Old Gold Trade-In: How a Jewelry Shop Should Record It

An old gold trade-in is when a customer brings in old jewellery, the shop tests and weighs it, values it at the day's buying rate, and deducts that value from the price of a new piece. For the shop owner, a trade-in is two transactions on one invoice: scrap coming in and a new piece going out. Record only the net amount the customer paid and the scrap vanishes from your books, which is why so many stock counts come up short.

TL;DR. Inspect before you weigh: hallmark, stones, solder, and parts that are not gold. Weigh the gold alone, set the karat, and convert to pure grams. Price the scrap at the buying rate for its karat and the new piece at the selling rate plus its making charge. Print one invoice with both lines; only the difference changes hands. Bag and label the scrap with the invoice number and carry it in the gold ledger until it reaches a workshop or a supplier.

Buying scrap, trading it in, or taking it as payment

Scrap gold enters a shop in three ways. All three add gold to stock, but each affects the safe differently:

Route	Safe	Stock	Must be recorded
Cash purchase of scrap	Cash out	Scrap in	Weight, karat, buying rate
Trade-in against a new piece	Only the difference moves	Scrap in, piece out	Both lines on the same invoice
Scrap against a customer debt	No cash movement	Scrap in	Balance before and after, conversion basis

The trade-in is the route most often recorded wrongly. The salesperson works out the difference in their head, writes the final amount, and the scrap leaves no trace. A piece that left the showcase without its barcode being matched to anything incoming is the first thing a scan-based count will flag, as we explain in jewellery barcode tags.

Inspect before you weigh

The number on the scale is not the gold weight. Check these before you price anything:

• Hallmark. The karat stamp is your first evidence of purity. A hallmark exists so that an independent body vouches for the metal's fineness. A worn or unreadable mark means the karat must be confirmed before pricing.
• Stones. Remove them where possible, or estimate their weight and deduct it. Stones are not bought at the gold rate.
• Non-gold parts. Steel springs in bangles, clasps of another metal, fillers. Deduct them.
• Old repairs. A piece repaired many times may contain solder of a different karat.
• Plating. If a piece might be plated rather than solid, do not price it until it is tested.

When in doubt about karat, do not guess. Record the scrap as "under test" with no price and agree a time with the customer.

Receiving scrap at the counter, step by step

1. Record the customer. Name and phone number on the invoice, and any identification your shop policy requires, written down and applied to everyone alike.
2. Inspect the piece using the checklist above, noting findings in front of the customer.
3. Weigh the gold without stones on a calibrated scale the customer can see.
4. Set the karat from the hallmark or a test.
5. Convert to pure grams: weight × fineness ÷ 1,000. Fineness is purity in parts per thousand; the World Gold Council notes, for example, that most 14-carat jewellery is stamped 585 rather than the strict 583. The full method is in our gold karat conversion guide.
6. Price at today's buying rate for that karat, never the selling rate.
7. Print the invoice and have the customer sign next to the weight and karat.
8. Bag the scrap with the invoice number, weight and karat written on it, and put it in the safe.

An illustrative trade-in

These prices are round illustrative numbers, not market rates. Your real daily rate goes in their place.

A customer brings a 21-carat chain weighing 15 g with no stones, and wants a 21-carat bangle weighing 14 g.

• Scrap value: 15 g × illustrative buying rate EGP 3,400 = EGP 51,000.
• Bangle: 14 g × illustrative selling rate EGP 3,600 = EGP 50,400, plus making charge 14 × EGP 150 = EGP 2,100, total EGP 52,500.
• The customer pays the difference: EGP 1,500.

The invoice must show 15 g of 21-carat scrap in, 14 g of 21-carat jewellery out, and EGP 1,500 into the safe. Write only "EGP 1,500" and your gold ledger says 14 g left with nothing arriving, while 15 g of scrap sits unrecorded in a bag.

Notice where the shop's margin sits: in the gap between buying and selling rates and in the making charge. Pricing scrap at the selling rate gives that gap away on every exchange.

Where scrap goes after it enters the shop

Scrap is not showcase stock. It is gold on its way somewhere, and it must stay visible until it arrives:

• In the safe, in a labelled bag, counted by weight at the daily close.
• In the gold ledger, under scrap, separate from finished jewellery.
• To the workshop on a job order stating weight and karat, with what comes back compared to what went out and the loss calculated, as covered in workshop and making charge accounts.
• Or to a supplier, against their account in pure grams.

Because jewellery is pure gold alloyed with other metals, scrap goes back into the same cycle when it is melted and refined. That cycle only shows a profit or loss if every step is measured in pure grams.

Common trade-in mistakes

1. Recording only the net amount. The top cause of unexplained stock shortages.
2. Weighing stones with the gold. You pay the gold rate for a stone.
3. Pricing scrap at the selling rate. You lose the spread on every exchange.
4. Unlabelled scrap. A week later nobody knows whose bag it is.
5. Judging karat by eye. Hallmark or test, nothing else.
6. A different policy per customer. If you ask for identification, ask everyone.

To see how the trade-in line sits on a full slip next to the new piece and its making charge, read what a gold sale slip must show.

How Tibr handles this

According to the Tibr product page, barcode sales accept a scrap trade-in from the customer inside the same invoice, alongside discounts and split payments across cash, card and InstaPay. Stock shows total weight per karat for both finished pieces and scrap, with filters. Workshops receive and return gold with the loss calculated, without touching shop stock, and selling below cost requires an owner PIN, so a badly priced exchange does not slip through quietly.

To see how trade-ins fit the rest of the shop, read our guide to gold shop management software.

FAQ

Do customers get the making charge back when they trade in old gold?

Usually not. The making charge paid for the craftsmanship when the piece was bought, and a shop buying scrap values it by gold weight and karat at the buying rate. That is why customers receive less than they originally paid.

Should scrap be weighed with or without stones?

Without. Remove stones where possible, or estimate their weight and deduct it. Write both the gross weight and the net gold weight on the invoice.

What if the hallmark on scrap is unreadable?

Do not price it on a guess. Record it as under test with no value, confirm the karat by testing, then complete the purchase or trade-in at the real karat.

How should a trade-in appear on the invoice?

As two separate lines on one invoice: scrap in, with weight, karat and buying rate; the new piece out, with weight, selling rate and making charge. Only the difference is paid, and the customer signs next to the weight.

What happens to scrap after the shop buys it?

It stays in a labelled bag in the safe and is recorded in the gold ledger as scrap. It then goes to a workshop on a job order or to a supplier against their account in pure grams.

Written by Mindshift Team, Tibr product team.

Want scrap in and jewellery out on one invoice and one stock record? See Tibr on its official page.