Gold purity is one of the key components in determining the value of physical gold assets.
Believe it or not, there’s no such thing as 100 percent gold — or anything else for that matter. All gold contains at least trace amounts of other metals. Occasionally the metal is purposefully alloyed with gold to make it firmer and less malleable, as gold is a soft metal and easily loses its shape. Jewelers will alloy gold with other metals to make it better able to hold a design.
For investment and value assessment, the purer a gold coin, bar or ingot is, the more it is worth. Purity is determined by a value known as karats. As a measure of purity, a karat is one-twenty-fourth purity by the mass of the gold being measured.
For example, 99 percent pure gold is 24 karats, 75 percent gold is 18 karats, 50 percent gold is 12 karats and so on. While no gold is 100 percent pure, new refining techniques are steadily increasing the purity of gold, from 99 percent to 99.9 to 99.99 and so on.
Investors seeking to determine the purity of their gold should check the markings on their coins, bars, wafers, ingots, etc.
In the U.S., the Federal Trade commission strictly regulates the karat markings used in the country for nearly a century. According to FTC regulations, gold that is 10 karats or more are stamped with the marking K or Kt. The FTC also allows decimal markings.
The FTC takes a stern stand against underkarating, imposing harsh fines on violators of federal law. Because of gold’s use in international commerce, other countries also have strict regulations regarding how gold is measured and marked.
Coins almost always originate from a mint. The coins should have a marking informing the holder of the purity of the coin.
Bars and ingots come from foundries. Since the mid-90s all of the smaller gold bars made by modern foundries have a high level of purity and weight accuracy. Bars made before the mid 90s or are heavier than one kilogram are of lesser purity, and the accuracy of their weight is less exact.
There are a variety of ways to determine gold purity. One of the least expensive methods is the acid-scratch test. You can perform the test by buying an acid-testing kit. The test essentially consists of scratching your gold sample and a gold needle against a touchstone. Once you’ve done that, you must apply acid to the stone. If the acid turns both scratches the same color, the karatage of your sample matches that of the gold needle used.
Fire assay and machine testing are two more involved and expensive methods of gold purity testing. For most individual gold investors, an acid-scratch test will be sufficient.