Buying gold jewellery?
When we first arrived in Australia back in 1998 one of the first things that caught my attention was the high prices for jewellery. (I am actually a computer guy but used to make jewellery as a hobby in South Africa)
Over the years I got more involved in the local jewellery industry and today I am in partnership. I manage all the web sites and marketing efforts and they concentrate on the manufacturing. I would like to share a few pointers that I believe will save you money when you buy jewellery.
Sales
Be wary of constant sales so many of these stores run. Many of these aren’t sales at all; they simply hike the price for awhile and then offer a so called sale when in fact it is standard retail. There is a well known jewellery chain in our local shopping mall and for the past two years they have run a sale every week. I would love to meet the individual who comes up with a different worded sale every week because they have to be the most imaginative individual on planet earth.
Solid, hollow and silver filled jewellery
A jewellery store pays the manufacturer a price per gram; they then add their markup to this. Because the price of gold is continually increasing the manufacturers try to use less and less gold in an effort to ensure the items are affordable. This is where you the consumer need to be careful when buying hollow or silver filled. Other than the obvious reason that hollow jewellery dents and then looks terrible, the most important is value for money.
Always ensure you ask for the gold weight of an item when buying because you can at least calculate whether the price is reasonable or not. At the end of this article is a simple formula for those of you who would wish to calculate it yourself.
Solid
As of today 4th December 2011 we would sell a gram of 9ct gold to a store for $29. This is a finished product like a bangle. If the bangle weighs 31 grams in 9ct then we would sell it to a store for $29 x 31grams = $899
I did a quick search on google now and found the price different stores are selling a bangle ranges between $36 – $124 per gram of 9ct. As you can see if you do not shop around you may end up paying an extremely high price.
On our example of a 31gram bangle the retail would vary between $1,116 – $3,844 a difference of $2,728
If you purchased at $40 per gram or less then you are doing well.
Hollow
If you have the weight simply divide the price by the gold weight and you will have the per gram price they want to charge you.
Silver filled
Generally a silver filled gold bangle will consist of around 20% gold and 80% silver so if the weight was 31 grams as in our example then
31grams x 20% = 6.2grams 9ct gold
31 grams x 80% = 24.8grams of silver
Fine silvers cost is $1.02gram as of 4th December 2011
925 Sterling Silver ranges between $4.50 – $22gram retail
Our example bangle would cost in the range of
31grams x 20% = 6.2grams 9ct gold @ $36gram = $223.20
31 grams x 80% = 24.8grams of silver @$4.50gram = $111.60
Price = $334.80
31grams x 20% = 6.2grams 9ct gold @ $124gram = $768.80
31 grams x 80% = 24.8grams of silver @$22gram = $545.60
Price = $1314.40
As you can see there is a huge variation in prices and it is important to shop around for the best value for money. Hollow and silver filled are cheaper than a solid item because they contain a lot less gold.
If you have any questions please feel free to contact me at md@mikesdesigns.com.au
Kind Regards
Kevin Bowden
http://www.mikesdesigns.com.au
Formula
Remember that precious metals are weighed using troy ounce which is 31.1grams as opposed to an avoirdupois ounce which is 28.3grams. The avoirdupois ounce is for Commodities such as sugar, grains, and the typical grocery items.
9ct gold
Fine gold is known as 24 Karat.
9ct (also known as 9K) is 9/24 parts of gold = .375 or 37.5% gold
9ct is made up of 37.5% fine gold and 62.5% other alloys. These other alloys are usually a combination of silver, copper and zinc. To create different colours of gold you would change the % within the alloy component.
Now back to our formula. We know that 31.1grams of fine gold is one ounce. To calculate the price of 9ct based on any specific days gold price you simply divide 9/24 which gives you .375
You then divide 31.1grams by .375 which equals 82.93grams of 9ct. In other words one ounce of fine gold equals 82.93grams of 9ct.
If the daily price for an ounce of fine gold is $1708 you divide this by 82.93 to give you the price per gram of 9ct. $1708/82.93 = $20.59 per gram of 9ct.
18ct gold
18ct (also known as 18K) is 18/24 parts of gold = .750 or 75% gold.
18ct is made up of 75% fine gold and 25% other alloys.
To calculate the amount of 18ct grams in one fine ounce of gold we divide by .750
31.1grams of fine divided by .750 = 41.46grams of 18ct gold which is exactly half the weight of 9ct.
If the daily price for an ounce of fine gold is $1708 you divide this by 41.46 to give you the price per gram of 18ct. $1708/41.46 = $41.19 per gram of 18ct
