There is nothing to match gold jewelry as a gift, whether it’s a brooch, a chain, a bracelet or an exquisite pair of earrings. However, when you purchase these items, it’s easy to pay too high a price. In order to ensure you get value for money, it’s important to understand exactly what you are buying.
One of the main factors that determine the price of a piece of jewelry is the purity of the metal. Before starting to look for jewelry, it would be a wise idea to familiarize yourself with the karat quality marks. Karat is the measure of purity, and enables you to tell what percentage of the metal is actually gold.
If the metal is 100% pure, it is marked 24 karat. However, metal of this purity is too soft to be practical to use in jewelry, and it is mixed with other types of metal — such as copper, silver, zinc or nickel — to make it more durable. Most pieces of jewelry are 18 karat (75% pure), 14 karat (58.5% pure), or 10 karat (41.7% pure), with 10 karat being the minimum purity at which a piece can legally be sold or described as gold in the US.
If you are buying in Europe, the markings are different. A mark of 750 is equivalent to 18 karat, 585 is equivalent to 14 karat, and 417 is equivalent to 10 karat. Whether in the US or Europe, in addition to purity markings your piece should carry a trademark or hallmark identifying its maker, and a mark of its country of origin.
Because of the mixture or alloy with other metals, you will find gold comes in a variety of colors. Yellow is alloyed with copper and silver, pink with copper only, and white contains palladium or platinum as well and zinc and copper. Yellow is the most popular for jewelry, but white costs about 10% more than other colors.
For you as a buyer, the problem with karat marking is that it can easily be faked. Less reputable stores can assure you that a piece of jewelry is 14 karat or 10 karat, when in fact it is far less. It’s virtually impossible to tell simply by looking at an attractive piece whether it’s 10 karat, 9 karat or even less.
The best way to ensure you get value for money is to purchase from a store that is known to you, or one with a solid reputation. In particular, you should look for stores with quality assurance programs, which test their own pieces for quality. This doesn’t just apply to the most expensive shops — major department stores such as JC Penney, Sears, and Walmart all have their own testing programs.
Another factor you have to be aware of is the pricing system that many jewelers use, which is known as keystone pricing, or triple keystone. If a jeweler is using keystone pricing, it means the item is being sold for approximately double the wholesale price. Triple keystone pricing means the item is sold for about three times what the jeweler paid, or at a 200% mark-up.
For example, if you see an 18 karat bracelet weighing four ounces, you know that this is 75% purity, so it contains three ounces of gold. If the price of gold per ounce is $1,000, this would make the value $3,000, and this is about the price you would expect to get if you were selling it. If you bought this in the jewelry district on 47th Street, you would expect to pay around $4,000, but elsewhere, where triple keystone is the norm, you could be charged around $9,000.
However, there is another major factor determining price where jewelry is concerned, and that is workmanship. If you were to purchase an 18 karat bracelet of the same weight, but made by Cartier or Bulgari, you could pay as much as $30,000. You are paying a substantial premium for the design and the name, over and above the price of gold. If a piece has historic, antique or collectible value, you will also pay a premium. However, if you were to sell these pieces, the premium you received would not be nearly as much.
The major point to be aware of is that, if you are looking for a precious metals investment, you would be better to purchase bullion, coins or ETFs (exchange traded funds). Jewelry is not ideal as an investment, because when you purchase you are paying for much more than the metal itself. Purchase gold jewelry for its main purpose — for its beauty and decorative value, and for the pleasure it brings to those who wear it.