Gold Purity vs. Weight: Making Sense out of Pricing Gold Per Gram vs. Per Ounce
Gold has bewitched the humankind since centuries. Donning it is an indulgence to some and investment to others. However, when a buyer looks at a shiny chain or coin, the following questions come into their mind: What is the impact of its purity on price? Am I supposed to be concerned about weight in grams or in ounce? How much does price per gram of 18 karat gold? Weirdly enough, lots of jewelers and even some gold investors do not cope with these concepts. Whether or not to invest in gold? Let us separate the smoke, put to rest some common myths and demystify the art of pricing gold.
Gold Purity Gold purity: 9ct/11ct
In the next section we are going to look at different ways of understanding the purity of gold.
Gold is not gold is not gold, to blur a phrase. This is because you will find that the majority of the gold that you come across is not pure. Unalloyed gold is just too soft to be used in jewelry every day, and it is sometimes not convenient to use in coins as well. Enter karat (US and Canada spelling) or carat; a system that explains numerically how much gold has been brought into a product.
24 karat gold is (nearly) pure gold that is to say 99.9%. Wonderful stuff but break it and you will regret it.
Gold of 18 karats? That is 75 percent gold and other metals 25 percent is added to give it strength.
14 karat? LONGER LASTING afforded by 58.3 percent of gold alone.
In jewels, carats rule. The stronger the karat the more it has a reality of being gold. This affects all the things, even your on your wrist as well as its price.
Karat VS Fineness
Certain nations either (Europe, e.g.) stamp gold with its fineness. It is a part. With 24k, think .999. In 18k it is literally the .750, easy as pie. However, when you find yourself in a pawn shop, or surfing the websites of the bullion dealers, the karat value and fineness are basically all you have to go by as to purity.
The Importance of Weight (and the Measurement of same)
Have you ever thought how it is possible that people can fight over grams and ounces in a gold store? It is more than hair splitting. Gold, as well as most precious metals, is weighed worldwide in troy ounces, a norm in North America, the UK, and most global markets. But jewelry? That is another thing altogether. The larger part of jewelry is sold by a gram.
So What is a Troy Ounce?
The troy ounce is 31.1035 grams. This is not your regular ounce used in the kitchen (28.3495 grams). When you have plans of getting some investment coins, bars, or even some dust panning (gold rush, anybody?) you will encounter the troy ounces. Inquire on the price of a piece of jewelry in a local jewelry shop, and you are likely to get prices expressed in grams.
Jewelers also write some items in pennyweight (dwt) 20 pennyweight = 1 troy ounce. So at this point you might be a bit lost, and there is nothing unusual in that. Customers usually compare only grams or troy ounces, but not both of them.
The Algebra of Glitter 101
This is not rocket science, let us just tear the Band-Aid. The price of gold is reduced to mere arithmetic, the weight, multiplied by purity, then multiplied by the spot price. However in the case of 18 karat gold we could put it simpler as people tend to inquire about the price of 18 karat gold in grams.
Suppose that the current spot price is 60 dollars a gram (of pure, 24k gold):
To the degree of 18k: 18/24 = 0.75 (or 75%).
Multiply Spot’s price with purity: 60 x 0.75 = 45 dollars per gram.
This is the amount of the raw content of gold contained in an 18k product.
But wait! Jewelers add charges of a craft, brand and their profit. Your ring or necklace? Depending on its source it may go for $65/80 per gram or more.
Which one is cheaper; ounces or grams?
The twist is here the significant gold dealers like ounces on the bullion bars and coins. However, purchasing in ounces will you grant a cheaper price than grams? Sometimes, yes. Bigger bars or coins imply that there is less overhead cost per unit hence the slight discount you may get as opposed to a huge number of small pieces measured in gram. However jewelry it is always the mini “per gram” price, no matter what the overall weight is.
Purity, Weight, and Price: Shopping Playbook
You do not like math? It is a buyer cheat sheet:
Never miss karat/ fineness stamp of gold.
Compute the amount of gold that actually exists in the item (gross weight x % purity).
Multiply the weight by the current spot price to come up with an estimate of melt value.
Compare that number to the retail price and you have the markup of the jeweler.
Note: the higher the karat, the more expensive the piece of gold per gram, however markup on jewelry can have its way. And, the heavier it is the more expensive – but lighter things may have higher markup of labour and design.
The Usual Fords: Do Not Be Boondoggled
In some cases, jewels are weighed at pawn shops and fly-by-night gold buyers on standard kitchen scale. That is not good when you are using grams and the other party is using ounces or vice versa. Conversion rates should always be checked: 1 troy ounce = 31.1 grams.
Just one more traditional step: There are sellers who do not specify purity. When you are told something is solid gold and this person fails to (or even refuses to) tell you the karat content, just leave. That is like purchasing a whole tank of gas and not being surprised to know the tank size. Demand specifics.
Catchers of Gold Prices That Were Unanticipated
Gold does not trade in isolation. These are some surprises you may not notice:
Market need: With the world crisis prices shoot up and one can be either economical, political or even viral.
Exchange rate fluctuations: As an increase in the dollar increase, gold prices tend to decrease and vice versa.
Dealer premiums: Bullion dealers add a mark-up on top of the spot, and sometimes this mark-up can be large. Jewelry stores are even more expensive in making and designing.
Is it better to pick up gold by grams or ounces?
In case you are a retailer of jewelry mainly, the grams will be your bread and butter. Ounces are more convenient and standard in case of investments. The magic bullet? Be flexible. Be aware of the two systems. The metric switcheroo should not overtake you.
