What is the Formula for Gold Jewellery Price Per Gram?
The technicalities of investing in gold jewellery may seem like a daunting and far-off prospect to the regular person. The truth is, however, that the ability to evaluate prices for gold jewellery is easily within reach for anyone with interest in the topic.
A better understanding of how gold jewellery prices work fills any potential buyer with that extra bit of confidence when conducting face-to-face sales.
Armed with this knowledge, you can feel safe that you won’t be getting ripped off when conducting business. It will also ensure that you get treated with a heightened level of respect by any jewellers you encounter while buying.
Anyone looking to buy gold jewellery should want to know more than just the daily price of gold before landing on a decision to invest. Those looking to make such a purchase first want to understand how to calculate gold price, as well as the charge of gold within the market.
The good news for potential investors is that the formula itself is far from complicated to master – we’ll have you well-versed in it by the end of this piece.
Getting familiar with the basics
Knowing how gold is priced, particularly in relation to the live market, stands to save you a great deal of money as a gold jewellery investor.
To become better accustomed to this subject, you should begin by familiarising yourself with gold weights and the karat system. A decent understanding of the karat system guarantees you know what you’re talking about, both in front of jewellers and while communicating in online marketplaces.
Once you’ve learned this, you can successfully calculate your jewellery's price-per-gram worth, as well as any markup a jeweller may have placed on a gold item's price.
As soon as you’ve got your head around these concepts, all it will take is a simple formula to bring you up to scratch on determining the worth of your 24-karat gold jewellery. So let’s get to it – your bright future as a gold jewellery valuer begins today!
The first step when calculating a gold price for jewellery is to refer to the item’s gram weight – obviously, the more of something there is, the more value the item contains. When evaluating whether a gold piece of jewellery is priced accurately, you should check the item for its listed "gram weight".
The number of grams in a piece of jewellery gives you the gold content (provided you know the karatage, which we’ll explore below). Once you know the gram weight of a piece of jewellery, you will be able to compare the amount of gold in your piece with other items from other stores – providing you with the perfect tool to comparison shop.
If you are buying from a traditional jeweller, they will almost always possess a jeweller's scale. With the assistance of this scale, you can obtain the exact weight of the item right in the store.
If you are shopping online, however, check that the gram weight is listed in the jewellery item’s description, i.e. "This piece of jewellery weighs approximately 34.0 grams". If an online vendor doesn’t display at least this information (or isn’t willing to provide it promptly), it’s probably best to avoid doing business with them.
The charge of gold obviously also plays an integral part in ascertaining the value of your item of jewellery. Gold jewellery items are often alloyed with less valuable, stronger metals to strengthen the piece. As good a job as these foreign alloys do of strengthening the item of jewellery, the less gold an item contains the less valuable it will be.
To figure out the gold content of a piece of jewellery, you should begin by determining the karat weight of the item (10K, 14K, 18K, etc). Once you have done this, you can compare "apples to apples", so to speak.
The karat value (K) of a gold item measures the purity of its gold. More specifically, it measures the ratio of pure gold to any alloy metals it may also contain.
At the top of the scale, 24-karat gold is of the highest quality possible, making it 100% pure. A 12-karat gold piece, on the other hand, will consist of 12 parts gold and 12 parts alloy metal, making it 50% pure. There are also other karats outside the 24 and 12 that we’ve mentioned here, which we will get to shortly.
Because gold weighs more than the other metals it is typically alloyed with, a 14-karat gold pendant will weigh more than a 10-karat gold pendant of the same style and size. This is because a 14-karat piece has a higher gold content than that of a 10-karat piece. Going by this same logic, an 18-karat gold ring will weigh more than a 14-karat gold ring, and so on. To help you determine the gold percentage of gold items, you can consult the following figures for the karat-parts percentage of gold:
24-karat = 24/24 (100.00%)
18-karat = 18/24 (75.00%)
16-karat = 16/24 (66.66%)
14-karat = 14/24 (58.33%)*
12-karat = 12/24 (50.00%)
10-karat = 10/24 (41.66%)*
You can round 14-karat to 60% and 10-karat to 42% for easier approximations
Current market price
The next step of our gold calculation formula is conducted by referring to the market price. The market price is the all-important and constantly updating figure from which gold’s daily worth is derived. The current market price will always be determined by London's biggest bullion banks, who agree on a price to clear their outstanding client and in-house orders at a particular point each day.
This current market price of gold is obtainable from an array of places and is always provided in Troy ounces. Interesting history lesson here: confusingly enough, a Troy ounce is not actually the same weight as a regular ounce. One Troy ounce is equal to 1.097 ounces, which results in a Troy ounce being approximately 10% heavier than a regular ounce. One Troy ounce is also worth 31.10 metric grams, which will come into play later in our formula. If you’re curious about where to begin by sourcing the current per-ounce price of gold, you can do so by simply consulting a gold site online, such as kitco.com.
The gold jewellery price per gram formula
Need to know How to calculate gold price for jewellery? Using the simple formula below, you will need to convert ounces of gold to grams of gold – as gold jewellery is most often listed in grams, not ounces. This is simply because grams are a far more manageable unit when dealing with the average weight of most gold jewellery items. The all-important formula is as follows:
Price of gold per ounce / 31.1 / 24 x Karat of your item = Base price-of-gold content per gram of gold
In the below example, we’ve used $1,200 per ounce as the price of gold per ounce and entered it into the formula for determining the base price-per-gram of a 14-karat-gold piece of jewellery.
Some of the other numbers in the formula represent 31.1 grams per ounce of gold (remember there are 31.1 grams in a Troy ounce), 24 karats (reflecting pure gold), and what the gold market value uses since they are representing the value of 24-karat gold per ounce.
Our example looks like this: $1,200 / 31.1 / 24 X 14 = $22.50 per gram
What does this tell us? It tells us that each 1 gram of 14-karat gold is worth $22.50 as far as the raw precious metal of gold is concerned.
Are you even more interested in investing in pure gold now that you have a better understanding of how it works? Now that you’re fully equipped to calculate the worth of gold jewellery, you’re perfectly qualified to make the leap into a gold-jewellery investment confidently. Investing in pure 24-karat gold jewellery will leave you with a stunning and shiny piece of jewellery, which you can wear proudly while determining its live market value at any given moment. Instead of choosing to invest in intangible assets, such as stocks or real estate, you can make a choice to invest in something truly special, which you will be able to proudly wear, show off, and display to the world. If you’ve decided gold jewellery is an investment you’re interested in making, we here at 7879 have precisely what you’re looking for, with our unique and impressive 24-karat gold collection.