When you sell your gold to a dealer, they often send this to a refinery for it to be purified. Intact gold jewellery, newly mined or otherwise goes through a purification process. Most dealers might be conversant with the concept, but the process of refining gold itself might be a little obscure. The process of refining gold involves the physical separation of gold particles manually and chemically.
Gold that is extracted from the earth is not pure. It is often mixed with other metals. To find a sizeable amount of gold vast quantities of soil has to be processed. Natural gold nuggets typically have 70 to 90% of gold. After physical separation, the gold is either subjected to heat or chemical treatment. Gold is subjected to extremely high temperature until it melts. Because of its density gold will then settle at the bottom of the molten liquid mix whilst other metals stay at the top to be skimmed off. This technique is quick and efficient, but you can only hope for a purity level of about 99.5%. This is not gold at its finest. The process of heating gold ore is an old one that has been used since ancient times. To get the gold to a finer level of purity i.e. 99.9% refineries treat the molten gold with chemicals. The inclusion of chemicals in the process of refining gold began in 1874 and since then refinery technology and methods have been evolving and getting better.
What happens next is that the molten gold is put in a chemical bath and an electrical current is passed through the gold. The physics and chemistry of this process are complex, so we won’t get into them. However, the gold that comes out of that process is 99.99% higher. The higher the purity of gold the higher the gold price.
The process of chemical processing produces investment grade gold, the kind of gold that goes into making bullion coins and gold bars. It is not uncommon for the process to stop after the melting process when the refineries aren’t required to produce pure gold. For instance, 14k gold is only 58.3% pure and contains other metals. Gold is a soft metal, but the addition of other alloys can improve its strength. Gold used in jewellery for instance needs to be soft enough to make it easier for jewellers to mould their designs but it also has to be hard enough to retain its shape and durability. Gold bullion bars and coins are made with 99.99% or (24k) investment grade gold, so the chemical refining process is essential. However not all coins are made of investment grade gold.
Vintage gold coins like pre-1933 US gold coins and some older British Sovereigns, the Mexican Gold Pesos, etc. were created with copper alloys to make the harder and more ductile. The coins may still contain troy ounces of gold but because of their age, the gold price might be slightly different from that of newly struck gold or rounds and bars that were struck after 2002. Collectors influence the price of older coins because they don’t only buy coins for their purity but also for their age, their history and their provenance.
High levels of gold may sound like the best thing, however there is one downside: 99.99% fine gold is too soft and is prone to abrasions. This is why it is important for buyers of bullion to keep their gold in protective containers.
