Many people get excited about the amount of gold they have and the sum of money they think they will get for it. They take their gold down to a local pawn shop or cash-for-gold business, only to be offered much less than they thought the gold was worth. Some sellers even think that the buyers were trying to take advantage of them. Much of this confusion is due to a lack of understanding of what a karat is and how this unit of measurement relates to the value of gold.
What is a karat?
A karat is a measurement of the purity of gold. 24-karat gold is considered to be pure gold. Also written as 24k, this represents gold that is 99.99% pure. Any gold that is less in value of karats is impure. For example, 18k gold is 75% gold with 25% of additional metals to add strength.
An easy way to understand karats is to know that the number of karats is the number of parts that are gold. The total of parts is always 24. A 14k piece of jewelry would be 14 parts gold and 10 parts of other metals; an 18k piece of jewelry would contain 18 parts gold and six parts other metals.
How do karats apply to the value of gold?
When gold is quoted at a price in ounces, this is for pure 24k gold. If you possess gold items that are less than 24k gold, then the value of the gold is a fraction of the market price. For example, if you have an ounce of 18k gold, the value of the gold only applies to 75% of the object's weight.
Of course, there is also the issue of a markup when selling your gold. Dealers will not pay the full price for gold because they have to make a profit. People understand that; it is basic business practice. They do, however, get confused about karats. Always remember than anything less than 24k gold is less than pure gold, and impurities have no value.
Why isn’t all jewelry made from 24k gold?
Gold is a soft metal, and in its purest form, it is very soft. Over time, pure gold will wear down. By adding other metals, the end product is an alloy that is stronger than gold. Different colors can also be created. Palladium, for example, mixed with gold creates a white metal.
What is the most common karat value of jewelry?
Typically, it is the 14k gold jewelry that is most common. This is still 58.33% gold, but it is more affordable for consumers. Most jewelry has a marking somewhere on the piece that will indicate the amount of karats. If this is not found on the gold, there are chemical tests that can be done to determine a piece's gold content.