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Jewelry Dominating Old Scrap

With jewelry dominating old scrap, it should come as little surprise that volumes should be greatest in those countries making or buying jewelry. Volumes also tend to be greater in the developing world as pieces there typically have lower markups over the price of the contained gold and as a result of the unsentimental investment motive behind initial purchase. Such pieces are also more likely to be plain, in other words not carry precious or semiprecious stones and be of higher caratage. In industrialized markets, jewelry is more likely to carry stones and be of medium/lower caratage, be branded, and be bought as a gift for adornment—which will lower the propensity for remelt—and the consequent high markups over the contained gold mean a profit can rarely be made. Nonetheless, scrap can still prove significant through the liquidation of poorly selling merchandise or through the previously noted selling of stylistically dated pieces.

Generally, scrap is reused in the markets in which it is generated. However, during times of peak supply (such as after Egypt’s currency crisis), amounts surplus to local industry requirements would invariably be exported, often to the major Swiss refineries, where the metal reenters the supply
chain.