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April 15, 2012

Putting A Value On Different Types Of Gold

There is a common misconception that when you sell an ounce of gold in any form, it is worth the spot price of gold. The spot price of an ounce of gold is the price that a buyer will pay or a seller will accept for the immediate delivery of the precious metal.

People are sometimes shocked to find that a store offering to pay for any old gold jewelry only offers them a fraction of the spot price for their gold chains and gold rings. The confusion is usually attributable to the fact that people do not understand that gold jewelry is not made of pure gold.

What is most gold jewelry made of?

Almost all gold jewelry contains a less-expensive alloy like silver, copper or nickel to increase the strength and durability of the jewelry. The vast majority of gold jewelry is made of 14 or 18 karat gold. Gold content is measured in terms of karats in the jewelry trade. Pure gold is considered 24 karat gold. An 18 karat piece of jewelry is 75% pure (18/24) and a 14 karat piece of gold jewelry is 58.3% (14/24) pure.

Scrap gold dealers will only pay you for the actual gold content. They also reduce the amount they pay for the cost of melting down the gold, delivery charges and a commission for their services.

Gold bullion, whether it is in the form of gold bars or coins, is considered pure gold. It is at least .999 fine and has a value very close to the spot price of the metal. Purity aside, you will pay slightly more for gold bullion coins because they are easier and more convenient to handle. Large 100 or even 1,000 ounce bars offer the lowest price per ounce for gold bullion. Commissions and dealer markup accounts for the higher price you will pay when you buy instead of sell bullion gold.

What makes gold jewelry expspensive?

When you are talking about expensive gold jewelry, the value is determined in part by the gold content, but also by the design and embellishment of the particular piece of jewelry. A similar premium is also placed on collectible gold coins. The condition and rarity of a particular coin can make its numismatic value worth much more than its gold content.

An educated consumer should understand the importance of knowing the gold content and any other extrinsic factors that affect the price of their gold items. By being aware of the type of gold they may be thinking about buying or selling, they are more likely to get a fair price when they make a transaction.

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