Sailors and pirates in this era did not wear gold earrings and certainly not for this purpose. This is a myth that as far as I can tell probably derives from Howard Pyle’s romanticized paintings of buccaneers made in the late 19th/early 20th century.

There is some limited evidence that wealthy European men sometimes wore gold or pearl earrings in the 16th and 17th centuries as a gaudy display of their wealth as in this famous portrait of Shakespeare (1600-1610) or this portrait of Walter Raleigh (1588) or this portrait of Charles I of England (1636). But these men were far removed from common sailors and pirates and the fashion seems to have declined by the mid-late 17th century so that toward the later half of the century earrings on men are a stereotype of “fops” and dandies and vain, pretentious men overly obsessed with their appearance (The Buccaneer’s Realm by Benerson Little). So on that token, perhaps a few buccaneers or pirates in the 17th century did pimp themselves out with gold or pearl earrings since buccaneers were often known to behave extravagantly when they had money, but it was never by any means common for sailors.

As to whether such a piece of jewelry would have been used to pay funeral expenses if a pirate was wearing one: almost certainly not, least of all by other pirates. In 1669, the powder magazine of Henry Morgan’s flagship the Oxford blew up by accident while at anchor, destroying the ship and causing scores of buccaneers to perish. The next morning the other buccaneers in the fleet fished out all the bodies they could find and ruthlessly cut gold rings and any other valuables off their former comrades as booty before throwing them back into the sea:

A week after the ship had blown up, they had fished out all the corpses floating in the water. This was not in order to give them a decent burial, but for the sake of their clothes and gold rings on their fingers. As soon as they had fished out a body they pulled off the garments and hacked off the fingers which were berringed, then threw back the corpses to be a floating prey for the sharks. Their bones are still to be found on the beaches, washed up by the sea. (The Buccaneers of America by Alexandre Exquemelin, published 1678)

So much for the “brotherhood” of the coast.