Testing the Purity and Value of Gold

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The intrinsic, extrinsic, perceived, and market value of gold has been part of a global debate that dates back to the end of World War II. When the Bretton Woods agreement was reached in 1944, the gold standard was called into question. By 1971, the gold standard of monetary valuation was abandoned altogether; since then, people have been questioning the merits of gold as a commodity or as an investment asset.

In metallurgical terms, the real value of gold in 2018 is of little consequence to traders and investor, who are mostly concerned with its market value. Gold is still being mined, extracted and processed, but its industrial demand and applications are just shadows of what they used to be. In the jewelry and high-end audio industries, for example, advanced alloys can be used instead of gold, and they can be manufactured at far more affordable costs.

In early April 2018, the value of an ounce of gold was priced at $1,333. Most of the gold traded in the commodities market and even on Wall Street as exchange-traded funds is not physical; pricing is subject to market demand for financial instruments such as futures contracts, securities and certificates. Despite all this market activity, gold has an advantage insofar as being still being valued and accepted in its physical form.

If an individual holding an ounce worth of gold in nuggets, coins and jewelry pieces, she can exchange them for cash at market prices; however, purity will determine how much she will get for her pieces.

The purity of gold is measured on the standard karat system, which is based on a range of 24 points. If all the pieces held by the woman in the example above are 24-karat gold, she will likely be able to get about $1,300 for them.

A common method for testing the purity of gold involves a touchstone, a jewelry scale and various acids that act as reagents. The acids come in dropper bottles ranging between 10 and 24 karats. The gold pieces are scratched against the touchstone; the marks or streaks left by the metal on the stone are meant to be saturated with the acid, which will turn a dark color. Like other chemical tests, accuracy must be obtained by means of a control method, which in this case would involve testing a piece that is known to be of a specific karat.

Jewelers may also use electronic devices to test the conducive properties of gold; this is achieved by applying a special gel and sending an electric charge between the device and the piece. The most sophisticated and expensive purity testing method involves the use of x-ray spectrometry.

In general, a 14-karat piece of gold is said to be nearly 60 percent pure; to this effect, if a batch of 14K gold rings weighs an ounce, the buyer will offer 60 percent of the market price. In April 2018, the troy weight of an ounce of pure gold, about 31 grams, would have paid $1,333; however, if the pieces tested at 14K, the value of the batch would be around $800.