- October 23, 2017
- Category: Gold
This universal unit of measurement for the fineness of gold is an important concept to understand when investing in precious metals.
Whether you’re a jewelry aficionado or ready to invest in gold as a precious metal, you’ll want to gain a firm grasp on the concept of a “karat” – our most common method of evaluating and grading the purity of gold. Karat is spelled with a “k” in the United States and Canada, but you’ll find it spelled with a “c” elsewhere. Regardless of the spelling, the karat serves as an easy way to quickly grade the purity of gold coins or bullion.
What does a karat refer to?
Simply put, a lower karat numbers means a lower grade of gold. Lower grade gold is characterized by a higher content of other metals besides raw gold in the mix. The lowest grade of gold that actually contains gold is GE or gold electroplate. This is simply a base metal covered with a microscopic layer of gold. It is intrinsically almost worthless. The highest purity level? That would be 24k gold – which clocks in at least 99.9% pure gold.
To determine the actual purity of gold, simply divide the karat weight designation by 24 and the resulting number correlates to the percentage of purity. For example, 14k gold (a common blend used in jewelry) equates to a purity level equal to 14/24, or .583. Convert this to a percentage and you have 58.3% pure gold. 18k gold? That’s 75% pure. And so on.
What are today’s most prevalent gold purity levels?
The most common karat weights seen today are 14k, 18k and 24k, but there are numerous gradients in between (and below) these popular weights to be aware of.
GE: Gold electroplate is nothing more than a real gold coating applied over some other base metal. Minimum standards dictate a gold plating thickness of at least 7 millionths of an inch. 10k gold, at a minimum, must be used in the plating process.
GF: Gold filled refers to a gold-plating process that uses pressure and heat to bond the surface gold to the inferior metal substrate. Standards mandate at least 10k gold and the gold portion must account for at least 5% of the total weight of the piece.
10k: 10 karat gold is 41.7% pure and is often used in jewelry due to its inherent toughness and low relative cost.
14k: 14 karat gold is quite popular in industrial applications as well as in the jewelry industry. It is nearly as tough as 10k gold, but contains significantly more pure gold – as it registers 58.3% pure.
18k: With a strength profile almost as tough as 14k, but formulated to be a full 75% pure gold, 18k is considered a well-balanced blend that is used in a variety of applications.
24k: You can’t buy gold any purer than 24k, as it must be at least 99.9% fine in order to receive this distinctive classification. 24k gold is generally used as an investable asset, as it is too soft for use in jewelry. 22k karat would be the softest you’d want to go.
Understanding the notion of a karat is an important part of owning and investing in gold. Your broker will ensure your gold-based holdings include coins, bullion, or bars that are at least 99.9% pure. Gold is a powerful and historically lucrative investment vehicle that can provide a sense of stability and consistent growth to virtually any investment portfolio.