Why Gold is Valuable?

The first thing to understand about gold is that it has been recognised as a universal currency from time immemorial.

Widely recognised, easily transportable and easy to convert it transcends all other forms of token in terms of the constancy of its relative value throughout history.

Gold is a rare metal and its scarcity is what maintains its value as an international currency.

Who Sets its Value?

In the world of international trade, gold is one of a number of commodities that are traded on markets. The price for pure gold is constantly changing against all the currencies that are used in buying and selling. So, if you are valuing gold against pounds sterling or US dollars, the price may fluctuate by the minute relative to the currency movements or the demand for gold.

How Gold is Traded

A gold dealer tries to acquire a stock of gold for the right price and sell it at a higher price by taking advantage of these market fluctuations.

A gold mining company mines raw materials for gold and needs to ensure that the cost of processing is lower than the market value of the gold he can produce, otherwise he will be making a loss.

Likewise, a gold recycler tries to recover previously processed gold in the form of old and unwanted jewellery. To achieve this, he has to assess the current market value that gold is fetching and set this against his marketing, collection and processing costs.

How a Recycler Values your Gold

When you see a simple gold calculator on a website, it is worth noting that the prices quoted are current market prices for pure refined gold and they are used to help calculate how much a gold merchant can afford to pay on any given day. But in all cases, he has to evaluate and factor in his marketing and processing costs into the equation so do not be misled. The prices displayed are not the prices he will quote for your gold. He cannot evaluate this until he has examined and tested the quality and quantity of your offering.

The more reputable gold recyclers have an honest, open and transparent system for pricing your gold based around the daily market price quoted less all the recovery and refinement costs. They will also factor in the quantity of gold that each package contains so the more you send the better the relative offer will be.

What a Recycler will not Value

A recycler is only concerned with the pure gold that can be recovered from whatever you send. If the quantity is too small, the cost of recovery outweighs what he can fetch so most gold recyclers will only deal in packages greater than 10g (There are approximately 28 grams in 1 ounce).

He does not value workmanship or intricacy. When you buy a piece of jewellery you are paying for artistry, gemstones, settings and workmanship. None of this has any value to a gold merchant so bear that in mind. If you want to keep your gemstones, you should take them out of their settings as they will not be returned.

Dress jewellery has no value to the gold merchant so do not send this either.

What is a Gold Carat?

Pure gold consists of 24 carats, so one carat equals 1/24th pure gold. Therefore:

  • 9 carat = 9/24th or 37.5% pure gold
  • 18 carat = 18/24th or 75% pure gold

White Gold

White gold is produced using pure gold mixed with a metal like nickel to give it a different colour. Again, it is only the pure gold content that is of interest to the gold merchant.

A Good Time to Sell Gold

The value of gold in comparison to many currencies has more than tripled in recent years. At present, gold is fetching far more than it has historically due to the world recession that has led to a lack of confidence in other commodities, currencies, property, stocks and shares and economies. Investors always run to gold in uncertain times, so now is a great time to sell your gold.

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