loss ranges from 0.5% to 1.5% for clean scrap, and up to 5% to 8% for dirty or stone-filled jewelry.
• Assay and testing fee: Determining the exact fineness of the poured bar requires XRF spectrometry or fire assay certified by the Swiss Central Precious Metals Control Office (BCMP). This fixed fee (CHF 30 to 80 per lot) disproportionately affects small quantities.
• Electrolytic refining cost: The chemical separation of gold, silver, and copper in an industrial refinery consumes energy and reagents, billed per gross kilogram treated.
• Dealer margin & market price risk: Protects the dealer against London Bullion Market (LBMA) price swings between the purchase moment and physical delivery to the refinery.

Practical Payout Table for 18 Karat (750‰ Gold) in Switzerland

The following table simulates the net payout for various lot sizes of 18k gold scrap, assuming a live fine gold spot rate of CHF 85.00/g:

Mathematical Formula to Verify Your Payout

Before accepting an offer at a Swiss precious metal counter, verify the calculation using the industry standard formula:

Net Payout (CHF) = [ Gross Weight (g) × (Fineness ÷ 1000) × Fine Gold Spot CHF/g ] × (1 − Margin Rate) − Assay Fees

Calculation Example: You bring in 45.0 grams of 14-karat scrap (585‰). Spot is CHF 85.00/g, and the counter applies an all-inclusive 10% deduction:

1. Fine gold content: 45.0 g × 0.585 = 26.325 g pure gold.

2. Gross spot value: 26.325 g × CHF 85.00 = CHF 2,237.63.

3. Net payout after 10% deduction: CHF 2,237.63 × 0.90 = CHF 2,013.86 in cash or bank wire.

Comparing Buying Channels in Switzerland

• Cantonal Banks & UBS: Generally only buy back certified bullion bars and official bullion coins (Vreneli). They do not accept scrap jewelry, or apply punitive discounts exceeding 20%.
• Retail Gold Buying Shops: Deductions range between 10% and 18%. Always compare offers in high-competition urban centers like Zurich or Geneva.
• Direct Refineries (Zurich, Geneva, Neuchâtel): Best payout for lots over 100 grams, with margins trimmed down to 3% to 7%.

Frequently Asked Questions (FAQ): Melting Margins

Can the buyer deduct the weight of gemstones?

Yes. Synthetic stones (cubic zirconia) and common gemstones hold no metallurgical value and their weight must be estimated and deducted from the gross weight. Certified diamonds above 0.30 ct should be appraised separately.

Is the melting margin negotiable?

Yes, especially above 100 grams. Professional dealers adjust their spreads downwards for larger lots.

Are scrap gold sales reported to Swiss tax authorities?

Under the Swiss Anti-Money Laundering Act (AMLA), cash transactions exceeding CHF 15,000 require formal ID verification. However, capital gains on private precious metal holdings are tax-free in Switzerland.