What is karat gold? Explanation of gold purity, fineness and the difference between 18, 22 and 24 karat

Anyone who buys physical gold invariably encounters the term karat. Whether you invest in a well-known gold coin, a heavy gold bar or a valuable piece of jewelry, this specific number directly determines the value and quality of your asset. Yet the different units in the precious metals market often cause confusion. Sellers interchangeably speak of fineness, percentages and karats.

What exactly is gold karat and how do you calculate the actual purity? In this knowledge center article we give you a clear explanation. You will discover the exact differences between 14, 18, 22 and 24 karat and learn how you can easily recognize the gold purity yourself.

What exactly is a karat?

The term karat undoubtedly sounds familiar to you. However, the exact mathematical meaning behind it is less well known to many beginning investors. The word is traditionally derived from the Greek word 'keration', which refers to the seed of the carob tree.

Because these small seeds possessed a remarkably constant weight, they were used by merchants in antiquity as the ultimate and reliable reference weight for weighing precious metals.

Today, a karat is the universal unit of measurement that indicates the purity of gold in a metal alloy. The system works based on a clear division into 24 equal parts. When something consists entirely of pure precious metal, we speak of 24 karat gold.

Mathematically speaking, one karat thus represents exactly a 1/24th part of pure gold. Converted, this equals 4.166 percent of the total weight.

Why is gold mixed with other metals?

Pure 24 karat gold is naturally a relatively soft and pliable material. This makes it very vulnerable to wear and damage in its purest form. For that reason, gold is often melted together at high temperatures with other, harder metals such as copper, silver, or zinc. We call this specific process making an alloy.

This historical system is still widely applied globally, primarily in the jewelry industry. However, within the professional investment market for gold bars and gold coins, we see that the international fineness scale is more often the standard nowadays.

Karat, gold content and fineness: the differences

In the physical precious metals market the terms karat, gold content and fineness are often used interchangeably. Although at their core they refer to exactly the same principle, namely the purity of the metal, the mathematical scaling is fundamentally different.

For you as an investor it is important to be able to distinguish these three designations flawlessly, so you always know exactly what you are buying. We make the following professional distinction:

• Karat: The traditional and historical division based on 24 parts. You mainly see this designation, such as 18K or 24K, in the global jewelry industry and on historical gold coins.
• Gold content (percentage): This is the most accessible way to indicate purity. It immediately shows you the exact percentage of pure gold in an alloy. With 18 karat this gold content is exactly 75 percent.
• Fineness (parts per thousand): Within the professional investment market the fineness scale is the absolute and undisputed standard. The London Bullion Market Association (LBMA) expresses the purity of gold exclusively in parts per thousand. A fineness of 999.9 means that 999.9 out of 1000 parts consist of pure gold. You will almost always find this specific number stamped as an official hallmark on your gold bars and modern investment coins.

Table: Handy overview of gold purities

To make these ratios clear to you, we have summarized the most common purities and their corresponding applications in a clear table.

24 karat gold is the purest form and contains the highest amount of pure gold.

What is the difference between 18, 22 and 24 karat gold?

When you invest in precious metals, you quickly discover that the difference between the various karats goes beyond just a mathematical percentage. The chosen alloy has a direct impact on the hardness, color and application of the gold. Where 24 karat gold is the norm for vault storage, a piece of jewelry requires a completely different composition.

Below we explain the exact properties per purity to you, so you always make the right choice for your investment portfolio or jewelry collection.

18 karat gold: The perfect balance for jewelry

18 karat gold has a fineness of 750 and consists of exactly 75 percent pure gold. The remaining 25 percent is carefully supplemented with robust metals such as silver, copper or palladium. This specific composition offers you a number of important advantages:

• Wear resistance: The addition of hard metals makes the gold significantly more scratch resistant and prevents it from deforming during daily use.
• Color retention: Because of the high gold content 18 karat gold retains a beautiful, warm and deep yellow shine.
• Value retention: Customers often ask us if 18 karat gold is a good purchase. For jewelry this is absolutely the best purity. It combines a high intrinsic gold value with the necessary practical sturdiness. For pure investment purposes, however, we recommend a higher purity.

22 karat gold: The standard for classic coins

Within the world of investment gold, 22 karat occupies a special and historical position. This purity consists of 91.67 percent pure gold (a fineness of 916.7). It is the undisputed standard for some of the most traded and well known investment coins in the world, such as the South African Krugerrand and the American Eagle.

Mints consciously choose 22 karat to give the coins a slight degree of robustness. The addition of copper, which gives the Krugerrand its famous orange glow, makes the coin resistant to damage and wear during trading.

24 karat gold: How much karat is pure gold?

24 karat is the highest achievable purity within the precious metals market. This purity stands for 99.9 to 99.99 percent pure gold, often indicated in the market with the stamp 999.9 Fine Gold. Because no other metals are added, 24 karat gold is naturally extremely soft and pliable.

You will only find this highest purity in specific investment products:

• Gold bars: Almost all globally recognized gold bars from LBMA certified producers are cast or minted in 24 karat.
• Modern bullion coins: Innovative mints have found ways to mint 24 karat coins. Well known examples of this are the Canadian Maple Leaf, the Austrian Vienna Philharmonic and the British Britannia.

Because of the extreme softness of the pure metal we advise you to always store 24 karat coins and bars in their original, protective capsule or packaging. This prevents depreciation due to unnecessary scratches or dents.

How heavy is gold?

When you hold a physical gold bar or a solid gold coin in your hands for the first time, you will immediately notice how surprisingly heavy this feels. Gold has an extremely high density. It belongs to the heaviest precious metals on earth.

To give you a practical idea: a compact block of pure gold the size of a standard pack of butter easily weighs more than a kilogram. This unique physical property directly explains why relatively small investment products still represent a significant financial value and can be stored efficiently in a vault.

Within the professional precious metals market, however, we rarely measure the weight of gold exclusively in regular grams or kilos. The international and undisputed standard measurement for trading in precious metals is the troy ounce.

The troy ounce as a global standard

When you look at the current gold price, you always see the price per troy ounce listed. One troy ounce is mathematically equal to exactly 31.1034768 grams.

For you as an investor, it is important to carefully distinguish between the following two concepts when considering your purchase:

• Fine gold weight: This is the actual weight of the pure gold contained in an object. With the most common investment coins, this is almost always exactly one troy ounce.
• Gross weight: This is the actual, total weight of the object when you place it on the scale.

A 22 karat investment coin of 1 troy ounce contains exactly the same amount of pure gold as a 24 karat one.

Common misunderstandings about karat

Around the term karat, there are some persistent misunderstandings that regularly cause confusion for new investors and buyers of jewelry. We list the two most common mistakes for you, so that you always enter the precious metals market well informed.

Is there such a thing as karat silver?

We regularly see and hear that people search for the term 'karat silver'. Technically speaking, however, this wording is completely incorrect. The historical karat system is exclusively reserved worldwide for indicating the purity of gold.

When we speak about the purity of silver, we exclusively use the percentage method or the international fineness scale in parts per thousand in the precious metals industry. The two best known and most common forms of silver are:

• Sterling silver: This purity has a fineness of 925 and consists of 92.5 percent pure silver, mostly used for cutlery and high quality jewelry.
• Investment silver: Silver bars and well known investment coins are invariably minted in a high fineness of 999 or 999.9.

Carat for diamonds: A completely different meaning

Another common confusion arises when gold jewelry is combined with gemstones. The word carat (internationally often abbreviated as 'ct') is also widely used in the diamond trade, but the meaning there is fundamentally different.

Where karat for gold always indicates the purity and pureness of the metal, for diamonds and other gemstones it is exclusively a hard unit for weight. One carat for a diamond is mathematically equal to exactly 0.2 grams.

How do you recognize the gold purity yourself?

Determining the exact gold purity is of great importance for you as an owner or potential buyer to determine the actual value of an object. Fortunately, you do not always have to visit a laboratory immediately for this.

In the Netherlands, the trade in precious metals is strictly regulated via the Guarantee Act. As a result, almost all gold objects are provided with official hallmarks that you can recognize with the naked eye, or with the help of a magnifying glass.

Where do you find the hallmark?

Manufacturers and goldsmiths place these stamps in strategic, inconspicuous places. With a gold ring, you will almost always find the hallmark on the inside of the band. With necklaces and bracelets, you must look closely at the clasp or the end link of the jewelry. With pendants, the stamp is often placed on the back or on the suspension eye.

These hallmarks usually consist of three numbers that indicate the fineness of the gold. The numbers correspond directly to the percentage of pure gold in the object. For example, do you see the number 585? Then you know immediately that the object consists of 58.5 percent pure gold, which equals 14 karat.

With investment gold, such as bars and coins, the purity is often explicitly stated as a fineness of 999.9.

Table: Recognizing gold purities by the stamps

In the table below you will find the most common stamps and the corresponding karats. This overview helps you to immediately determine the purity of your gold.

Conclusion: this is what gold purities mean

Knowledge about the different gold purities enables you to select the right precious metals with complete confidence. You now know exactly that 24 karat guarantees the very highest purity, while 22 karat coins offer extra robustness while retaining exactly the same amount of gold. Your ideal choice depends entirely on your personal investment strategy.

Are you ready to structurally protect your wealth against a loss of purchasing power? At The Silver Mountain you can buy pure gold safely and discreetly. We exclusively offer globally recognized bars and coins, so you are always assured of the very highest quality and optimal tradability.