Does gold Karat matter?

There is an old wives’ tale that says ‘gold is gold’; encouraging women to decorate themselves in gold jewellery rather than other materials with the aim of attaining a “blingy” investment. However, not all gold is gold! Anyone that has visited a jewellery shop has been told gold comes in different purities meaning there are different types of gold jewellery. I have noticed that this always confused customers and made the decision of choosing gold purity difficult. My aim today is to clarify the difference in gold purity and how such differences can affect the price, design, and the value of the item you choose to purchase. I will use a necklace as an example to help clarify how variations can be presented in gold items.

Gold purity refers to how much actual gold is in a practical piece of jewellery. It is usually measured in Karats ( ratio of gold to other metals or alloys) on a scale ranging from 0 to 24 (the higher the more gold content is available).  For example, if you refer to the chart below you would be able to conclude that a 22 Karat necklace would have 22 parts gold and 2 parts metal alloys, meaning it contains 91.7% pure gold.

Firstly, price can significantly vary according to the purity (in Karats) and weight (in grams) of your necklace. The price per 24K ounce of gold is set by international spot prices that fluctuate according to the market environment. So for example, your 10 gram 22K necklace at today’s price would be 91.7% of the price of 24K (pure gold) and that is because the price gets adjusted according to the purity present in the necklace so consumers would pay only for the amount of gold available. Of course, you would have to add labor costs (making charges) and any other costs (retailer profit, taxes.. etc) on top of this gold price to get the total purchase cost of your necklace.

Second, the design of jewellery tends to vary greatly according to the purity. Gold is very malleable therefore the purer the jewellery piece the harder it is to make very intricate designs with it. This is why most intricate designs in the market tend to be made with 10,12,14 and 18 Karat gold. However, some markets tend to only accept jewellery pieces with 21K - 24K due to cultural preferences. You would find quite different designs in such markets due to the high gold purity used as well as market taste and preference.

Third, the value of your necklace is highly dependent on its overall weight and gold purity. So just like its price at purchase, the higher the purity and weight the more value it will have in comparison to other purities at the same weight. For example, your 22K 10 gram necklace is of higher value than another necklace which has the same weight and design but lower purity (let’s say 18 Karat). However, at the same time, that 18K necklace would have cost you less to purchase when taking just the value of the gold into account.

 Those differences tend to influence consumer markets globally and reflect onto the jewellery pieces available in your region. No gold purity is the correct one! It is all about personal preference and taste. For example, some countries are known to have markets that demand higher purity even if its more expensive and less intricate, while other markets prefer lower purity and more intricate designs. The design and price of your gold necklace is determined by those differences. It’s purity , design, and price can give your jeweler a good indication on what your next favorite piece will be!