What is the Difference between 22 and 24-Karat Gold Coins?

Being in the gold coin business I often field questions from investors, brokers and dealers regarding coinage. Lately, it seems as though I am being asked more often about the difference between 22 and 24-karat gold coins. Brokers tell me that callers often demand 24-karat gold coins and refuse to listen to an offer that has to do with 22-karat coins, which is a real shame because many 22-karat coins are far more promising as investment vehicles than some 24-karat pieces.

The number of karats assigned to a gold coin refers to the coin’s purity. Jewelry-grade gold is often 10-karat (41.7 percent pure gold), 14-karat (58.5 percent) or 18-karat (75 percent pure). Coins are usually either 22-karat (90 percent pure gold) or 24-karat (100 percent gold), but the misconception is that 24-karat coins contain more gold by weight. Actually, 22-karat gold coins that supposedly weigh one ounce actually contain one full ounce of gold as well as some filler material, such as silver or copper, to make it a more durable coin. Thus, a “one-ounce” 22-karat gold coin and a one-ounce 24-karat gold coin contain the same amount of pure gold.

Some newer bullion coins are minted in 24-karat gold, and these can be useful for gold IRA transactions and their fractional counterparts could be useful for buying goods and services one day. The majority of pre-1933 gold coins are 22-karat gold since they were originally intended for circulation. PCGS and NGC-certified examples of pre-1933, 22-karat coins can fetch many times the value of gold, and investment-grade examples are prized for their private classification as well as the fact that they have sometimes outperformed 24-karat bullion in terms of profitability.

It is not wise to base a gold coin purchase on the karat count. Instead, let factors such as your anticipated holding period, profit expectations and need for profit and/or safety dictate your gold coin buying decisions.

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