Gold Markup for Jewelry: The Ultimate Guide

Learn the meaning of essential trade terms for gold weight and karat purity, so you can accurately calculate the gold content value of any jewelry item and understand the gold markup applied by jewelers.

In this comprehensive guide, you will learn:

• How to convert between different gold weight measurements including troy ounces, pennyweights, grains, and grams.
• How to understand karat values and calculate gold purity percentages from 10 karat gold to 24 karat gold.
• How to determine the actual gold value in jewelry based on current market prices.
• How to calculate the markup jewelers apply when selling gold items.
• How to apply these calculations to real-world examples using different weight measurements.

Understanding Gold Weight Measurements in Jewelry

Jewelers traditionally weigh gold and alloying metals in troy ounces. However, depending on the context, weight references and terms may vary. Unfortunately, this variety sometimes makes it difficult for average consumers to make quick and accurate calculations about their jewelry's value.

Here are the essential gold weight conversions you should know:

• Troy pound = 12 troy ounces
• 1 troy ounce = 20 pennyweights (dwt)
• 1 pennyweight (dwt) = 24 grains (gr)
• 15.43 grains (gr) = 1 gram (gm)
• 31.10 grams (gm) = 1 troy ounce

Note these equations carefully. In particular, learn the conversions for pennyweight (dwt), grain (gr), and gram (gm). (Don't confuse the abbreviations of the last two). You'll find yourself frequently dealing with these three weight references on a "price per ____" basis.

Gold Karat Values

The karat value (K) of a gold item measures its gold purity. Specifically, it represents the ratio of pure gold to alloy metals in the piece. Pure 24 karat gold is 100% gold with no added metals. For example, 12K gold contains 12 parts gold and 12 parts alloy metal, resulting in 50% purity.

To determine the purity percentage of any karat value, simply divide the karat number by 24. For convenience, here's a quick reference:

You can round 14K to 60% and 10K to 42% for easier approximations.

How to Calculate the Gold Markup

When sellers claim they don't price based on weight, they're usually pricing according to "what the traffic will bear" - meaning you'll face an arbitrary markup on the gold item.

However, if you know both the weight and karat of a gold item, you can calculate its gold value yourself and get a good estimate of the jeweler's markup.

Below, you have three examples of gold items sold by pennyweight, grain, and gram. Let's calculate the markup in these cases, using $400/troy ounce as the daily gold price. (Editor's note: Yes, this article shows its age. However, the math remains the same, regardless of the daily price of gold).

Calculating Gold Value by Pennyweights

A dealer wants to sell a 14K gold item weighing 3 dwt for $90.

• To get the pennyweight price, divide the daily gold price per troy ounce, $400, by 20. (1 troy ounce equals 20 dwt).
• Thus, $400/20 = $20 per dwt.
• To get the pure gold price for the item, multiply 3 dwt, the weight of the item, times $20.
• Thus, 3 x $20 = $60. (This would be the price IF the item were 24K or 100% gold).
• To get the 14K gold price for the item, multiply $60, the pure gold price, by 0.6. (Remember, 14K gold contains approximately 60% gold and 40% alloy).
• Thus, $60 x 0.6 = $36.

So, the 3 dwt, 14K item contains $36 worth of gold, when gold sells at $400 per troy ounce. Therefore, we've determined the jeweler's markup for the alloys (and everything else) to be $54, since the item is being sold for $90. The $54 markup is 1.5 times the value of the gold.

Calculating Gold Value by Grains

A dealer wants to sell a 14K gold item weighing 3 gr for $5.

• To get the grain price, divide $400 by 480. (1 troy ounce equals 480 gr).
• Thus, $400/480 = approximately $0.83 per gr (or 83¢ per gr).
• To get the pure gold price for the item, multiply 3 gr times $0.83.
• Thus, 3 x $0.83 = $2.49.
• To get the 14K gold price for the item, multiply $2.49 by 0.6.
• Thus, $2.49 x 0.6 = approximately $1.49.

So the 3 gr, 14K item contains about $1.49 worth of gold, when gold sells at $400 per troy ounce. Therefore, we've determined the jeweler's markup — at $5 for the item — comes to $3.51, about 2.35 times the gold value.

Calculating Gold Value by Grams

A dealer wants to buy a 14K gold item weighing 3 gm for $15.

• To get the gram price, divide $400 by 31. (1 troy ounce equals approximately 31 gm).
• Thus, $400/31 = approximately $13 per gm.
• To get the pure gold price for the item, multiply 3 gm times $13.
• Thus, 3 x $13 = $39.
• To get the 14K gold price for the item multiply $39 by 0.6.
• Thus, $39 x 0.6 = $23.40.

So the 3 gm, 14K item contains around $23 worth of gold, when gold sells at $400 per troy ounce. Therefore, we've determined that the jeweler's offer to buy the piece at $15 comes to about 65% of its gold value.

How to Determine the Actual Gold Content Value in Your Jewelry

In summary, to calculate the gold value content of any jewelry item, you need three key pieces of information:

1. The weight of the item
2. The karat purity
3. The current daily gold price

When working with different weight measurements, remember these important conversions:

• 20 dwt = 1 troy ounce
• 480 gr = 1 troy ounce
• 31 gm (approximately) = 1 troy ounce

The calculation process follows these steps:

1. Divide the daily gold price per troy ounce by the appropriate conversion factor for your weight measurement.
2. Multiply that result by the weight of your item to calculate its pure gold price.
3. Multiply the pure gold price by the gold content percentage (karat value divided by 24).

The final result indicates the actual gold content value of your jewelry item. By comparing this value to the retail price, you can easily determine the jeweler's markup and make more informed buying and selling decisions for your gold jewelry.