Quick answer
It is the theoretical maximum a refiner would pay if the item were reduced to pure metal. Dealer offers usually sit below melt to cover their margin, refining loss, and testing costs. Collector coins with rarity or condition premiums can trade for far more than melt.
When you sell a gold coin, a silver bar, or an old ring to a dealer, the number they quote is anchored to one figure most sellers never calculate on their own. That figure is melt value, and knowing how to compute it protects you from lowball offers and helps you spot when a coin is worth much more than the metal inside it.
What melt value actually measures
Melt value is the market price of the pure metal contained in an item, as if the item were refined and sold as raw bullion. It ignores design, brand, packaging, and sentimental value. It counts only the grams or troy ounces of gold, silver, platinum, or palladium the item is made of, valued at the live spot price on a professional exchange.
Spot prices are set continuously on markets like COMEX (part of CME Group in New York) and the London Bullion Market Association, and quoted in US dollars per troy ounce. A troy ounce is 31.1035 grams, heavier than the everyday avoirdupois ounce used for groceries. Every dealer, refiner, and calculator uses troy ounces for precious metals math, so mixing the two is a common way to end up with a wrong number.
The formula: weight, purity, and spot
The math is short. Multiply the total weight of the item in troy ounces by its metal purity (as a decimal), then multiply by the current spot price per troy ounce.
Melt value = weight (troy oz) x purity (decimal) x spot price ($ per troy oz)
Purity is expressed as a decimal fraction. Fine gold at 24 karat is 0.9999 or higher. 22 karat is 0.9167 (about 91.67 percent gold). 18 karat is 0.750. 14 karat is 0.583. 10 karat is 0.417. For silver, sterling is 0.925 and coin silver is 0.900. For platinum bullion coins, purity is typically 0.9995. If the piece is stamped with a fineness mark (like 999, 916, 750), that number divided by 1,000 is the decimal purity.
For coins, you also need to know the coin’s specification (not just what it looks like). A 1 oz American Gold Eagle contains one full troy ounce of gold even though the coin itself weighs slightly more because it is alloyed with copper and silver. A 1 oz American Gold Buffalo, by contrast, weighs exactly one troy ounce and is 99.99 percent pure gold. Our gold value calculator and silver value calculator run the math instantly for common coins, bars, and karat weights.
Example 1: melt value of a 1 oz American Gold Eagle
The American Gold Eagle is the most common bullion coin in the United States. The 1 oz version contains one troy ounce of gold, mixed with a small amount of copper and silver for durability. Total coin weight is about 1.0909 troy oz, but the gold content is a full 1.0 troy oz.
At a gold spot price of $2,400 per troy ounce, the melt value is:
1.0 x 1.0 x $2,400 = $2,400
At $2,800 spot, the melt value moves to $2,800. Melt value is not a fixed number stamped on the coin. It changes every second the metals markets are open. Two identical Eagles minted the same year can have different melt values ten minutes apart if spot moves.
Example 2: melt value of a 14K gold ring
Jewelry math is where most sellers get shortchanged. Suppose you inherit a 14 karat gold ring that weighs 8.0 grams on a jewelry scale. First convert grams to troy ounces (8.0 / 31.1035 = 0.2572 troy oz). Then apply the 14K purity factor (0.583). Then multiply by spot.
0.2572 x 0.583 x $2,400 = $359.87
That is the melt value of the gold inside the ring. Any gemstones, the design, the brand, and the labor to make it are worth zero to a refiner. A pawn shop or “cash for gold” buyer will typically offer a percentage of that melt value, not the full amount. Our guide on face value versus melt value covers why the number stamped on a coin is almost never the same as its metal worth.
Why dealer offers sit below melt value
A refiner or scrap gold buyer has real costs to cover before they see a profit. Understanding those costs explains why an honest offer is a percentage of melt, not 100 percent of it.
Refining loss and assay cost. Melting mixed karat jewelry recovers slightly less pure gold than the theoretical purity suggests, because tiny amounts are lost to slag, cupellation, and processing. Assay testing (to certify the exact purity of the recovered metal) also costs money.
Bid-ask spread. Refiners sell the recovered pure metal to bullion wholesalers at spot minus a small discount, not at spot itself. The dealer buying from you has to build that spread into their offer.
Time and capital. Between the moment they buy from you and the moment the recovered metal clears the refiner, weeks may pass. Spot can move against them. Offers include a margin for that timing risk.
Overhead and margin. The dealer has rent, staff, insurance, and their own profit to earn. That comes out of the gap between what they pay you and what they eventually collect.
For clean bullion (an unscratched 1 oz Silver Eagle, a sealed gold bar from a recognized refiner), the offer can sit very close to melt because there is almost no refining loss and testing is minimal. For scrap jewelry of unknown purity, offers commonly range from 60 to 85 percent of melt at fair dealers, and much lower at bad actors. Getting more than one quote is the single best defense.
When collector value exceeds melt
Melt value is the floor for any bullion item. It is not always the ceiling. Rare coins, high-grade condition, historical significance, or strong collector demand can push market value far above the metal alone.
A common-date 1 oz Silver Eagle in circulated condition trades close to melt with a small dealer premium. The same coin in a graded MS70 slab from a top year can sell for many multiples of melt. A pre-1933 US $20 Saint-Gaudens double eagle contains about 0.9675 troy oz of gold, so its melt value at $2,400 spot is around $2,322, but the coin routinely sells above that on numismatic demand, and rare dates or grades sell for tens of thousands.
The gap between market value and melt value is called the numismatic premium. It comes from rarity, condition, and demand rather than metal content. Melting a rare coin destroys that premium permanently. Anyone considering scrapping old US coinage should have it appraised first. Our guide on coin value beyond melt covers the specific categories where collector demand routinely outruns the metal price.
Selling? Get real melt-based offers before you accept the first quote
If you are holding gold, silver, or coins you might sell, post one free request on Goldiew’s sell page. Up to 15 verified buyers respond with sealed offers based on live melt value plus any numismatic premium your items carry. It is free, and there is no obligation to accept. You can also browse the Goldiew marketplace to see how comparable coins and bars are priced by real buyers right now.
Melt value: common questions
Is melt value the same as spot price?
No. Spot price is the current market price of a pure troy ounce of a specific metal. Melt value is the spot price applied to the actual weight and purity of your specific item. A 14K gold ring weighing 8 grams and a 1 oz Gold Eagle have very different melt values even at the same spot price, because they contain different quantities of pure gold.
What weight unit do I use for melt value?
Troy ounces. One troy ounce equals 31.1035 grams. The everyday avoirdupois ounce used at the supermarket is only 28.3495 grams, so mixing the two overstates or understates value by about 10 percent. Every reputable dealer and calculator quotes precious metals in troy ounces or grams, never in standard ounces.
Where does the spot price come from?
Spot prices are set continuously by professional futures and over-the-counter markets, primarily COMEX (CME Group) in the United States and the London Bullion Market Association in the United Kingdom. Financial data sites publish the live number for free. Dealers quote from these same feeds, sometimes with a small internal spread built in.
Will a dealer ever pay 100 percent of melt value?
Rarely on scrap or jewelry, occasionally on clean sealed bullion when they are short on inventory. Most fair offers on scrap gold sit between 60 and 85 percent of melt, and on clean bullion between 90 and 100 percent, depending on the metal and the dealer’s business model. The Federal Trade Commission recommends comparing multiple written offers before selling, in its consumer guidance on selling gold.
Does the IRS use melt value or market value for taxes?
The IRS uses fair market value at the moment of the taxable event, not melt value. For most bullion, fair market value is close to melt. For collectible coins with a numismatic premium, fair market value is higher. Gains on precious metals held as investment are generally taxed as collectibles at up to 28 percent for long-term holdings, per IRS Publication 550. Consult a tax advisor for your specific situation.
How do karat stamps translate to purity for the melt formula?
Divide the karat number by 24. So 24K is 24/24 = 1.000 (99.9 percent or higher pure), 22K = 22/24 = 0.9167, 18K = 18/24 = 0.750, 14K = 14/24 = 0.583, and 10K = 10/24 = 0.417. A fineness stamp like 750, 916, or 999 is already the purity in thousandths, so divide by 1,000. The Federal Trade Commission jewelry guides (16 CFR Part 23) require accurate stamping in US commerce.
Can I calculate melt value on silver dimes and quarters?
Yes. Pre-1965 US dimes, quarters, and half dollars are 90 percent silver. A pre-1965 dime contains about 0.0723 troy oz of silver, a quarter about 0.1808 troy oz, and a half dollar about 0.3617 troy oz at uncirculated weight. Multiply by silver spot to get the melt of each coin. Dealers often quote this as a “face value multiplier” to save the math.
Sources
- CME Group, COMEX gold and silver futures contract specifications and spot price mechanics. cmegroup.com/markets/metals.
- London Bullion Market Association, LBMA gold and silver price setting methodology. lbma.org.uk/prices-and-data.
- United States Mint, American Eagle Coin Program specifications for gold, silver, and platinum bullion coins. usmint.gov/learn/coin-and-medal-programs/american-eagle.
- Federal Trade Commission, Guides for the Jewelry, Precious Metals, and Pewter Industries, 16 CFR Part 23. ecfr.gov/current/title-16/chapter-I/subchapter-B/part-23.
- Federal Trade Commission, consumer guidance on selling gold. consumer.ftc.gov/articles/selling-gold-jewelry.
- Internal Revenue Service, Publication 550, Investment Income and Expenses, sections on collectibles capital gains tax treatment. irs.gov/publications/p550.
- United States Mint, historical coinage specifications for pre-1965 US 90 percent silver coinage and pre-1933 gold coinage.
Nothing in this guide is tax, legal, or investment advice. Consult your tax advisor for your specific situation.