How to value gold
If you know how to value gold and determine its price before you decide to sell, you will know what sort of price to expect. This is very important if you want a fair price for your gold. Remember you will never get the market or retail value for your gold; it will be slightly less to allow a profit margin for the buyer.
How pure is your gold?
Chances are you've heard of the carat system for measuring the purity of gold. You probably already know that the higher the carat, the more valuable the gold. The name carat (or karat in North America and Canada) comes from the fact that gold was weighed against carob seeds for a several centuries. Carob seeds were believed to be uniform in weight, but it was recently proven that this was not the case!
The purest gold is 24 carats. However, much of the gold on the market is less than 24 carats. This is because gold is much softer than many other metals, and pure gold is usually too soft to use in jewellery. 24 carat gold is found in places like Fort Knox!
Metals such as copper are usually added to gold to make it harder.
The easiest way of finding the carat rating of your gold is by looking at the hallmark. There are extensive online resources and books on gold hallmarks. If you still can't find it, you may need to speak to an expert.
Gold is made up of a total of 24 "parts". The gold parts are called the carats. So if your gold ring is 10 parts copper and 14 parts gold, it is 14 carat gold.
There is a simple equation for working out the purity as a percentage:
(Number of Gold Parts divided by Total Number of Parts) x 100 = % Purity
So according to the recent example:
(14 divided by 24) x 100 = 53.33% pure
The other common carat ratings of gold: 22ct is 91.66% pure, 18ct is 75% pure and 9ct is 37.5% pure.
As purity goes down, so does the value of your gold.
How much does it weigh?
If you decide to weigh your gold yourself you will need something that is both small and accurate; a small set of digital scales is perfect. Carefully remove all attached stones or other metals from your gold, remember it is your gold that you want to value.
Gold is normally weighed according to a special type of ounce known as the Troy Ounce. Where a normal ounce is 28.35 grams, a Troy Ounce is 31.1 grams.
Due to the fact that most people only sell gold in small amounts, most companies that buy and sell gold will measure it in grams.
What is the value of your gold?
In determining how to value your gold, you must use a couple of equations. This can get a little complicated, so I'm going to try and keep it as simple as possible.
It's easiest to understand when shown in an example:
You have 8 grams of 14 carat gold, and the current price is £500 per Troy Ounce.
The first part of the equation is to find the price of one gram of gold. Divide the current value of 1 Troy Ounce of Gold by 31.1 (the number of grams in a Troy Ounce of gold). This will give you the price per gram. If gold is currently £500 per Troy ounce, the equation is (£500 divided by 31.1), which equals £16.08
The second part of the equation is the total weight of your scrap gold multiplied by the number of carats in the gold, then dividing by 24. So (8 x 14) divided by 24 = 4.67 This tells you how many grams of pure gold are in the scrap gold.
The final part is to multiply the results from the first two equations to get the total market value: £16.08 x 4.67 = £75.09
Price Per Gram x Amount of Pure Gold = Current gold value
So in this example you would get £75.09 for your gold.
It is important to remember a few things. Firstly, you should look at the market price before making a calculation, because the price of gold changes on a regular basis. Secondly, this is not how much you will get for your gold, this is the market value. Knock ten or fifteen per cent off the market price to give you a price that a buyer of gold is likely to quote you. Thirdly, market prices are usually given in Troy Ounces and not grams, so it is important you know how to calculate them.
Knowing how to value gold is a safeguard against being ripped off. It is unlikely to change the price offered to you by companies that buy gold. However, the benefit is that you will have an approximate figure in your head of how much you can expect to be offered for your old or scrap gold.