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Everybody knows that gold is a valuable element, but many people are still in the dark about what they need to know and the jargons involved when it comes to business deals that involve the precious metal gold. It is true that most people would be able to get by without knowing or understanding these technical terms involving gold, but knowing the jargon would be beneficial and help them better understand deals involving precious metals such as gold.

Although different regions use different terms, most of them are similar in context and thus if one plans to trade gold internationally it is imperative for one to be abreast with the terms and jargons that dealers use. However before we move on to the list it is important to understand gold in the most basic sense. There are two versions that gold is defined by in terms of karat, the American Carat and the European karat.

The European system for determining the purity of gold is when the gold item is stamped or marked with the numbers 417 which indicates 41.7% gold content that is deemed as 10 karat gold. As for 14 karat gold, it is marked with 585 to indicate 58.5% gold contained within the specific gold item.

Finally 18 karat gold is marked with 750 to indicate 75% gold is pure gold and the remaining 25 % comprises of other metals to hardened the gold and give it a different hue of colour.

24 karat gold is pure gold that do not contain any foreign elements. 10K gold is the minimum gold content in the United States for anything to be considered as gold. After you are familiar with these basic facts, check the market rate for the current value and compare it to the value it was purchased at. Determine the margin you are making and decide if it is a viable option to pursue.

9 karat gold in turn is 37.5% pure gold and the rest made up of hardening agents. Another factor that individuals who are buying jewellery should be particularly aware of is the fact that gold jewellery is mixed with hardening agents (other metals) due to the nature of gold in its pure form which is extremely soft and thus whatever jewellery is made out of pure gold would go out of shape easily and thus not a viable option to be made or crafted into gold jewellery.

Gold bullions are typical examples of how soft gold is. Another reason hardening agents (usually platinum, silver, copper, palladium) are used to give gold a distinctive colour to make gold jewellery more attractive. However the value of the jewellery is only based on the quantity of gold contained within it.

However gold bullion has a different rating system that does not use the karat system. Instead it is coded by troy ounces. A troy ounce is equivalent to 31 grams. Gold bars are normally graded and categorized by this system and the sole purpose of their existence is for reserves at central banks and for investment purposes only.

This is also the reason that 75% of the gold mined throughout the entire planet is utilized for cosmetic purposes mainly for the jewellery industry. As for the remaining 25% it is directed towards manufacturing and gold trade reserves for corporations and governments.

Golden Jargon

Karat

Derived from the Greek word "keration", meaning carob bean, the term karat indicate the proportion of gold relative to other substances within a metallic material. One karat is equivalent to a fraction of one twenty-fourth. Gold purity can also be quoted in thousandths, with 24-Karat gold referring to around 999 thousandths. The typical gold bar will have a minimum of 23.88 Karats (or 995 thousandths), and the minimum gold content required to mint any marketable gold coin is 21.6 Karats.

Legal Tender

Currency in specified denominations, which you could use as payment Legal tender coins have a face value (i.e. Britannia £100) but the gold content is far more valuable than the amount written on it

Liquidity

The term liquidity is used to refer to the ease in which an asset is ‘converted’ to cash, for example gold jewellery has a high liquidity rate due to the fact that almost anybody would buy gold jewellery or bullion for that matter.

MarketValue

Gold spot prices that are determined by the London Fix twice a day, it is the price at which gold is traded at any given time.

Hallmarks and Mintmarks

Hallmarks are markings that jewellers use to determine purity of jewellery (12k, 14 k, 18 k or 22 k) whereas the mintmark is a letter or symbol on a coin that identifies where that particular coin was ‘produced’

Gold Fundamentals

Gold is without a doubt a long term investment and as such trying to make quick money from gold is not a very workable idea as gold investments should essentially be an investment that is specifically focused on bigger projects that relates to retirement, or buying a house.

For more information, please visit the Melbourne Gold Company