• Old scrap accounted for a substantial 28% of total gold supply in the period 2010-21.
  • While large in scale, scrap is very much the dependent variable and exerts little impact on the international gold price, although it can notably affect local prices.
  • Old jewellery accounts for well over 90% of total scrap, with emerging markets in turn accounting for around 70% of that.


Gold is unusual as a commodity in that it has very little true consumption; the vast bulk of what has been mined sits above ground in various forms with the potential to return to the market.

Disinvestment is one such avenue, but this article covers the often-larger area of recycling (or scrap). This has been done to assess the importance of recycling to the broader bullion market (which necessitates a tight definition of scrap - see chapter 2) and to shine a light on to what can be one of the more opaque areas of the supply/demand balance.

Recycling should have the potential to exert a notable impact on the gold market in that, since 2010, it has accounted for 28% of total gold supply on average. However, analysis points to scrap being very strongly influenced by the gold price and is very much the dependent variable. For scrap to turn the table and actively impact the international gold price, economic distress would have to be severe and global but not trigger a countervailing boom in safe-haven-motivated investment demand. That said, surging scrap can often push local markets to a discount to the world price, although that typically also requires demand within a country at the same time to be very weak.

A key reason why price is important is that the vast majority (well over 90%) of recycling is from jewellery and of this, around 70% comes from the price sensitive jewellery markets of emerging economies. Within this latter group, India and China generate the most recycling unsurprisingly, but there are another five of historical significance (over 60t in one year) – namely Turkey, Iran, Iraq, Egypt and Thailand. That said, the industrialised world used to be more important, contributing 43% of the total during the period 2010-13, when the cash-for-gold business was at its peak.

Gold Recycling and the Gold Price

Source: Metals Focus

A key determinant of each country’s importance is the pool of jewellery, a volume equal to a country’s cumulative jewellery consumption less its scrap (globally, this stock is estimated at around 90,000t). Western countries’ share of this pool is higher than their share of consumption today due to the bloc’s demand being higher relatively in previous decades. However, emerging markets ‘fight back’ in that their dominant low margin, high carat jewellery has a far greater propensity to be scrapped than high margin, gemset and branded items. The pool derived from other areas of fabrication (such as dental) is more theoretical in nature as little is properly available to the bullion market.

There are two main flows for the recycling of gold. The first concerns high grade – material that is at least 40% gold (often much higher) and overwhelmingly sourced from jewellery. As a relatively simple material to refine, and as finance and security matter, much of this is refined in the country of generation and, if not, the metal is often air freighted. The second concerns low grade – material that might only be 1-2% gold (if not much lower, and is sourced from all areas of fabrication, which means other precious metals may well be present). As security and financing are less of a concern here and the material is much more complex to refine, the recovery of metal from this source occurs in smaller number of countries, many of whom receive their feed as ship-freighted imports.

Recycling: Quarterly Volumes & the Gold Price

Source: Metals Focus