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The purity content of gold is measured in units referred to as karat (Sebastian, 2019). Particularly, the term is specific for jewelry and ornamental gold. Karat is confusable for the term carat: the unit measure of weight for the diamond (Sebastian, 2019). An analysis of various gold karats is crucial in making an informed decision while purchasing golden items. Understanding the 10k, 14k, 18k, 22k, and 24k gives substantial reasons for the differing level of demand for these items in the United States markets.

An increase in the level of karats of gold implies a commensurate elevation in the level of purity of the item. Therefore, the 24k gold is purer compared to the 10k gold (D’Aquino, 2017). Similarly, the units of karats directly correlate to the fineness of gold in a particular item of jewelry. Currently, the highest attainable level of purity during the purification process of gold is 100% representing 24k (Sebastian, 2019). Similarly, the highest level of fineness in the market is 999 (Sebastian, 2019). Knowledge of the level of fineness and purity of gold is crucial in establishing the demand pattern. Below is a table of conventional measurement of gold in karats.

Karat Gold Purity and Fineness Reference Table

Source: Sebastian (2019)

10k, 14k and 18k Gold

In the US market, a metal must contain at least 41.7% gold in its composition to be considered gold. Therefore, the 10k gold is the lowest karat available in the market. However, other traders have labeled anything less than 50% of the gold content as 10k (D’Aquino, 2017). The fineness of the 10k gold is lower compared to that of 14k and 18k. The remaining large proportion is composed of metal alloys such as nickel. Unfortunately, many people are allergic to nickel and putting on of ornaments with a high amount of the alloy may lead to the development of skin rashes. While this allergy may appear in mild forms as the skin rash, it may take other serious forms which may cause serious medical distress to the affected individual. Therefore it is advisable that allergic individuals purchase gold of higher quality.

Despite the minimal difference between these three low quality gold types, the final luster of 10k is more distinct. 10k gold is rustier compared to the subsequent two qualities. Thus ornaments made of 10k have a poor finish but high tensile strength. Consequently, many people prefer buying ornaments of high quality than this. On the other hand, the difference between 14k and 18k gold is rarely visible to the naked eye. If a person is purchasing gold as an ornament, it is thus more advisable to purchase the 14k gold since it has a higher tensile strength with low significant difference between the 18k gold. The table below shows a comparison of the prices of ornaments made of various karats of gold.

Comparison of the Prices of the Different Karats of Gold in the US Dollars

Gold Unit USD
1 Gram 24k 42.95
1 Gram 22k 39.37
1 Gram 18k 32.20

Adapted from: Sebastian (2019)

As shown in the table above, 24k gold is the most expensive due its high level of purity as explained in the previous section. The difference in price between 24k and 22k gold is minimal, only $3 per gram. Thus it is more economical to purchase 24k compared to 22k. On the contrary, the price difference between 18k gold and 22k gold is US $ 5 (Sebastian, 2019). This difference is not commensurate with the difference in purity between the two items. Thus financial analysis shows that it is more economical to purchase 18k gold compared to 22k gold (Sebastian, 2019). Therefore economic analysis makes 18k gold be the most favorable item to purchase. However, it is crucial to conduct a thorough analysis of the other characteristics of the various karats of gold available in the market before making a conclusive statement on the observable demand and supply patterns in the American market.

22k and 24k Gold

These karats are also referred to as highly refined gold. The ornaments made to this quality are shiny due to the high amount of gold. Notably, the 24k is pure gold devoid of any alloy (Mohamad & Kaspin, 2015). The softness, malleability, and the sparkling nature of pure gold make it so expensive. The high karat metal is thus able to deform into various shapes after being worn as an ornament for a given period. On the contrary, 22k gold is alloyed with other metals like zinc, nickel, and silver to increase its tensile strength. However, the alloying process reduces the content and the glistering finish of gold. However, the glister difference between 22k and 24k gold is minimal.

Cost and Practicality

The amount of karat determines the prices of gold. This implies that prices increase from 10k to 24k (O’Connor, Lucey, Batten, & Baur, 2015). Cost is one of the most determinant factors while purchasing these metals. Despite the higher levels of purity of 24k and 22k gold, the items are malleable and easily deform. Buyers would like to acquire a more durable commodity to make returns for their money (Hanna, 2017). It is not logical to buy a malleable commodity at an expensive price just because of its appearance. Particularly, ornamental materials are usually subjected to pressure when people are dancing, performing various activities or by accident. It is therefore important to buy an ornament that is due to last a longer period of time. Purchase of a material that lasts a shorter duration of time is expensive as one will need to replenish the worn out item severally. On the contrary, if one purchases a more durable item it lasts longer thus making the long run cost cheaper.

The practical differences between the various types of gold are only visible to skilled eyes. Majority of people will not appreciate the differences in the outlook of the ornaments. It is thus more practical to buy an item of gold that will last for a longer duration of time at a lower price. This explains why the 10k, 14k, and 18k gold remains popular in the American market despite their low purity levels.  In most cases, goods of ostentation are bought so to attract attention of other individuals. In case the individuals within the immediate surrounding of the person using these goods of ostentation are not able to note the differences, there is no need to purchase a more expensive item. The image below shows the minimal visual differences between the various karats of gold.

10k, 14k and 18k Gold

References:

D’Aquino, A. (2017). Gold-Filled vs. Gold Plated Jewelry. [online] Golden. Available at: https://www.gldn.com/blog/2017/3/6/gold-filled-vs-gold-plated-jewelry

Hanna, M. (2017). Gold Investor, September 2017. [Online]World Gold Council. Available at: https://www.gold.org/goldhub/research/gold-investor/gold-investor-september-2017/us-gold-jewellery-an-evolving-industry

Mohamad, N. & Kaspin, S. (2015). Investigating the standard process of conventional gold refining process in Kelantan, Malaysia. International Conference on Sustainable Energy and Environmental Engineering, 172-175. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=17&cad=rja&uact=8&ved=2ahUKEwiF3sKa_MTiAhUPzIUKHY7dAWYQFjAQegQIBhAC&url=https%3A%2F%2Fdownload.atlantis-press.com%2Farticle%2F25841498.pdf&usg=AOvVaw3tG96M99qmwWqPwhqEEQz0

Sebastian, Y. (2019). What are the Differences Between 10K, 14K, and 18K Yellow Gold?  [online] Your Diamond Teacher. Available at: https://yourdiamondteacher.com/rings/differences-10k-14k-18k-yellow-gold/ [Accessed 31 May 2019].

O’Connor, F., Lucey, B., Batten, J. & Baur, D. (2015). The financial economics of gold- a survey. International Review of Financial Analysis, 41(n.a), 186-205. Available at: https://mpra.ub.uni-muenchen.de/65484/1/MPRA_paper_65484.pdf

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