Understanding the Purity of Gold

Gold Investing Strategies

Understanding the Purity of Gold

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People have used gold as a store of value since ancient times. It's possibly the oldest form of currency (since it's said to be acting more like a currency instead of a commodity) ever used by the human race and, what is unique about it, is that unlike other things like stone tablets, it is still in active use today as a medium for investment. Investors still look into gold as a safe haven and a hedge against the wild fluctuations that other vehicles of investment impose.

If you are interested in putting your money in gold, there are a lot of things that you have to learn about, as gold investments are far more complicated than what it initially looks. You have to have some deep knowledge about topics like gold purity and its relation to the price of gold.

Pure gold is a very soft metal. It is so soft that even a needle can scratch it. If you handle a piece of gold very often, it could lead to numerous scratches, which could eventually bring down the its price, especially in the case of gold coins. So what normally happens is that craftsmen often mix gold with other metals in order to form an alloy, which enhances gold's handling capabilities and make it harder.

As more metals are mixed with gold to form an alloy, the alloy's purity decreases. This purity has to be measured so that it can be associated with the value. This is what the karat system is developed for. The highest value is the 24K (>99.5% gold by weight) and goes down linearly. This is the typical way of measuring gold purity in jewelry.

As for gold bullion, the advertised weight is actually the weight of actual gold and not the entire bullion.

As already mentioned, investing in gold (like investing in any other medium) takes reasonable mastery of the market. We don't want to just put our money in vehicles that we do not understand, right? In the next few posts, we will discuss more issues regarding gold investments. Hopefully, you can come along.

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Tags: • alloy • gold purity • currency • safe haven • gold coins • gold bullion • price of gold • investing in gold • gold investments •

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