Gold and The Karatage System

I have discussed the karatage system in my article on Gold Weights & Measures but wanted to expand on it a bit. With all the scrap gold being turned in at various local and national gold dealers as well as the popular home gold parties, this is good information for you to know.

Karatage is a system used to express the purity or fineness of gold in 24 parts. Pure gold is 24 karats or 24k. Anything less is a mixture of gold and some other metal(s). Below are various karatage categories with their gold fineness and percentage of gold content:

24 karat = .9999 fineness = 99.99% gold;
23.6 karat = .9830 fineness = 98.3% gold;
22 karat = .9167 fineness = 91.67% gold;
21.6 karat = .9000 fineness = 90.0% gold;
18 karat = .7500 fineness = 75.0% gold;
14 karat = .5833 fineness = 58.3% gold;
12 karat = .5000 fineness = 50.0% gold;
10 karat = .4166 fineness = 41.66% gold;
8 karat = .3333 fineness = 33.33% gold.

Happy investing.

Selling Scrap Gold-10K Gold Ring

In my article, Selling Scrap Gold-A Case Study, I detailed my experience with one of the big scrap gold buyers. You've probably seen their ads on TV "Send us your gold, get a big check back". I did not accept their low-ball bid and got my scrap gold back, a small 10 karat gold ring.

I sold that ring a few days ago to the local coin dealer I mentioned in my previous post for $48 and change. The ring had no special meaning to me (not a family heirloom or keepsake) and I wanted to start a business relationship with this local dealer. So when he offered me 50 percent of the ring's gold value (based on the current spot price of gold), I decided the offer was fair.

Here is how the ring's value was calculated...

At the time of the sale, spot gold was at $890.60 per Troy ounce. The 10k ring weighed in at 5.3 pennyweights which is approximately 26 percent of a Troy ounce (there are 20 pennyweights in a T. ounce). So $890.60 x .26 = $231.55. If the ring had been pure 24K gold, that would have been the gold value of the ring. Since it was only a 10K ring, it's gold content is 41.66 of the total weight (more information on this can be found in my article titled Gold weights & Measures). So $231.55 x .4166 = $96.46. The dealer offered 50 percent of that value which is how I received a little over $48.00.

If you are considering selling your scrap gold in the future, I hope you find this information helpful. Feel free to add a comment if you have a question on any of this. By the way, the dealer will probably receive at least 90 percent (probably more) from a major refiner or about $88.00.

Prosperity (Scrap Gold) Parties

Over the weekend, I watched a short news story on one of the Minneapolis/St. Paul TV stations about Scrap Gold parties. Sometimes referred to as Prosperity Parties, this is where people bring their scrap gold and other jewelry to a place (usually someone's home), have it examined and converted to cold, hard cash.

People proudly display a few hundred dollars they received and everybody is happy. But they leave out an important detail which is what percentage you can expect to receive of the gold's value based on the spot price of gold. If the customer receives 30 percent of the gold's value and the appraiser turns around and receives 95 or 98 percent from a refiner, how fair is that?

I am not saying some of these appraisers don't present a fair offer but there is certainly room for some serious low-balling to the customer. If you happen to attend one of these parties, here are a few useful facts...

Spot gold is stated in Troy ounces. A Troy ounce equals 20 pennyweights which equals 31.1034 grams. If spot gold is $900 a Troy ounce on the day you attend one of these parties, then each penny weight has a gold melt value of $45 for a pure 24k gold piece of jewelry or $22.50 for a 12k piece of jewelry.

If you are quoted a price in grams (as opposed to pennyweights), each gram is worth $28.94 for a pure gold piece and $14.47 for a 12k piece (which has only 50 percent gold content). When you are offered a price on your scrap gold, do a little figuring in your head to see if you are being offered a fair price and one you are willing to accept. More information on this subject is contained in my Gold Weights & Measures article elsewhere on this site.