Amassing gold is a time-tested method of building wealth. Furthermore, many investors and economists consider the price of gold an indicator of the country's economic strength. Gold jewelry, coins and bullion provide an effective way to invest in the precious metal, especially if you wish to bolster your portfolio with a tangible asset. However, the kind of gold you buy determines its long-term value.
Daily Gold Price
The daily price of gold -- posted by commodities trading houses such as the New York and Chicago Mercantile Exchanges -- is expressed per troy ounce, approximately 32 grams. For example, if the daily price of gold reaches $1,650 on any given day, this is the approximate price at which 1 troy ounce of pure gold, 24-karat gold, could be bought or sold. You can monitor daily fluctuations of gold and other precious metal prices on any website that runs a stock market ticker or posts stock market statistics. Newspapers also print the price in the finance section.
Although generally regarded as pure, 24-karat gold contains about 99 percent pure gold, according to an article published on "Art Jewelry" magazine's website. The negligible 1 percent consists of an alloy, usually copper or silver, used to facilitate smelting. In the United States, 24k gold is commonly used to produce investment-grade coins and bullion. Due to its soft nature, it is less common to find wearable 24k gold jewelry.
Eighteen-karat gold, a harder metal commonly used to make high-quality jewelry, consists of 75 percent pure gold and 25 percent alloys. To calculate the daily price of an 18k gold piece of jewelry, coin or bullion that weighs 1 troy ounce, simply multiply the daily price of 24k gold by 75 percent, or 0.75. If your item weighs less than 1 troy ounce, first divide the daily price of 1 troy ounce of 24k gold by 32 to calculate the daily price of pure gold per gram. Then, multiply the price of 1 gram of pure gold by 75 percent, or 0.75. This number represents the price per gram of your 18k gold item. Finally, multiply that price by your item's weight.
Commodity-exchange gold prices serve as a guide, but retail prices of 18k and 24k gold items are usually much higher. For example, even if the daily price of gold remains static, it's not uncommon for retailers to mark up gold items by hundreds of dollars more. As an investor, keeping track of the daily price of gold can help you negotiate deals with private buyers and sellers online, and at auctions and estate sales. Knowing the price of gold can also help you spot good prices when retailers have markdowns to move inventory or offer discounts for bulk purchases.
Video of the Day
- "Art Jewelry" Magazine: Raise or Lower the Purity of Your Gold
- World Gold Council: Demand and Supply
- CNN Money: Commodities
- The Everything Guide to Commodity Trading; David Borman
- Jupiterimages/liquidlibrary/Getty Images