Gold Prices: Here’s what you need to know

Gold Prices

In this post, I’ll cover everything you need to know about the price of gold.

This guide is jam-packed with essential information if you’re thinking about buying or selling gold in the near future.

Gold FAQs for Beginners

Gold FAQs for Beginners

How many grams are in an ounce of gold?

Gold is always measured by the troy ounce, which is equivalent to 31.103 grams. This standard was created in France during the Middle Ages and was later adopted by the United States in 1828 for standard coinage.

A troy ounce is slightly heavier than an avoirdupois ounce, which weighs only 28 grams.  The avoirdupois ounce is the standard of weight used to measure most other commodities.

How many ounces are in a kilogram of gold?

There are 32.151 troy ounces in one kilogram of gold.

What is the “melt” price?

The melt price is the spot price for a gold item.  It does not take into account any collectability, artistic value, or historical importance.

In other words, the price of the gold item is only important to the extent of the price you could get if you melted the gold piece down and placed a value on the metal content only.

What is a karat, and how does it impact the price of gold?

A karat is the measure of the purity of a precious metal. Pure gold is 24 karat.  Gold items will have a purity marking that will indicate the karat number, such as 12k, 18k, or 24k.

Here is how some of the more common numbers translate:

  • 999 = 24 karat, 99.9% gold
  • 916 = 22 karat, 91.6% gold
  • 750 = 18 karat, 75% gold
  • 585 = 14 karat, 58.5% gold
  • 375 = 9 karat, 37.5% gold

Is there a difference between karat with a “k” and carat with a “c”?

Believe it or not, there is.

Karat stands for the measure of purity for gold items only.  That’s why you’ll see gold items only stamped “14k” or “18K”, but never “14c”.

For the weight of gemstones, “carat” is the measurement and a “carat” is equal to 200 milligrams.

Karat denotes purity, while carat denotes a weight.

What is white gold and how does that affect the price of gold?

White gold is an alloy-based precious metal.  It typically contains about 75% gold and 25% nickel, silver palladium, or zinc, giving it a silver, or white metal look.  The resulting alloy is harder than pure gold which many people like.

The price of the gold is not affected by whether a piece is white gold or not.  The price is determined by the karat amount.  For example, it’s common to find 14 or 18k gold as options for engagement rings. These options are much more durable than a pure 24k ring, with 14k being the harder of the two because there is less pure gold that’s present, and this creates a more durable ring.

What is paper gold?

You can buy gold certificates if you want to invest in gold. A gold certificate is basically a piece of paper stating that you own a specified amount of gold stored at an off-site location. This is different from owning bullion outright because you are never actually taking physical ownership of the gold.

It’s purely a personal choice.  Some investors enjoy the ease of buying paper gold, some prefer to see and hold their precious metals first-hand.

Can I put gold in my IRA?

Yes.  Talking to your financial professional to determine if this is a smart move for your portfolio.  Many recommend it as a hedge against other investments.

Gold Price FAQs

How is the price of gold typically quoted?

In the vast majority of cases, it will be quoted as the spot price per troy ounce in U.S. dollars.

What currency is the spot gold price quoted in?

Gold is traded in U.S. dollars (USD) so it is quoted in USD. Outside of the United States, the spot gold price is taken in USD and converted to local currency (i.e., pesos, pounds, etc.).  This gives market participants the price for 1 troy ounce of .999 fine gold in their respective local currency.

Is the price of gold the same all over the world?

Yes.  If gold varied from market to market, or country to country, this would create an arbitrage situation.

Arbitrage is defined as the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

Do gold prices change often?

Yes!  As a matter of fact, gold spot prices change every few seconds during market hours.  Prices will go up or down based on breaking news, supply and demand, inflation risks, geopolitical news, order flow, and other global economic factors.

The spot gold price is determined by several U.S. and foreign exchanges.  This means the gold spot prices consistently updates from 6 pm EST to 5:15 pm EST, Sunday to Friday (markets close from 5:15 pm to 6 pm EST each weekday).

If the price of gold is constantly changing, how do I lock in a price if I am buying or selling gold?

Dealers have procedures for locking in a specific price on gold products based on current price levels.

These procedures may vary from dealer to dealer and will generally be for a limited time period.  When you are dealing in gold, be sure to ask the dealers you contact what their locking in procedures are.

How are spot gold prices determined?

Gold is traded all over the world, including exchanges in as Chicago, New York, Zurich, Hong Kong, and London.

The COMEX, formerly part of the New York Mercantile Exchange and now part of the CME Group in Chicago, is the key exchange for determining the spot gold price.

The spot gold price is calculated using data from the front-month gold futures contract traded on the COMEX. If the front-month contract has little to no volume, then the next delivery month with the most volume will be utilized.

What is a gold futures contract?

A gold futures contract is a contract for the sale or purchase of gold at a certain price on a specific date in the future. For example, gold futures will trade for several months of the year going out many years.

If a buyer purchased a December 2021 gold futures contract, then he or she has purchased the right to take delivery of 100 troy ounces of gold in December 2021.

U.S. investors can buy or sell gold futures contracts on the New York Mercantile Exchange (NYMEX) in 100 troy ounce contracts. Typically, NYMEX contract months include February, April, June, August, October and December, with trading closing on the third to last business day of the delivery month.

If the spot price of gold is quoted at $1800 per troy ounce, can I buy gold for that price?

Probably not, but you can come close.  Although spot gold prices are quoted as the price of 1 troy ounce of .999 percent fine gold deliverable now, you will still have to pay that price plus a small dealer’s premium (a mark-up to cover distribution and minting costs).

When you sell gold to a dealer, you will typically sell at a price below the spot price.  This allows the dealer to cover their costs and sell the gold above the spot price.  The spread between their buy and sell prices represents the dealer’s gross profit.

How come I often see gold coins selling at hundreds or even thousands of dollars over the spot prices of gold?

Gold coins are based on their gold content and their collectability.  This numismatic value can drive the price to much higher levels due to a collectability premium.

Those premiums may vary widely due to when or how the coin was minted, how many of that particular coin was minted, what condition the coin is in, and more.

The flip side of this is that some gold coins do sell for face value and little more.

How are gold coins graded and what effect does that have on their gold price?

A third-party service will evaluate a coin to determine its condition before assigning a grade on a scale of 1-70.  The higher the grade, the more numismatic value the coin has.  Grades range from Poor (P-1) to Perfect Mint State (MS-70) and are graded based on luster, strike, attractiveness, color, and preservation.

Where can I get gold coins graded?

The two most popular grading services are Numismatic Guaranty Association and Professional Coin Grading Service who grade modern and vintage coins and encase them in hard plastic with a unique serial number to catalog the coin after it has been graded.

Gold Buying and Selling

Gold Buying and Selling

Where are the best places to have gold jewelry pieces appraised?

To truly know the value of what you are selling, it’s advisable to get an appraisal by a member of the American Society of Appraisers, the International Society of Appraisers or the National Association of Jewelry Appraisers.

What do I need to know about appraisals and how they impact the price of my gold?

Appraisals are done on a flat fee and should range from $100 to $400, depending on how long the appraisal takes.  Simple rings may take no more than an hour but larger pieces with elaborate settings and multiple gems could take three or four hours to appraise.  Never pay for an appraisal that will charge you a percentage of the value of the item.

Also, one of the drawbacks of appraisals is that just because you had your piece appraised, that doesn’t necessarily mean you’ll get that same price if you try to sell your piece.  Appraisals, often conducted for insurance purposes, determine the retail replacement cost of your jewelry, not the resale price.

If you’re getting an appraisal because you want to resell your gold or jewelry, ask the appraiser if he or she can also give you a resale price estimate.

What is an assay?

An assay is a certificate or encasing that guarantees the purity and authenticity of the accompanying gold piece. Assays typically include a serial number, which will match the serial number imprinted on the bar. Assays will also include a signature by the official assayer of the piece.

Do you need my Social Security Number when I buy coins and/or bars?

The IRS required IRS Form 8300 reporting requirements when, including your Social Security Number, when you make purchases in excess of $10,000 that are paid with cash or any combination of cash and cash equivalents (such as a cashier’s check).  Learn more about this requirement by accessing IRS Publication 1544.

Where will I get the best price if I’m buying gold?

The sale of gold to consumers is extremely competitive.  You will want to look for a gold dealer that has a good reputation and can offer you gold products at the lowest possible premiums.

Chances are, this will be an online gold dealer since they don’t have brick-and-mortar overhead issues and expenses.  Online dealers may also have access to a much wider range of gold products than a local gold or coin store as well.

Where will I get the best price if I’m selling gold?

We have consistently found that Cash for Gold USA is the best place to sell your gold for top dollar.

For more details, be sure to check out our complete guide on how (and where) to sell gold here.

Pro Tip: If you’re interested in selling silver or jewelry, you can do that through Cash for Gold USA here.

How long will I have to wait to be paid when I sell my gold?

If you go to a local coin shop, you could be paid in as little as 15 minutes after you go in.  But be aware that you may not be getting the best price if you go this route.  You’re more likely to be lowballed because you’re more likely to engage in a spur of the moment sale of your gold.  Physical retail locations also tend to have higher overhead costs, so they won’t be as flexible or generous.

When you sell your gold online, dealers will generally have a streamlined process.  You will need to go through the process of mailing your gold which could take a couple of days to reach the dealer.  Many dealers do offer a 1-day turnaround from the time they receive your gold.  You may even be able to arrange for a direct deposit to your bank account or PayPal to speed the payment.

The good news is that the dealer will have a lock-in price that guarantees the price of your gold once you agree to sell your gold to them.  You will have a day or two to ship your gold to the dealer where it will be verified.  You’ll be paid immediately after the verification.

Is there any difference between selling scrap gold, gold plated jewelry, or other forms of gold, as opposed to selling gold coins, bullion, and bars?

The short answer is “no.”

Buyers are more concerned with the qualities of the gold you’re selling (karat, fineness.) than what form you’re selling.  To them, it all comes down to melt weight and purity.

Of course, the exception here is if you’re selling forms of gold that have numismatic value, such as rare coins, antique jewelry, and so forth.

Should I buy gold bars or gold coins?

It depends.  Bars have a lower premium than you’ll pay than minted coins.  However, gold bars are subject to mandatory reporting when you sell them back in the future, per ICTA Reporting Requirements.  For those who are concerned about privacy, it’s worth noting that minted coins are not subject to the same level of mandatory reporting as gold bars.

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