Gold Investing - Karatage System

Karatage is a system of specifying the purity (or fineness) of gold as a fraction of 24 parts. For example, 18 karat gold is 18 parts gold out of 24 parts or 75% gold. Other common karat readings are 10 karats (41.66 % gold), 14 karats (58.33 % gold) and 22 karats (91.67 % gold).

American manufacturers of gold products are required to stamp each gold item with their mark or insignia and the gold content "quality mark" usually expressed in karats. A dirty little secret is the gold purity can be off as much as one-half karat and still be legal. That is, a gold item marked as 18k can actually be 17 1/2k and still meet the letter of the law.

When you sell your scrap gold to a gold company accepting such items they, as well as the refiner they ship the items to, are aware of this leeway in the law. It is also assumed that many if not most American manufacturers of gold products take advantage of this leeway and your buyer will set their buy price accordingly.

If you have traded in your scrap gold for cash and what you received seemed a little low (based on the gold purity of the items you sold), this may be one reason why.