18-Karat or 24-Karat Gold: Which Is Better for Investment?

With growing public interest in the gold market, choosing between 18-karat and 24-karat gold has become one of buyers' main concerns, especially when the primary goal of purchase is preserving the value of money and earning returns in the long term.

18-karat gold is mostly used in the manufacture of jewelry and melted gold due to its greater strength and wide spread in the Iranian market. In contrast, 24 carat gold with higher purity is usually used in the production of investment bars.

However, a higher rate does not necessarily mean a more profitable investment. The cost of purchase, the difference between the purchase and sale price, liquidity and originality of the product also play a role in the final yield. In the following, we will compare these two types of gold from an economic and practical point of view.

What is the difference between 18 carat and 24 carat gold?

The most important difference between 18 and 24 karat gold is their purity. The grade shows what proportion of the weight of an alloy is pure gold.

18 carat gold contains 75% pure gold and the remaining 25% is made up of other metals such as copper, silver or other alloy elements. The presence of these metals increases the hardness and resistance of gold and makes it more suitable for the production of jewelry.

In contrast, 24 carat gold is called pure or close to pure gold. Investment bullion usually comes in purities such as 999 or 999.9 per thousand.

Comparison table of 18 and 24 karat gold

Important point: The lower price per gram of 18 carat gold does not mean that the pure gold in it is cheaper. For economic comparison, the amount of pure gold and all transaction costs should be calculated.

Review of 18 carat and 24 carat gold in terms of profitability

From an economic point of view, the amount of profit of investing in gold depends more on the changes in the price of gold in the market and the transaction costs than only on the carat of the product.

Let's assume that the price of each gram of 18 carat gold in a hypothetical example is 12 million Tomans. Considering the purity of 75%, the theoretical value of each gram of pure gold will be around 16 million Tomans.

Therefore, the value of gold contained in a piece of 10 grams of 18 karat gold is almost equivalent to the value of pure gold contained in 7.5 grams of 24 karat gold.

If the price of pure gold increases by 20% and other factors remain constant, the base value of both assets will also increase approximately in the same proportion.

As a result, it cannot be said that 24 carat gold necessarily generates more profit than 18 carat gold due to its higher purity.

What factors determine the real profit of investing in gold?

Purchase price: the amount paid at the beginning of the investment.

Selling price: the rate offered by the seller or buyer at the time of exit from the investment.

Manufacturing fee: a fee that is charged in some products, especially jewelry.

Transaction Fees and Charges: Fees associated with buying, selling or holding services.

Difference between purchase and sale price: the distance between the purchase price and the sale price of an asset.

Bubble or product premium: The amount that may be paid beyond the value of the gold contained in a product.

Therefore, to calculate the real profit, the net amount received at the time of sale should be compared with the total initial purchase cost.

The difference between 18 carat and 24 carat gold in terms of liquidity?

Liquidity is one of the most important criteria for choosing gold for investment. Liquidity means the ability to convert an asset into cash within a reasonable period of time and with the least difference compared to the market price.

In Iran, 18 carat gold has a well-known market due to its wide use in jewelry and molten gold transactions. However, the purchase of melted gold requires checking the quality and authenticity, and some sellers may have specific conditions for buying it.

24 carat gold can be traded especially in the form of standard bars with valid specifications. Of course, the liquidity of the bullion depends on factors such as weight, manufacturer's brand, packaging, and validity of the certificate of authenticity.

For example, it may be easier to sell a standard ingot with a low weight than to sell a heavy ingot with low demand. On the other hand, a piece of molten gold with an unknown grade may also need to be retested for sale.

Therefore, liquidity cannot be determined solely based on grade.

Is it better to buy 18 carat melted gold or 24 carat bullion?

One of the most common choices of Iranian investors is to compare melted gold with gold bullion.

Melted gold is usually obtained from melting gold artifacts and is considered one of the most interesting options for investment due to the lack of wages for making jewelry. Of course, the carat of melted gold is not always exactly 18 and its real carat should be determined.

On the other hand, 24 carat bars are usually supplied with high purity and standard specifications. Some ingots have a serial number, manufacturer specifications and special packaging.

In terms of cost, molten gold may have a lower premium than branded small bars. However, bullion can also be an attractive option for some buyers due to its standardization and ability to be identified.

Finally, the comparison should be made based on the cost per gram of pure gold, not just the price per gram of the product.

Is 24 karat gold more suitable for long-term investment?

24-carat gold is one of the well-known options for long-term asset storage due to its high purity. Standard bars are not usually bought for ornamental use and the main purpose of buying them is to preserve the value of the gold.

However, 18 carat gold can also be suitable for long-term investment, especially if it is purchased in the form of melted gold and with a suitable transaction cost.

In long-term investment, factors such as maintenance security, initial purchase cost, possibility of sale, and changes in gold prices are more important than the appearance of the products.

Another important point is that gold does not have a guaranteed return. The global price of an ounce, exchange rates and economic conditions can increase or decrease the value of capital.