Of Gold & Silver

Thinking of investing in gold?  Then it pays to know a bit about this special metal.  Below are some “gold basics” worth knowing:

Features of Gold

Gold is valuable for more reasons than its beauty.  Here are some of the basic features of gold that have made it appealing for thousands of years:

• Rarity – Part of gold’s value comes from its scarcity.  In the entire history of the world, only 150,000 tons or so have been produced (and mankind has been mining gold for more than 6,000 years).
• Recyclable – Gold doesn’t easily corrode, and nearly all the gold mined is still in existence — it just gets recycled and reused for new purposes.  Thousands of years after it’s been mined, it still shines with luster.  This adds to the metal’s value and desirability.
• Malleability – Pure gold (24 karat) can be shaped into just about anything.  Compared to other metals, it has a low melting point, which makes it easy to work with, and craftsmen can craft it into jewelry and other objects of beauty.

Uses for Gold

When you think of uses for gold, your mind probably goes to gold in jewelry.  This does indeed account for a large portion of gold demand, but there are other uses as well.  Examples include…

• Monetary – Gold has been used as money many times in the past, and some argue that it may once again come into play as a currency (or backing for paper/electronic currency) since the fiat currencies around the world may be headed toward big time inflation.  In some countries (such as South Africa and Canada) gold coins are still considered legal tender.
• Dentistry – While you don’t see many people wandering around with gold teeth today, dental gold is still in use, thanks to the metal’s natural resistance to corrosion.  It is alloyed with silver, copper, platinum, etc. to create durable and lasting dental fixtures.
• Electronics – Not only does gold resist corrosion, but it also efficiently conducts electricity, which makes it popular in electronics.  Gold can be used as a semiconductor in circuit boards and integrated boards, so it is used in everything from TVs to computers to cellphones.

How Gold Is Measured

Gold is measured and weighed in a unique measurement called “troy ounces.”  One troy ounce is equal to 31.10 grams.

As you might guess, an ounce isn’t necessarily an ounce.  Purity is a consideration.

You’ve doubtlessly heard of karats. Karats measure the purity of gold, with the purest form of gold being 24 karat (24K), which is considered 100% pure.  From there it goes down with lower karats representing lower percentages of purity.

• 24K = 100% pure
• 22K = 91.67%
• 18K = 75%
• 14K = 58.3%
• 10K = 41.67%
• 9K = 37.5%

Sources: Commodities For Dummies (For Dummies (Business & Personal Finance))