You don't have a tracking number, you have a delivery confirmation number, you also have insurance, so your best bet would be to contact the USPS again about filing a claim on that.
In the meantime, talk it over with your buyer, come to an agreement on how long you two are willing to wait before you refund the money, and go from there. You're the one who will have to deal with the insurance claim, and receive the compensation, I'd say that once you start that process, it's time to refund his money.