Types of Gold

So, is jewellery a worthwhile investment?

This design element means the value of the gold jewellery is subjective. The price you pay for jewellery far exceeds the value of the gold content itself. For this reason, gold jewellery tends to be less effective as a form of investment than gold coins and bars. If the gold price rises, your jewellery will appreciate at a slower rate, as its value consists of subjective design value, not just gold. The only way gold jewellery will ever rise in value faster than gold bars or coins is if the designer becomes renowned or the piece becomes very rare.

High relative production cost

The biggest problem with investing in gold jewellery is the making charge. Essentially, this is the cost associated with the production process, which includes design. There are labour costs involved with this that cannot be recovered when you sell that jewellery back into the market. Dealers only pay for every ounce of gold that’s actually in the jewellery. Moreover, 24 karat gold is no good when it comes to crafting jewellery. It’s way too malleable to retain shape and bring out all the detail in the design. So, 18 or 14 karat gold is the material of choice for making jewellery. This means when, you’re buying jewellery, you’re not getting gold with 999.9 purity.

Inefficient use of gold

In addition to the above, there are wastage charges to consider. In order to create attractive gold jewellery that boasts of stunning designs, there’s unwanted gold that’s removed and discarded as scrap. However, the customer, i.e. you, still have to pay for this. So, you’re paying for gold that doesn’t actually come to you. Wastage charges may be as much as 5 to 7% and could vary with each job. Interestingly, as most jewellery is crafted today using precision technology and high-quality machines, not a lot of gold should actually be wasted. However, jewellers continue to charge customers ‘wastage charges’ as a percentage of the actual cost of making the jewels. Also, it’s important to remember that gold, as a precious metal can simply be melted down and used again by the jeweller. So, in essence, the customer ends up paying for gold that is reused by the jeweller.

Cost calculation of gold jewellery

The actual costs of ordering custom made gold jewellery from a jeweller can be calculated as the total amount of gold to be used, priced at the spot price on that day, labour and making charges, wastage charges and VAT. If your jewellery includes precious stones, that’s yet another component you need to include within the pricing. Also, one needs to be sure of the exact karat of gold being used and if you’re not careful, you could well end up paying for 18 or 22 karat gold, while your jewellery could be made out of gold with lesser purity. Often customers are at sea when it comes to all this, due to an inherent lack of understanding of the intricacies and mechanics of the gold jewellery industry. Most customers would not own professional equipment for measuring the purity of the metal or stones. All of this adds up to the uncertainty and risks associated with investing in gold jewellery. Of course, gold jewellery continues to remain evergreen, as it symbolises the status and power of the person wearing it.

It’s true; there are many different types of gold for investment,

but it doesn’t have to be confusing. When investing in physical gold it’s important to establish which form offers the best value as an asset and which will be the easiest to sell at the highest price. In the same way as trying to sell an unusual house, realizing your profits on an obscure form of gold could prove to be difficult.

The world of jewellery transforms gold into various colours for several reasons:

Appeal – customers want gold in various colours for design/aesthetic reasons

Durability – gold is highly malleable and bent/scratched easily. Adding other metals increases durability

Price reduction – by adding cheaper metals, the price of the jewellery is reduced

Popular colours used in the jewellery industry for gold are:

Blue gold – created by adding indium or gallium

Green gold – also called Electrum this is created by adding silver and copper

Purple gold – usually consists of 79% gold and 21% aluminium, so is 18 karat gold

Rose gold – made by adding copper and silver, with a higher proportion of copper than in green gold

White gold – created by adding platinum or palladium, especially popular in jewellery designs

Yellow gold – naturally reddish yellow the intensity of yellow can be intensified by adding copper, silver and zinc

Investment Gold

Part of our process is helping you choose the best type of gold investment to meet your individual goals. Whatever your circumstances, you should always stick to the recognised forms of investment gold.

The HM Revenue & Customs definition is gold in the form of a bar or coin with a minimum purity of 995 thousandths for bars and 900/1000 for coins (minted after 1800). In short, that’s 22 karat gold coins and 24 karat gold bars.

Why does this matter to me?

There are a few benefits of focussing on investment-grade gold.

1. The quality and purity of gold are assured and consistent. You always know exactly what you’re getting. I like to think of it as buying a bottle of wine from the supermarket which is a brand you know, and the alcohol content is clearly stated. Compare that to buying alcohol in the prohibition era, and you never knew what you were drinking! This certainty is particularly important with a high-value investment where you need to eradicate the risk.

2. With standardised investment grade, gold such as well recognised bullion coins from renowned mints and Swiss manufactured gold bars, you enjoy the comfort of knowing your gold is liquid. This means it’s easy to sell whenever you need. That’s mostly down to the fact that these investment-grade gold coins (e.g. Sovereigns and Britannias) and bars are globally renowned and sought.

How can I benefit?

This helps both the speed at which you can realise your profit and also the price you can fetch. Compare this with the scenario of trying to sell non-investment grade gold such as a gold nugget. The uncertainty and ambiguity surrounding its purity, authenticity and weight will narrow buying opportunities dramatically.

One common misconception is that a 1oz 22 karat coin has less gold than a 1oz 24 karat coin or bar, but this is not true! All of these have 1oz of pure gold. The 22 karat coins simply have an additional 2 carats of an alloy (copper and silver) to improve their wear and tear.