As you may know, the spot price refers to the market price of pure gold per Troy ounce (ozt). The Troy ounce is a measurement system that has been used since medieval times to measure precious metals, black powder, and gemstones.
The troy ounce (ozt) is 480 grains, somewhat heavier than an avoirdupois ounce (oz), which is 437.5 grains. A grain is exactly 64.79891 mg; hence one troy ounce is exactly 31.1034768 g, about 10 percent more than the avoirdupois ounce, which is exactly 28.349523125 g.
About Pennyweights (dwt):
Used gold is purchased in a smaller denomination, known as the pennyweight (dwt), which equals 1/20th of an ounce (ozt). The best way to weigh gold is obviously on a jewelers scale. However, it is possible to weigh your gold on an accurate gram scale, converting grams to pennyweights. Chances are you won't have a piece of 24 kt gold lying about, it will probably be of lower grade such as 14-18 kt. However, to simplify things, let's assume it is 24 kt (9999) gold.
Weighing gold at home:
Say you have a piece of 24 kt gold that weighs 100 grams on your scale. Use the conversion formula below to determine how many gold pennyweights it is.
Conversion: 1 gram = 0.64 pennyweight (dwt)
So, 100 grams (jewelry weight) X .64 = 64 gold pennyweights.
Determining Price Per Pennyweight:
Conversion: 1 Troy ounce = 20 pennyweights, so divide 20 into the present spot price (for this example it's $1000)
$1,000.00 / 20 = $50.00 per gold pennyweight.
Understanding Spot Price:
As you know, gold is a commodity that investors buy and sell each business day on the open market. (WallStreet, etc). As investors buy and sell it, the price will rise and fall with market conditions. A familiar term is the spot price of gold, which represents the immediate settlement price per ounce the moment an ounce of pure gold sells. If you're selling less than pure gold, adjustments must be made to calculate your gold's value.
Why you can't get full market price:
Unfortunately, no one can buy your gold from you for full market price. Even investors buying gold bullion must pay a broker fee just to acquire gold. Merchants, such as ourselves have overhead to pay (employees, insurance, advertising costs, refining fees, etc.) in order to stay in business.
