The difference between karat, gold content, and fineness

The difference between karat, gold content, and fineness

When investing in gold, it is important to pay close attention to its quality. Determining the quality of gold can be confusing because various terms are used to describe it. People often refer to the karat of gold, but it is also common to talk about its purity or fineness. This article provides a deeper insight into these different terms.
 
Because gold is not a particularly strong precious metal, other metals are often added to it. This is known as an alloy. Due to these additions, gold is often not pure. When gold purity is measured in karats, it indicates how many parts of gold are present in 24 parts of the alloy.
For example, 24-karat gold means that all 24 parts of the alloy consist of gold, making it 100% pure. In the case of 18-karat gold, 18 out of the 24 parts are gold, while the remaining 6 parts consist of other metals. This corresponds to 75% purity or a gold content of 75%.
 
In addition to measuring quality in karats or purity, some countries also assess gold quality based on fineness. Fineness measures how much pure gold a piece of precious metal contains per 1,000 parts. A fineness of 750 means that out of 1,000 parts of precious metal, 750 parts are pure gold. When converted to purity, this equals 75%, or 18 karats.
The purest form of gold is 24-karat gold. In terms of fineness, this is expressed as 999.9. In English, this is also known as "four nines fine," and a well-known coin with this quality is the gold Maple Leaf coin.
The absolute purest form of gold has a fineness of 999.99. This "five nines fine" gold is extremely rare. One of the few series minted in 99.999% pure gold is the 1 troy ounce gold Bobcat coin from the Call of the Wild series by the Royal Canadian Mint.
 
Below is an overview of different gold qualities and their corresponding names in karats, purity, and fineness.
 

 
24-karat gold consists of 99.99% gold. 22-karat gold consists of 91.7% gold, 5% silver, 2% copper, and 1.3% zinc. 18-karat gold consists of 75% gold, 15% silver, and 10% copper.
 
The most common term used to indicate the quality of gold is karat. Gold that is not 24-karat can still be a good investment. For example, the world's oldest gold investment coin, the Krugerrand, is made of 22-karat gold. However, the Krugerrand weighs 33.93 grams, meaning that in the end, it contains the same amount of pure gold as a gold Maple Leaf. Both coins consist of one troy ounce (31.103 grams) of pure gold.
 
Disclaimer: The Silver Mountain does not provide investment advice, and this article should not be considered as such. Past performance is no guarantee of future results.