Knowing that gold is valuable and that there is a daily gold price id fine, but it’s not enough. There are a few other elements that need to fall within your familiarity.
Consider weight. Gold and the metals used for alloying with gold are weighed in troy ounces. It is important to know and understand the words or references used because references to weight vary, depending on the circumstances (sometimes this is done so that the average person won’t be able to calculate quickly or accurately, I am sorry to say):
1 troy pound = 12 troy ounces
1 troy ounce = 20 pennyweights (dwt.)
1 pennyweight (dwt.) = 24 grains (gr.)
15.43 grains (gr.) = 1 gram (gm)
31.10 grams (gm) = 1 troy ounce
Note carefully these equations-and, especially, the abbreviations for pennyweight (dwt), grain (gr) and gram (gm). These are the three weight references you’ll be dealing with mostly, on a “price per _________” basis. When a seller tells you he or she isn’t selling on the basis of weight, then the pricing is being done according to what the traffic will bear – arbitrary mark-up.
If you know the weight and karat of the gold item you can calculate the gold value yourself- and have a good idea of the seller’s mark-up.
Here are three examples, using $400/ounce as the daily gold price:
YOUR PRICE QUOTED IN:
|Pennyweights (dwt.)||Grains (gr.)||Grams (gm.)|
|20 dwt = $400 (1 oz.)||480 gr = $400 (1 oz.)||31.1 gm = $400 (1 oz.)|
|Dealer sell price is $90 for 3 dwt item of 14K gold||Dealer sell price is $5 for 3 gr item of 14K gold||Dealer buy price is $15 for 3 gm item of 14K gold|
How much of a mark-up is involved in the pricing of these three examples?
Take Example No. 1 where the dealer wants to sell a 14K gold item weighing 3 pennyweights for $90.00.
To get the pennyweight price you divide $400 by 20 = $20/dwt.
To get the pure gold price for the item multiply 3 dwt. X $20 = $60
To get the 14K gold price of the item multiply $60 x .60 = $36
So the 3 dwt item contains $36 worth of gold when gold sells at $400 per ounce. A 14K gold item contains 60% gold and 40% alloy – so we can see that the mark-up for the alloys and anything else is about 2 ½ times the value of the gold.
Take Example No. 2 where the dealer wants to sell a 3 grain (gr) item made in 14K gold for $5.
To get the grain price you divide $400 by 480 = approx. 83₵/gr.
To get the pure gold price for the item multiply 3 gr x 83₵ = $2.49 = $1.49
To get 14K gold price of the item multiply .60% x $2.49 = $1.49
So the 3 gr item containing about $1.49 worth of gold at a gold price of $400/oz/ had been marked up to $5 slightly more than triple.
Take Example No. 3 where a dealer offers to buy a 3 gram (gm) item of 14K gold for $15.
To get the gram price divide $400 by 31 = approx. $13/gm.
To get the pure gold price of the item multiply $13 x 3/gm = $39
To get the 14K gold price of the item multiply $39 x .60 = 23.40
In this case, the 3 gm. item contains $23 worth of gold. The dealer has offered to buy for $15 a price less than the gold value.
In summary, finding the gold value content of an article is a simple 3-step process once you know the weight, gold karat alloy, and the daily gold price.
You know there are 20 pennyweights to an ounce, 31 grams to an ounce, and 480 grains to an ounce. Whichever of these weight references is used, you merely divide it into the daily gold price and use that figure to calculate to item price by the weight reference and the gold karat content.