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Quick Summary
Gold has been a valuable resource for thousands of years.
It is considered one of the most important resources in all of human history.
It is used for jewelry, coins, and other decorative arts.
There are many different types of gold that have unique qualities and characteristics that make them special to certain cultures or regions around the world.
This article will explore some of the many different types under physical gold, paper gold, gold alloy, and gold purities.
Physical Gold
Under physical gold, there are different forms of gold.
The most common forms of physical gold include:
Valuated Gold
Valuated Gold is an international standard for gold that consists of 24 kg (99.3 %) of pure gold fineness and a small amount of alloy, which makes it suitable to be used for investment purposes.
The value is based on the weight in kilograms without distinguishing between any marks or other defects visible to the naked eye.
The term “valuated gold” is often used for scrap gold, which has undergone the process of valuation to be accepted by a refiner after being melted down.
Gold Jewelry
What differentiates gold jewelry from coins and bullions is that they are not only used for value but as a means of beautification and fashion.
Artisans craft gold jewelry to create pieces that can be worn proudly for personal use or gifted during special occasions such as weddings, birthdays, and graduations, among others.
If your focus is on investing, refrain from this type of gold because it is the most expensive since you need to pay for the labor and craftsmanship involved in making it.
Stamped with designs representing different countries, these types of physical gold have legal tender status in their country of origin.
Gold coins are minted by government organizations for trading.
Each coin contains a certain weight (0.18-0.8g), purity level, and unique design that differentiates it from other coins.
Gold coins are common investments because they can be bought at an affordable price while still containing the same amount of physical gold content in each piece.
Gold Bars
Gold bars are one of the most common types of physical gold that individuals buy.
They are traded in their purest form, which is 24 karat (24K).
Gold bars have a brick shape, making them easy to store.
Also known as gold ingots or bullions, these forms of physical bars are produced by both government and private entities and can be bought at different standard weights starting from one gram.
Gold bullions have no fixed price, and the value of gold determines their prices on the international market.
Before actualizing its purchase, confirm if it has recognized hallmarks and stamping like a refiner, weight, purity, and registration number.
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Paper Gold
Paper gold represents an alternative form of trading gold through the use of derivatives.
This type involves financial instruments pegged to or derived from prices in the physical market for actual units of metal.
Paper Gold is traded over-the-counter, which means it's not regulated by any central bank authority and is bought between two parties without being listed on an exchange.
The most common forms of Paper Gold are:
Exchange-traded funds (ETFs)
Gold Exchange Traded Funds, better known as ETFs, are financial instruments that allow investors to trade gold without holding any physical units.
This means they don't have the risks associated with buying and storing metal like you would in physical gold.
They can be purchased through brokerage services just like shares listed on stock exchanges which means there is a buyer and a seller in every trade.
Gold ETFs can be compared to bonds for the function as defensive assets, hence used by most financial traders to hedge against inflation caused by political, economic, and exchange rate volatility.
Gold Futures (options)
Gold futures (options) are financial instruments that allow investors to trade gold at a set price and date.
If the market rate is above this price, it means you could lose money as your investment will not yield any profit.
This type of trading is recommended for those who know about how prices move because they can be volatile in nature.
Gold futures trading happens on future derivative markets.
Gold Commodity Pools
Commodity pools are legal arrangements that allow several individuals to pool their money together for trading purposes.
The investors are issued units of the pool that represents their share in it.
These gold derivatives allow small-time individual traders to reap benefits similar to large-scale companies, albeit with minuscule fees and commission rates.
Gold alloy
The name alloy comes from the Latin word alligare, which means to "make into one". Alloying is a process used in metallurgy where two different metals are mixed together.
Gold alloys usually contain more than one type of metal, but they can also be made up of just one kind.
After undergoing this process, gold looses its yellow tone, resulting in the following.
Yellow Gold
Though yellow is the natural color of gold, it can be alloyed with other metals to intensify its yellow color. The most common metal used for this purpose is silver, zinc, and copper, which gives a brighter tone to the already existing gold hue.White Gold
White gold is a result of alloying pure yellow gold with either nickel or palladium. The result is a silvery-white metal that requires re-coating after some time since it loses its original color over time.Rose Gold
Rose gold is a type of alloy that has been used in jewelry making since ancient times. It is made from copper and pure gold to create an intense pink hue. It is considered to be more expensive than yellow gold due to its rarity and darker color, but it has low resistance levels compared with other types.Green Gold
Green gold is made from alloying pure yellow gold with platinum, zinc, or copper, resulting in a greenish metal. It is durable but softer than the other types of alloys mentioned above.Blue Gold
Blue gold is a result of combining gold with gallium or indium, whose natural color is silver. One can also use ruthenium and rhodium in the production of blue gold.Purple Gold
Combine gold with aluminum in a proportion of 79% and 21%, and be sure to get a beautiful purple color. This alloy is mostly used as a gemstone in making rings, necklaces, or earrings since it is more brittle than the rest, and a strong impact can ruin the piece.
These are some of the many types of gold that are available in the market today. One can use gold in the investment or production of jewelry. It is important to be aware of the different types in order to make a more informed decision before the purchase.
Gold Purities
Gold purity refers to the amount of gold in an alloy, measured as a percentage.
Karat is its unit of measurement which means 24K represents pure gold, while 18k contains 75% gold. Gold purity is used as a measure of quality and value since it increases with the number of karats in a product.
For example, an 18-karat piece will always be more expensive than a 14-karat one because you can never extract 100% gold from alloys. Gold purity forms are:
24 Karat
24 karat gold is the most common form of pure gold used in jewelry.
It contains 24 parts out of 24 that are made up purely of gold, hence its name.
Depending on one's preference for color, this type can be easily alloyed with other metals to create a more desirable effect while maintaining high purity levels at all times.
24 karat gold is considered a good choice for investment purposes as it has high liquidity and value.
22 Karat
22 karat is a common alloy used in gold jewelry and ornaments. It contains 22 parts out of 24 that are made up purely of gold, hence its name.
It has some small portions of silver, copper, or other metals used to strengthen the alloy.
However, jewelry made from 22 karats is very delicate as it is a soft metal but more expensive than 18 karat gold and 14 karat.
18 Karat
This is the commonly used form of gold in the jewelry market today.
It is more robust, durable, and affordable compared to 24 karat.
18 karat gold is alloyed with other metals that make it hard.
This form of purity gold is popularly known due to its ability to retain the gold's yellow tone.
14 Karat
The last in the list of purity gold is 14 karat.
It has lower purity levels than others.
This type makes for ordinary and affordable jewelry due to its high availability in the market today.
Since it has a higher ability to resist wear and tear, it is mainly used in devising everyday jewelry like rings.
Conclusion
In this day and age, it is easy to get confused about all the different types of gold.
To understand what they are, you need to know a little bit about how they came into existence in the first place.
You may have heard that gold has been used as a form of currency for thousands of years around the world.
Gold used to be measured by its weight in ounces, grams, or other units.
Gold has always been expensive, which is why they created golden items as a way for everyone to have gold jewelry.
However as the world economy changed, so did how they valued gold as a precious metal.
