The price of scrap gold – or most gold, really – is calculated with three primary metrics: the price of gold, the weight of your gold, and the purity of your gold. By combining these three factors, jewelers can calculate the value of your gold by determining the quantity of pure gold that would remain after the melting process and then factoring in the current price of gold.
We’ll start by explaining the three main factors in gold pricing, then go over a few example calculations of how to find the value of your gold.
Depending on who you ask, gold is a commodity, or a currency, or maybe even a category of its own. Technically traded on the commodity market (with everything from coffee and sugar to oil and silver), in reality it can trade more like a currency alternative to paper money. While we won’t get into the details of WHY gold prices move, it’s important to understand that the price of gold is a large factor in how gold buyers price your gold valuables.
Years ago, gold jewelry may have traded at a premium, despite still having significant intrinsic value. But after gold’s historic run from 2002 to 2011, rising from around $250/oz to over $1800/oz at its peak, the intrinsic value of the gold had dwarfed the typical value of most gold pieces, from jewelry to coins.
While gold prices have come down in recent years, prices are still multiple times (nearly 5x as of writing this) higher than they were in 2002. So most gold you have is going to be priced on the price of gold, not how unique the necklace looks or what’s stamped on your gold coin (there are exceptions, of course, and if you sell to us, we’ll check for any rare or collectible pieces for you).
Gold is traded 24-hours from New York and London to Sydney and Hong Kong. A recent chart from Bullion Vault is below, which also includes the current price that you can use in your calculations.
Troy ounces are different from ounces. Gold is priced in troy ounces, which are approximately 10% heavier than the standard ounce unit of measurement used in the United States. So if you’re buying gold, make sure it’s being priced in troy ounces, not regular ounces. If you’re pricing in troy ounces and the seller is pricing in standard ounces, they’ll make a quick 10% off you if you’re going buy the price of gold per ounce. Similarly, if you’re weighing your gold at home, you’ll need to adjust to troy ounces, otherwise you’ll overestimate the value of your gold.
In the “karat weight” section, we’ll go over how to adjust for this difference.
The purity of gold refers to the percentage of a piece of gold that is actually pure gold. The price per troy ounce provided above is for pure gold, and when used in jewelry gold is frequently mixed with other metals to increase its size at a lower price. And while looking the same, the price of a 14k gold ring is very different than a 24k gold ring.
This purity percentage is also known as “fineness”. More broadly, it refers to the ratio of weight of the primary metal (gold in this case) to any other metal or alloys that are added to it.
Purity can be denoted as a percentage, as parts per thousand of pure metal, or as is very popular with gold to simplify things, karats.
|Karats||Parts Per 1000||Percentage|
Gold is produced at different purity levels, some even closer to 100% gold. Most notably, Canadian Gold Maple Leaf coins and American Buffalo coins are produced at 99.99% gold and are widely traded.
22k gold is extremely popular for gold coins as well. The American Gold Eagles are currently produced at this fineness, as are British and South African gold coins.
8k gold is the minimum standard to be considered gold jewelry.
A karat, or K, or kt, is the unit used specifically for gold alloys. It lines up to make discussing common pieces of gold a bit easier. A karat is just 24 multiplied by the percentage of gold that makes up an items mass. It could be written like this:
Or more likely, if you have the karat value and a scale, you’ll be wanting to solve for the amount of pure gold in your items. We can get that by moving the formula around a little bit:
The purity of gold jewelry is often inscribed somewhere on the piece of jewelry. Grab your magnifying class and inspect your piece for a small number written somewhere on the inside of it that wouldn’t typically be visible (like the inside of a ring). It might be in karat form, or it could have the 3-digit fineness percentage on it. You’ll use this in your purity calculations when finding the value of your gold.
The higher the purity of your gold pieces, the more they are worth. A 24k (999) piece of gold has twice as much gold as a 12k (500) piece of gold jewelry, and is worth double the value. Purity has a direct multiplier effect on the value of your gold items.
As discussed earlier, gold is priced in Troy Ounces, not regular ounces. This can cause a lot of confusion for people when it comes to gold value. It’s important to make the adjustment from ounces to Troy ounces when attempting to understand the intrinsic value of your gold before buying or selling. Always specify whether you’re using ounces or Troy ounces when negotiating gold prices with anyone.
If you’re weighing your gold in ounces, simply multiply the actual ounces by .9114 to get the number of troy ounces. Or in other words:
Troy Ounces = Ounces * 0.9114
And some other common measurements you may see:
Troy Ounces = Grams * 0.0321
Troy Ounces = Kilograms * 32.151
Troy Ounces = Pennyweights (DWT) * .05
Troy Ounces = Pounds * 14.583
So if you’ve got a pound of gold, congratulations! You’re quite wealthy.
Weight is an straight-forward measurement for pieces of solid gold. When it comes to pieces that may contain other metals like silver, or gemstones like diamonds or emeralds, the calculations get more difficult. Generally, the piece needs to be disassembled in order to weigh it accurately. However, if that is not possible, you’ll need a jewelry expert experienced with the weights of different size pieces to estimate the proportions of your valuables. Getting multiple opinions is recommended, or of course you can send it in to us for an accurate quote.
Now that we’ve gone over the three major factors involved with pricing gold, we can go over the actual calculation. If you have a lot of gold with different fineness measures, or different markings, things can be a little complicated. Just make sure you plug the right numbers into the right places after making the appropriate conversions, and you’ll be good to go. Here is the basic formula for calculating the value of gold:
Part 1: Price of Gold = Current market price of gold in Troy Ounces
Price of Gold (in Troy Ounces) = Price of Gold (in Ounces) * 0.9114
Part 2: Fineness % = Proportion of your gold that is pure gold
Fineness % = Karats/24 = (Parts Per 1000 Measure)/1000 = (% Gold)/100
Part 3: # of Troy Ounces = Weight of your pure gold in troy ounces
Troy Ounces = Ounces * 0.9114 = Grams * 0.0321 = Pennyweights (DWT) * .05 = Kilograms * 32.151 = Pounds * 14.583
They always say the best way to learn is by doing. Here are a few different common examples of how you might to calculate the price of your gold. So grab all your gold, your most accurate scale, and your calculator and get ready to see how much your gold is worth!