Gold is virtually indestructible so that, unless it has been lost, all the gold ever mined still exists. It is also easily recoverable from most of its uses and capable of being melted down, re-refined and reused. It follows that the supply of recycled gold, or scrap, is an important part of the dynamics of the gold market.
In the statistics, scrap is defined as being gold that has been sourced from old fabricated products that have been recovered and refined back into bars. It does not include jewellery that has simply been traded in and resold without being re-refined, or resold investment bars and coins.
Most recycled gold generated originates from jewellery. Smaller amounts come from recuperated electronics components and, at times, from investment bars and coins.
The supply of scrap depends largely on economic circumstances and on the behaviour of the gold price. It is common practice in the Middle East and Asia for customers to trade in one piece of jewellery in exchange for another, and the piece traded in may be melted down rather than simply being resold. But gold can also be sold for cash either if the owner has need of money or if the owner wants to cash in a profit following a rise in the gold price. It follows that scrap supply typically rises in times of economic distress or following a price rise.
