How Do I Know What I am Really Buying?

WARNING:  If someone tells you something is “gold” or “silver” they may just be talking about the color, and hoping that you will assume it is a precious metal. Real precious metal will be stamped with its purity.

Recently several customers have asked me to explain a bit more about metal and how it is marked in jewelry. They also were wondering what happens to people who lie about the precious metal content of the pieces that they sell.

First let’s talk about precious metal in general. Many different alloys are sold today in the United States, some of which are marketed and copyrighted. The rules for precious metal do vary between countries, and over time, so I will focus on current US rules.

Let’s start with gold. The purity of gold is designated by the term Karats (K) it is a proportion and not a weight. (The term “carat” is a unit of weight that is commonly used for precious stones.) The most common designations for gold are 24K, 22K, 18K, 14K, 12K, and 10K. 24K gold, is considered to be pure gold. It is very rarely used to make jewelry because it is too soft, and will scratch and bend easily. Other metals are added to gold to create an alloy, and this reduces the purity. The added metals may include nickel, zinc, silver, copper and palladium. The color of the final metal and its working properties are the result of the metals that are in the alloy. This is why we have white gold, yellow gold, pink gold, and rose gold, just to name a few. Those terms all refer to the color of the metal, but they do not tell you what the purity of the gold is. Purity is designated completely by the Karat number.

Still confused about Karat weight? Think of it this way. 24K is pure, therefore 12K contains half the amount of gold to other metals that 24K does.

English: Crystaline Gold

English: Crystaline Gold (Photo credit: Wikipedia)








I have had several folks ask about  the cost of gold filled items in my shop (more about filled vs plated later). If you are purchasing precious metal jewelry, it is important to know what the “spot price” of metal is. It is also important to know that most jewelers do not pay the spot price for their precious metal.  Spot price is the commodity price that an ounce of precious metal is traded at on the commodity exchange. This price is usually only available for folks who are buying over 100,000 ounces. The vast majority of jewelers purchase their metal from a jewelry supplier, by the ounce. The precious metal starts out as bullion (small bricks). Every time the metal changes hands, or is modified (turned into wire or sheet or casting grain) there is an up charge to cover the labor and equipment and allow for a profit. For example, if the spot price of gold is $1,187.70, which it was this past week, I would be paying about $1237.95 per ounce for casting grain. 24K gold wire, because it requires more processing than casting grain, would cost me $1251.62 per ounce. That is $63.92 more than spot per ounce. And how much is an ounce? Well, my simple gold wedding band is about 1/10 of an ounce. That means that the gold alone, no labor, is worth $125.17.

Next Time: Silver Alloys