Three main substances are usually referred to as fool’s gold. These substances can have the appearance of gold but lack the physical properties of gold. The most common is pyrite, an abundant iron sulphide mineral. The below photo from the Oregon State University shows how similar it looks to gold.
Chalcopyrite and weathered mica also give the appearance of gold. But, like pyrite, this is in appearance only. Once any prodding, scraping or pushing occurs these substances will react very differently to gold, as the USGS explains:
“these minerals will flake, powder or crumble when poked with a metal point, whereas gold will gouge or indent like soft lead. In addition, actual gold will leave a golden yellow streak when scraped on a piece of unglazed porcelain. Pyrite and Chalcopyrite will leave a dark green to black streak and the common micas will leave a white streak”
However, there are other ways fake gold can be created. Most commonly, gold plating or gilding is done to give the appearance of gold. The below image from this Fox News story shows how cheaper metals or alloys covered with a thin layer of gold can frequently convince. Tungsten is frequently used in these scams as it has a similar density to gold.
In the above case, the amounts were relatively small. But industrial fraud also occurs more frequently than you would think. In the story below a significant amount of what was said to be gold, was in fact just gilded copper.
So, it is clear that even in these times it is vital to understand what scams are out there, and what exactly you are buying, and from who.
The two best-known methods of defining and measuring purity are known as Karats (or Carats) and Fineness.
The words “karat” and “carat” are used interchangeably. Confusingly carat is also the name of the measurement to weigh gems but is distinct from a gold karat or carat. Historically, the word derived from the usage of a carob bean as unit of weight. K, k, KT, Kt, kt, CT, ct are the common abbreviations
When measuring the purity of gold, the karat system divides purity into 24 parts. So, 24 karat gold is 100% pure gold. This means there is no alloy whatsoever. Because gold is relatively soft, it is rare that jewellery is 24 karats. Different countries have different legal karat minimums as to what can be permitted to be called gold. In the United States for example gold must be at least 10K, in Denmark it is 8K. The table below shows karats and their percentage of gold equivalents:
|Karat / Carat||% Gold|
*There are usually almost minuscule or trace amounts of non-gold material even in the highest purity bars hence the convention of industry participants rarely claiming 100% purity.
Fineness does a similar thing to the karat method but just shows the purity in parts per thousand:
|Fineness||Karat / Carat||% Gold|
Variations of Gold in Jewellery
24K gold is too soft for jewellery. Thus, in the jewellery industry gold is combined with other metals to strengthen the item as well as enhance the appearance depending on the customer’s preference. There are numerous different combinations of gold with other metals throughout the karat spectrum. Some have 10K others 18K. For the customer, it all depends on price and preference. The below diagram demonstrates this nicely:
Yellow gold – usually mixed with metals such as zinc or copper
White gold- gold alloyed with metals such as nickel, silver, palladium, platinum and sometimes coated in rhodium
Rose gold – usually mixed with copper and silver. The more copper used, the redder or pinker the object becomes
Green gold – known also as electrum is created by adding silver.
Black gold – created by adding cobalt
Blue gold – is an alloy of gold and either indium or gallium
Whatever fashion, fad or trend the most important thing when examining gold jewellery remains the amount of gold in the piece. But as stated, in jewellery at least, most items are rarely 24K.
Gold Purity in the Financial Markets
When it comes to the gold industry purity matters. For serious investors and market participants only the highest purity, in the safest vaults, in the most reputable institutions, is sufficient.
Determining the purity of gold whether in physical or delivery of the underlying in a futures contract is called assaying. Fineness is the metric used in the gold market in the financial world.
Looking at the main players in the institutional gold market it is clear the purity is of the highest degree.
For example, the LBMA (London Bullion Metals Association) has a minimum fineness requirement of 995.0. As a side note, all gold accessed via Goldex is LBMA 995.0 fine gold bars or better. The London Metal Exchange (LME) also uses this minimum, as does COMEX from CME Group. Thus, both the major players in the physical and futures gold market use 995.0 fineness.
As can be seen, only the highest purity standards should be considered when investing and gold. It is also important to note that when buying gold, as the saying goes, all that glitters is not gold, unless the gold is of the highest quality assured by LBMA standards.