What is a Carat and what is Fineness?

What is a gold carat? What does fineness mean? And what is the difference?


Often enough in our line of work, the ATS team find themselves explaining 24 carat, 0.999 fineness, 999.9 fineness and that’s before getting into the 22 carat or 24 carat debate. So here is our quick guide on what a carat is and things to look out for as an investor in gold bullion.

1) What is a Carat?

A carat is a method of measuring the purity of gold. It is the ratio between the principal alloy (Gold) and any added alloys or impurities. Carat is worked out using the following calculation: Carat = 24 times the pure mass divided by the total mass.
For example a Krugerrand:

Pure Mass Weight (g) Total Mass Weight(g) Multiplied by Carat
31.1035 divided by 33.93g x 24 = 22.00
2) So what does fineness mean?

Fineness in essence means the same thing! It is another way of measuring the ratio of gold as the principal metal against alloys or impurities. Fineness is worked out to the thousandth part of the pure metal mass to alloy. The simple calculation for this is pure mass divided by total mass times by 1000.
So let’s take the sample example for the Krugerrand:

Pure Mass Weight (g) Total Mass Weight(g) Multiplied by Fineness
31.1035 divided by 33.93g x 1000 = 916.6
3) Which one is better to use?

In truth they are interchangeable! The traditional way of measuring gold is by carat but in recent years with the expansion of the bullion industry, the adoption of decimalisation in global currencies combined with the adoption of metric systems in Europe, the prevalence of fineness as measurement has increased. It all depends on what you prefer and what bullion you buy.

20g 24 carat gold bullion

24ct 20g gold bar

Commonly bars tend to follow the fineness system – 20g gold bars, 100g bars and 1 kilogram bars. The big refiners we deal with are located in Europe and therefore the adoption of 999 / 999.9 / 0.999 alongside grams has gone hand in hand.

For coins it has been a different story. The most prominent bullion coin is still the one ounce gold coin – which is still measured in the historic troy ounce for its weight and so is usually referred to by carat.

Here is a list of carats and fineness showing the relationship between Carat and Fineness:

Carat Fineness Jewellery Marks
24 999 / 999.9 / 0.999

Hallmark 999

999 hallmark

22 916 / 916.6 / 0.916

Hallmark 916

916 Hallmark

18 750 / 750.0 / 0.750

Hallmark 750

750 Hallmark

9 375 / 375.0 / 0.375

Hallmark 375

375 Hallmark

4) Is 24 carat better than buying 22 carat?

For bullion investment, the 24 and 22 carat distinction makes no difference when buying gold. As a bullion dealer, we are paying for the pure gold weight so it makes no difference to us.

If I have a one troy ounce of gold classified as 24 carat and a one troy ounce of gold classified as 22 carat, which has more gold? They have the same amount of gold! The Krugerrand and the Maple have the same pure amount of gold in them – 31.1035g. The total mass of a Krugerrand is bigger weighing a total of 33.93g, so it is a heavier gold coin than a maple.

Krugerrand 22 carat one ounce gold coin

22ct one ounce gold Krugerrand

Let me put it another way: if I take half a pint of squash and do nothing with it – it is in it’s purest form and is 24ct or 999. If I take the same half pint of squash and add a dash of water – it is now slightly diluted but has more in the glass – this is 22ct or 916. The amount of squash is same in both glasses.

5) Why do they add alloys to gold?

The common reason for adding alloys to gold is that is makes the metal harder. Gold is a relatively soft metal and over time being knocked about, especially worn as jewellery, it would get marked, scratched and possibly lose it’s shape. By mixing in another alloy such as copper or nickel, the final product is a lot harder and less likely to dent and mark over time. Traditionally, British gold such as the British gold sovereign was and still is 22 carat. It made the coins far more robust and easier to transport. In Europe many gold coins were 21.6 carat or 0.900 fineness which again helped to create stronger and more durable coins.

We hope this helps to explain carat, fineness and the difference between 24 and 22 carat. We also added the jewellery hallmarks for those of you interested in the jewellery side/scrap gold side. If we have missed anything on here or have any further questions, please contact us or call us on 020 72 40 40 40 to speak to one of our trained bullion dealers.

Article by Michael Cooper
email:-Michael Cooper

 

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