Types of Gold

by | Oct 9, 2020

Throughout history, gold has been a constant symbol of wealth and value. The increasing rarity of the metal and its inherent beauty only add to its prestige.

Gold comes in different compositions, colors, and purities. Whether you’re planning to use gold as an investment vehicle or buy jewelry for everyday use, it’s not a bad idea to learn the types of gold at its many forms.

Physical Gold

We process gold in various physical forms for different purposes. Let’s go over the most common ones.

Gold Bars

Gold bars (also known as ingots or bullion) come in the shape of bricks for more convenient storage. You can purchase gold bullion in different standard weights, starting at one gram. The value of bars depends on gold’s current market value.  Both private companies and government mints produce bars.

If you’re planning to buy bullion, always check for a recognized hallmark (the bar’s brand) and stamping, which includes the:

  • Registration number
  • Refiner
  • Weight
  • Purity

Gold Coins

Thousands of years ago, ancient civilizations began shaping gold into coins for currency. Today, gold coins are a potential investment vehicle. The weight of coins can range from 0.18 to 1.8 grams. Many governments mint gold coins like the:

  • Australian Kangaroo
  • Canadian Maple Leaf
  • American Gold Eagle
  • Chinese Gold Panda
  • Mexican Libertad
  • British Sovereign

You may also find an abundance of coins that don’t pass through common legal circulation, despite having legal tender status. In general, minted coins have more value when melted down because you’re paying more for the labor of making the coin than the gold content itself. However, some collectible coins may have a higher market value depending on their rarity.

Gold Jewelry

Unlike coins or bullion, gold jewelry can have two uses. You can purchase jewelry for the gold value, but you also get to wear it as an accessory. However, if you are focused on making investments alone, it’s best to avoid buying gold jewelry. These items’ prices exceed their meltdown value more often than not because, like gold coins, you’re also paying for the craftsmen’s labor.

When investing in precious metals, items with higher purities are easier to appraise and circulate on the market. Finding pure gold jewelry for investment purposes can be difficult because of the metal’s very soft and malleable nature. Most pieces you will find are alloys (gold mixed with other metals) to make them more durable and longer-lasting.

Paper Gold

People use paper gold to tap into the investment potential of precious metals without actually owning physical gold. While this asset reflects gold’s spot price on the market, some consider paper gold more useful for trading than as a long-term investment. Here are some of the more notable types:

Gold Exchange Trading funds

Gold Exchange Trading funds, or ETFs, are a collection of stocks that handle gold assets. The main advantage of ETFs is that you don’t have to worry about storing physical gold.

Gold ETFs can also act as a defensive asset, similar to bonds, that many investors use to hedge against currency debasement as well as political and economic turbulence.

The value of gold usually rises when the dollar is weak. So if you have an investment portfolio with risk exposure whenever the dollar is low, getting gold ETFs can help you hedge some of that exposure.

Gold Futures

Gold futures (also known as gold options) are contracts in the future derivatives market built on buying or selling gold on a specific date and price. Investing beginners might prefer other forms of gold investment since this market involves a higher degree of risk.

Gold Commodity Pools

Commodity pools are accounts in which investors combine their assets to take part in deals that they cannot afford independently. Like gold futures, people also trade pool accounts on future derivatives markets.

Gold Purity

24k gold bar

The purity of gold is measurable in karat—or carat outside the U.S. This system of measuring purity originated from medieval coins called “marks.” One mark weighed 24 karats in a system by which a carat equaled a coral tree seed’s weight.

It was challenging to make marks out of pure gold because of its softness. To solve this issue, metallurgists began combining gold with other metals to produce a more rigid substance. The resulting coin’s purity was proportional to the carat weight contributed by its gold content.

One gold karat is 1/24, or 4.1667%, of the whole item, and the alloy’s purity reflects the amount of gold it contains. Simply put, an object with 22 parts gold and two parts alloying metal is 22-karat gold, with 24-karat being the purest. If you’re planning on buying gold jewelry meant for regular use, it’s essential to know its purity.

24-karat

As the highest gold karat, some might assume that 24-karat is the “best” to buy, but this is not always the case. For investment purposes, yes—gold in its purest form is the most desirable. However, pure gold jewelry is another story.

Pure gold bends and scratches easily, so it’s not suited for daily wear. 24-karat gold jewelry requires meticulous handling and maintenance to prevent damage. Usually, people who own this type of jewelry keep it in storage and only bring it out on special occasions.

22-karat

Even 8% of alloyed metal mixed into gold makes the resulting item a bit more durable. Nevertheless, you should still take great care when handling 22-karat jewelry because this is still the softest form of gold alloy jewelry.

18-karat

18-karat is the most-used gold alloy ratio when making jewelry. 18-karat pieces retain the deep yellow tone of gold with the benefit of enhanced strength and durability.

14-karat

14-karat jewelry is arguably the better choice if you plan on wearing these pieces every day because they can resist regular wear and tear. Jewelers often use this ratio for wedding bands and engagement rings.

Gold Alloys

As we’ve mentioned, the process of mixing other metals with gold improves its durability. However, it can also result in aesthetic changes.

Gold, in its natural form, has a shiny yellow hue. This base yellow color is changeable by adding metals, giving jewelers more freedom when customizing their pieces.

If you’re a precious metal investor, gold color isn’t something you need to study extensively. However, it might help to know some basic information, especially if you’re also interested in jewelry.

White Gold

When combined with white metals like nickel and palladium, gold forms an alloy with a silvery hue. Aside from the mixed metals, “white gold” may also contain rhodium coating. The rhodium coating improves the item’s strength and durability while giving it a whiter and more lustrous sheen. However, the plating wears off over time and requires a recoat if you want to maintain the item’s original appearance.

Rose Gold

When gold mixes with copper (which has a reddish hue), the resulting alloy has a pinkish color—hence the name “rose gold.” By changing the proportion of gold and copper, you can get different shades of rose gold. Rose gold jewelry typically has a gold-to-copper ratio of 4:1. A higher copper content creates a more vivid red color that some people might prefer aesthetically for jewelry.

Green gold

Green gold (or Electrum) is a naturally occurring variant of pure gold. Electrum mainly consists of gold and silver with small traces of copper, platinum, and other metals. Today, it’s possible to make green gold by mixing gold with silver, zinc, or cadmium. However, experts frown upon the use of cadmium because of its toxic properties.

Blue Gold

Combining gold with indium or gallium creates blue gold. The alloy metals have a natural silver color. However, mixing them with gold produces compounds with pale or vivid blue hues. Rhodium and ruthenium are also common metals used to make blue gold.

Purple Gold

Jewelers form this alloy by combining gold with aluminum. The ratio used is usually 79% gold and 21% aluminum. Purple gold is a bit more brittle than other gold alloys, so a strong impact can damage or shatter it. As a result, jewelers often use it as a “gem” rather than a “body.”

Black gold

Black gold is an alloy containing gold with cobalt or chromium. Another method of producing this color involves oxidizing the gold with sulfur-oxygen compounds. This process can create different hues of brown and black.

Yellow Gold

Yes, gold in its natural state has a yellow color. However, it’s possible to intensify the color by combining gold with copper, zinc, and silver. This alloy is more robust than gold and has a more vivid, bronze-like color.

Parting Words

Gold’s many shapes and forms make it versatile for both functional and aesthetic purposes. Both governments and private individuals use gold as an investment vehicle because of its unique advantages. As we’ve mentioned, you can keep gold to hedge against several risks related to currency, inflation, politics, and many more. Investors also use precious metals to diversify their investment portfolios.

If you want to learn more about gold investments, please contact us at Learn About Gold, your source for information about Gold IRAs. We are happy to help you out on your investment journey!

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