What is my jewellery worth? Melt, resale and retail

Three numbers, and why they disagree

Asking what a piece is worth is really asking three questions, and the answers can differ by a factor of five without anything being wrong.

• Melt is the value of the metal if the piece stopped being a piece: weight, fineness and the current spot price. It is a floor, not a price.
• Resale is what a buyer would pay for it today as it stands, in a real market with real competition from new goods.
• Retail replacement is what a shop would charge you to buy the nearest equivalent, new, over the counter, with tax and margin included.

A ring bought for 5,000 might carry 400 of melt, sell privately for 1,500 and cost 5,500 to replace. All four figures can be accurate at once. The mistake is asking someone for the value and then treating whichever number arrives as the value.

Melt is the only figure with arithmetic behind it

Melt value is weight in grams, multiplied by the purity fraction, multiplied by the spot price per gram. Gold is quoted per troy ounce and a troy ounce is 31.1035 grams, so divide the quoted price by 31.1035 to get the per-gram figure.

Take a plain 18 carat band weighing 6 grams. 750 fineness means 0.75 pure, so the piece contains 4.5 grams of fine gold. If gold is quoted at 2,400 US dollars an ounce, that is 77.16 dollars a gram, and the melt value is about 347 dollars. The same 6 grams in 9 carat contains 2.25 grams of gold and melts for about 174.

Two corrections to that number. Stones are not counted: a buyer working by weight deducts an allowance for anything set, or asks you to have the stones removed first. And nobody pays full melt. A dealer buying scrap keeps a margin for refining, assay and price risk, so expect an offer in the region of 70 to 90 per cent of melt from a straightforward gold buyer, and appreciably less from a pawnbroker. Melt is arithmetic; the offer is a negotiation.

Resale: what a buyer actually pays

For a modern, mass-market diamond ring the resale price is typically 20 to 40 per cent of what it cost new. That is not a scandal, it is the structure of the trade. The retail price you paid included the shop, the staff, the stock sitting in the window, the marketing, the warranty and the tax. None of it comes back. Your second-hand ring also competes directly against an identical new one a hundred metres away, and the pool of people shopping for a used engagement ring is small.

Some pieces sit well above that band. Signed work by Cartier, Tiffany & Co. or Van Cleef & Arpels retains a far larger share of retail, because the name is itself the market. Period pieces in original condition, natural coloured stones, large fine diamonds with laboratory reports, and heavy plain gold – where melt sets a hard floor – all hold value better.

Some sit below it. Lab-grown centre stones have fallen steeply in the primary market and have very little secondary market at present; buyers price the mounting and treat the stone as decoration. Small melee under roughly 0.30 carats adds almost nothing to a resale figure. Fashion pieces in plated base metal have a decorative value only.

Retail replacement, and what an insurer wants

Retail replacement is the cost of walking into a shop and buying the nearest equivalent new. It is the highest of the three figures, frequently two to four times resale, and it is the number insurance policies are written around, because most policies replace the item rather than hand you cash.

What an insurer will accept is a written valuation from a registered valuer who has had the piece in front of them with a loupe, a gauge and a scale, and who puts their name to the document. An estimate produced from a photograph – by Carat or by anyone else – is a starting point for that conversation and a way of knowing roughly where you stand before you pay for the valuer’s time. It is not the document, and no honest tool will claim otherwise.

What lifts a piece above its metal

Things that genuinely add money:

• A centre stone with a laboratory grading report, ideally the original one, and ideally over a carat.
• A recognised maker’s signature and a matching hallmark, not just a style resembling a famous house.
• Age with intact original condition – untouched settings, original stones, no modern replacements.
• Original box, papers and receipt for a branded piece, which routinely change the price by a visible margin.
• Unusual natural colour in a stone, and size: value per carat rises steeply, so one 2-carat stone beats four half-carat stones comfortably.

Things that add nothing, however much they feel as though they should: family history without documents, the original purchase price, an old valuation document written for insurance, and carat weight alone in a stone with poor colour, clarity or cut. For how a stone’s quality is judged, see how to tell if a diamond is real.

Where to sell, and what the venue takes

Two habits are worth more than any single decision. Get at least three offers, because spreads between buyers on the same piece are wide. And never accept a figure quoted before the piece has been weighed in front of you.

What settles a number

Three measurements do nearly all the work. Weight, on a jeweller’s scale rather than a kitchen one. Fineness, by XRF or acid test if there is no hallmark you trust. And, for any significant stone, a grading report from a laboratory such as GIA or IGI. With those three, melt becomes arithmetic and resale becomes a search of completed sales for genuinely comparable pieces – sold prices, never asking prices.

Without them, every figure is an estimate, including the ones produced from a photograph. That is why Carat returns ranges for melt, resale and retail with the sales they rest on, rather than a single confident number, and gives no figure at all when the evidence will not carry one. Use an estimate to decide whether a piece deserves a professional’s time. Use the professional to decide what to do with it.