Britain gold buyers quickly learn that gold is not gold. There are purity, bars, coins and jewellery which confuse (and cost). And should you be attempting to pin down the price of 18k gold per ounce and determine just how it compares with its shinier cousin, 24k, or bullion pure you are in the process of experiencing an education in numbers, chemistry and psychology. It is a trip. Buckle up.
What Does it mean to be 18k or 24k Gold?
So here is the straight: A 24 karat gold is as pure as grandma is in her intents, this is technically 99.99% pure gold, with only a hint of other metals. This is what central banks are guarding and pirates of yesteryear were fantasizing of. It is smooth, shiny and highly pliable. Most investment coins and gold bars will fit the 24k, or nearish category.
18k gold is composed of 75 percent gold that is 18 out of 24 parts. It is hardworking, beautiful, and soft enough to carve without being dainty and jewellery makers adore it. The rest of the quarter is however not what the market perceives as gold. This is very important in pricing.
Price Per Ounce: Conversion Chaos
Prices of all gold internationally are quoted in troy ounce, which is 31.1035 grams, not a cooking ounce the baking you use. This assists the dealers, pawn shops, and the buyers all over the world to discuss the same thing. Spot price you listen to on TV or read on such sites as BullionByPost is pure gold.
Let us say we go to check a hypothetical spot market in the present day: gold is 6 (two zeros) times 1560 = 15,600 GB pounds as of 24k. It is 100 percent gold, no mere fillers.
18k gold? That is another kettle of fish. Expound 1,560 by 0.75 (since it amounts to just 75 percent gold). And the pure metal price of the same mass in 18k is currently 1,170 pounds sterling per troy ounce. That is your base rate without anyone charging you fees, VAT or surcharge. Convenient, yet by far only half the story.
Jewellery versus Bullion – Apples and Jet Engines
The Reason Why You Will Nearly Never Pay Spot on 18k Jewellery
Suppose you go into a jewellery shop in the High Street. There goes that blistering 18k necklace that is of one ounce value. You would pay in fantasy-land 1,170 l. (the value of the gold content). As a matter of fact, the sticker indicates 2,200 pounds. Why? First VAT- 20% in the UK directly out of your pocket on most gold jewellery (the bullion stuff often is exempted).
And then add premium on design, brand image, craftsmanship and, we must admit, location, insurance, advertising, cleaning costs, and the lunch bill of a person who has to buy his lunch.
Therefore a ring made with the 18k gold of 18 oven at metal price may be at 1170 but instead of it the consumer will cough up a considerable demand of nearly 2000 pounds plus after all the frills and flourishes. And you can now pay much more when the product is marked with a prestige brand. There are cases when 3,000-pound per ounce is not so excessive when it comes to complicated / exclusive pieces.
Bullion: The point of Convergence of Purity and Price
Bullion is otherwise. It is buying material bars, coins, or wafers to invest in, and not clothes to be stylish. They are all practically 24k (or near .9999) and, here comes the clincher, no VAT on buying bars or legal tender coins like Britannias (or Sovereigns). The pricing is set in the spot market with a small dealer premium.
Take a one-ounce bar: at spot of 1560 pounds, add a 3-5 percent premium. It cost only 1605 -1638. Such a nearer to real gold price as compared to 18k jewellery.
The construction of the Price in Differing Situations
Here An Ounce, an Ounce There
Let us take it piecewise. Suppose that you would like one troy ounce, which is the size of a thick pound (pound) sterling coin.
Retailer: 18k Chain: selling at 2,200, and weighing an ounce (31.1g). The value of pure gold is 1170 (34 per cent of spot) plus 75 of the spot (75 per cent). There is massive mark up of design, brand and VAT (£1,000 minimum mark up).
24k investment bar: Market price+3 percent premium, therefore, about 1600 quid. Almost its entire price is pegged to gold. Less costly to re-sell, as well.
24k coin (such as a Britannia): May have a small premium (through its collectability and minting) generally about 4-6 % on the spot.
VAT- Your Not So Welcome Competitor in Shopping
Majority pieces of gold jewellery are charged with 20% VAT. Investment gold, that is, bars and a few coins, does not. That 18 k melt up necklace of 1170? Add on another 234 pounds. However, a 24k bar cost 1600 pounds but you will have 320 pounds left in your wallet since the VAT does not apply. Suddenly, what you get that has the same weight but in different forms of buying would make a difference.
The Grinder resale prices and Melt Value
Decision pointers and Fast Facts
Spot price of gold changes every minute due to the global demand and supply.
The per ounce price of 18 karat gold is 75 per cent of the spot price of 24 karat gold, prior to market markup.
The retail price of Jewellery includes design, vat, and a profit-bullion is lean and normally only a tiny dealer premium.
If you want jewellery, VAT will cost you more; but buy VAT-free bullion, and you have savings before you start.
Bullion is much more readily and much more quickly saleable at prices near to those to be met with in the market.
When jewellery is resold it is worth less; bullion stands still.
Wait until you get your calculator, the current spot price and a clear head, then decide. When pure investment is in order, bullion takes the cake and you sleep well. When your heart is in charge of its wallet then you just better go in with clear eyes, jewellery is the epitome of memories and not money. In any case, being aware of the current price of 18k gold per ounce, as well as the values of it against your other shiny alternatives, screws around and gets you a lift. And that is worth its weight in or rather you know what.
