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Wednesday, December 21, 2005

Gold!

Wars have been fought over it, people have killed for it. What is the allure of gold?

Originally (it is guessed) man was attracted to gold because of its sheer beauty and the fact that it never tarnishes or rots in any way. Some ancient cultures associated it with the sun, gods, or royalty (often the three were intertwined in their beliefs). It was used to adorn valued things from jewelry to idols. It soon began to be used for currency. Why trade shells when you have gold?

These ancient cultures quickly learned how to add other metals to gold to ‘toughen it up’ because gold in it’s natural form is too soft to be practical. For gold, karat grade is used to express the proportion of gold in an alloy or the quality of a gold alloy. Fine gold (pure) is 24 karat. The proportions in other karat are listed below.

All jewelry is required by law to be stamped so consumers will know the quality of gold used. Jewelry made in North America is typically marked with the karat grade (10K, 14K, etc.), and jewelry made in Italy is typically marked with the "fineness" such as (417, 583, etc.). So if your jewelry does not have a karat grade stamped on it, check for a 3-digit fineness number.

10k gold has 10/24 parts gold to alloy, it's 41.67% gold, and the fineness grade is 417.

14k gold has 14/24 parts gold to alloy, it's 58.33% gold, and the fineness grade is 583.

18k gold has 18/24 parts gold to alloy, it's 75% gold, and the fineness grade is 750.

22k gold has 22/24 parts gold to alloy, it's 91.66% gold, and the fineness grade is 917.

White gold is a mixture of gold in its natural state (yellow) and white metals such as platinum, rhodium or nickel. 18K white gold will be much yellower than 10K. Additionally, it is always plated in rhodium which will wear off in 1-5 years and leave the gold less bright and shiny.

I wish they wouldn’t do that! I'd rather go without the plating, personally. I will only wear white gold because I believe it sets the gems off better (it doesn’t interfere with their tones) so I’m OK with that. I’m not so obsessed with shine that I’ll buy platinum instead, which is vastly expensive.

Many people are surprised to find out that we don’t have a gold standard for our currency any more. During WWI, the government began running out of money, so they started printing more. Why not? If you need it, make it. Right?

The problem was that the government didn’t have enough gold to back up what they were printing, and they still don’t. If every person in America walked up to the Federal Reserve tomorrow and asked to exchange their dollars for gold, they’d be severely surprised. In fact, the Feds would probably just tell everyone to go home. There simply isn’t enough gold to back up what is printed.

What does this mean?

It means that we will continue to have inflation because the American Dollar doesn’t have a set value. It fluctuates because the more volume that is printed, the more it is cheapened.

I’m not an economist by any means (though I loved macroeconomics in college) so I can’t speak authoritatively about this. But for more information, read The Case For a Genuine Gold Dollar.

Here’s another site that tells you what an ounce of gold is going for on any particular day: Live Gold Prices.

So yes! When you hear the commercials on TV about investing in gold, I would agree that it’s a wise investment. But invest carefully, and consult an expert.

Oh, and it wouldn’t hurt to tell your Other Half that buying you that gold ring this year is an investment, too.

13 comments:

michelle said...

ALL RIGHT!! Emeralds and gold it is for me. Hubby better get shopping!

Thanks Saur!

Saur♥Kraut said...

Michelle, I'll put a bug in his ear. ;o)

Lucy Stern said...

I like wearing 10 and 14K gold. It is more resilent and less likely to get damaged. I like the white gold too, but that is because I am a winter and I love silver too.

It would be wise to have a few pieces of pure Gold coins as insurance in case of a market crash.

Tan Lucy Pez said...

Well, it's pretty and all, but you can't eat it.

But, what the heck. Give me diamonds and gold then.

FTS said...

Ah, a post worth its weight in [ahem] gold. ;)

I feel like I should be taking notes when I come here. I learn something every day.

Will there be a pop quiz? ;)

Lee Ann said...

I love gold. Yellow, white, platinum....all of it! I really cannot decide which one I like better, so I wear which ever for the mood I am in.
Very interesting information.

Janet said...

I say you should blog about the worth of frankensence or mirth. That's timely, right?:)

Three Score and Ten or more said...

Made me think of William Jenning Bryan who ran for president advocating the abolition of the Gold Standard for currency. I believe his great speech included "You shall not crucify mankind upon a cross of gold!!" (or something like that.
You know that when the gold standard was officially abandoned they require folks to bring in their gold money to exchange for paper and made it illegal for any American to own gold in any form except for jewelry or decorative items.
A friend of mine was arrested back in 1961 for owning 26 ounces of gold coins that had been taken off from a sunken ship. He stayed out of prison, but the government kept the gold. Thing have changed. haven't they?

Senor Caiman said...

Saur,

Excellent post. Very informative.

Thanks.

Liquidplastic said...

Gee Saur, you are amazing, and yes that is redundant, but what else can I say. I love the diversity of your blog.

Now I can appreiate the 24K gold band my husband gave me when we renewed our vows. I can also see, by what Lucy said, why his 18K have had to be reshaped several times, when my little 10K have never had to be reshaped.

The Zombieslayer said...

Gold is a lousy investment because an ounce of gold will always be worth an ounce of gold. Case in point, suits. In the 1920s, you can buy a pretty nice suit with an ounce of gold. In 2005, you can buy a pretty nice suit with an ounce of gold.

Plus, when it all collapses and money's worth nothing, my guns will be worth a heck of a lot more than gold. Gold is a fatalistic investment.

The best investment is land. Always has been. Always will be.

As for the facts about gold, thanks. I never knew what 10k, 22k, and all that other stuff meant, nor did I know what white gold is.

For the record, the only gold we own is what's in that bottle of Goldschlager in the liquor cabinet. We think gold is bad luck. too many people have died for it.

Ellen said...

It always amazes me how we place so much value on intangable items such as gold, diamonds, etc. You can't eat them, only trade with them.
It reminds me of the old Twilight Zone story of the men trapped in the desert with the gold bars. Long story short, they starved to death, but had plenty of gold.

I enjoyed your posts about the worth and depth of gems... as always, your research is very informative!

Aunt Jo said...

This is totally off the subject, but funny.

One of the physicians in my office actually got a Pooping Reindeer as a gift this week!! I laughed and laughed. :o) They are real!