Weighing in on gold and silver
Silver and gold can be weighed two different ways. If you’re not careful, you can be selling at the lower weight but buying at the higher weight. It’s important to know the differences so you don’t end up on the losing end when involved in a precious metal transaction.
Gold and silver are the only two of the “seven metals of antiquity” (the others being tin, lead, mercury, copper and iron) that are known to occur as native metal, ones that occur in pure form. For at least 40,000 years, gold and silver have been in the forefront of finance, ornamentation, technology and even space exploration.
Yet, weighing gold and silver isn’t quite the exact science it should be. There are different ways to measure just how much of these precious metals we buy and sell, yet there are easy ways to convert each onto a level playing field for all.
Gold as gram: A 35 gram gold nugget offered at auction sold for $1,800 in 2018. With a troy ounce spot price of $1,332.73 in 2018, the value of the nugget is $1,499.86 if it were 24K. Most nuggets of over 1 ounce are unusual and may still have inclusions of other metals. Image courtesy BK Auctions and LiveAuctioneers.com
Troy ounce vs. standard ounce in grams
There are two types of ounces to be aware of: troy ounce (t oz) and avoirdupois ounce (avdp or standard). So if you are buying by the troy ounce, but selling at the standard ounce, the difference is already 3.5% in the dealer’s favor.
The reason is that a troy ounce is 31.10 grams while the standard avdp ounce is 28.35 grams. Be sure that the scale that weighs your gold and silver shows it as 31.10, not 28.35.
Pennyweights (dwt)
Occasionally, an auction will show gold offered in pennyweight. There are 20 pennyweight to a troy ounce. Simply take the pennyweight, shown as dwt, and divide by 20 to get the troy ounce in total weight then multiply by the karat to get the troy ounce in gold, then multiply by the spot price of gold that day for its value.
Gold as pennyweight: A simple 18K gold ring from Tiffany weighed in at 9.30 dwt, which equals .348 troy ounce with a value of $581.46 with a price of gold at $1,667.27 at the time. Image courtesy Carlsen Gallery Inc. and LiveAuctioneers
Measuring gold in karats
Gold is measured by troy ounce but also by karat, which designates the amount of gold that is usually offset by a harder alloy to strengthen it. The amount of gold versus the amount of another metal determines the karat: 8K is 33.3% pure (.333), 10K is 41.6% pure (.416), 14K is 58.3% pure (.583),16K is 66.6% pure (.666), 18K is 75% pure (.750), 22K is 91.6% pure (.916), 24K is 100% pure (1.00).
Measuring silver content
Silver is measured by the amount used in any piece of jewelry or decorative item. Sterling silver, for example, is 92.5% silver and usually 7.5% copper. It is hallmarked (stamped) with the word “sterling,” “ster” or the number .925 either on the bottom or on the underside of the item. The item actually feels rather heavy as well.
Silverplate, on the other hand, is mostly base metal with a thin layer of pure silver that has been electroplated to give it the shine and brilliance of silver. If it isn’t stamped, it is silver-plated. It actually feels rather light compared to the sterling.
Silver as sterling: A set of Gorham sterling silver tureens with a total weight of 74 troy ounces of silver at $32.26 a troy ounce in 2012 with a value of $2,413.88 that sold for $3,000. Image courtesy Millea Bros. Ltd. and LiveAuctioneers
Coin silver is usually defined as having 90% silver and 10% copper, but depending on the melted coins used there could be a difference between having 75% to 90% silver.
One way to know how much silver an item has is to cut a small piece from an inconspicuous area of an item, but this is destructive. An X-ray fluorescence (XRF) device, while non-destructive, measures only the base silver nearer the surface and misses entirely the type of base metal alloy underneath, thereby misreading the content of silver overall.
Testing a silver item that is marked as pure silver can be done by setting an ice cube on it. If it melts quickly it is pure silver. Use a magnet to see if it sticks. If it does, it is mostly base metal. A commercial silver testing kit uses nitric acid to see if it tarnishes at a predictable rate.
Silver as plate: A complete five-piece Art Nouveau silver-plated tea set of sold for $2,400, not for its unmarked silver content, but from its artistic design. Most silver-plated tea services will auction for $50 to $150. Image courtesy Clarke Auction Gallery and LiveAuctoneers.com
Things to know
When gold and silver are being weighed, it should be done in front of you. The scale should be at least two decimal places (31.10) to show it is being weighed as troy ounces, not in grams or pennyweight. Sending gold and silver to an offsite location by delivery service won’t allow the collector to know if it was weighed as troy ounce or a standard ounce.
Offsite locations (where you send your gold elsewhere to be weighed) will typically offer 70% or so of the spot price that day. You should be expecting 90% of the spot price or more.
If a dealer wants to sell you numismatic or “collectible” coins instead of buying your gold or silver outright by suggesting that the coins are “outperforming bullion by more than 2 to 1 … charging only … a 1 percent fee,” according to an AARP investigation, he is involved with a boiler room operation. The markup for each coin is wildly astronomical and a collector will always have trouble selling them later. This bait-and-switch tactic is not what a reputable dealer will ever suggest.
Reputable dealers will ask for your personal identification when selling gold and silver. This is to comply with federal regulations to combat money laundering and to verify against stolen goods.
Buying and selling of gold and silver at hotel shows, those offering free appraisals, answering 800 ads, getting a cold call from a so-called dealer, among other types of misrepresentations should always be avoided. Buyer beware is still the watchword. “Consumers need to do their due diligence,” says Kathy McFadden, executive director of the Industry Council for Tangible Assets, “Just as they would if buying a car or asking a contractor to come into their home. There is no difference.”
In the world of gold and silver, buy the book before you buy the coin. In other words, learn what you can first. That is the safest way to hedge against your own inflation.
