Figuring the Cost of Gold

Hi all. Can anyone suggest an easy formula for figuring the exact
cost of the 18K gold used in a piece, of course allowing for the
daily price fluctuations? Should I use pennyweights or ounces?

Allan Mason


Did you buy the gold in pennyweights, ounces, or grams? Keep it
simple, don’t hop around with units if you don’t have to. Factor in
transit cost, taxes, duties, imposts, fees, and any other name for
the cuts that well-placed thugs skim off the top.

Dan Woodard, Indian Jewelers Supply Co.

There is only one formula, and it is easy. I do assume that you
meant, “Should I use pennyweights or GRAMS?”, unless your pieces are
monumental. We use pennyweights - many use grams. I like the even
number of 20dwt/oz.

First of all, get the price of gold - is one that lists
it daily. Then multiply that times the gold that you are using - you
say 18kt., so multiply times.750, 14kt. is .585. It’s easy to get the
decimal for other karats, because it’s just the proportion of gold,

i.e. 18/24 =.750, 14/24=.585, 22/24=.916, etc.

So, after you multiply spot x.750, you have the price of 18kt. gold
per troy oz. Then divide that by 20 for per pennyweight, or 31.1 for
per gram. Then, weigh your ring, and multiply that weight times the
cost/dwt. gives you the cost of the ring.

Example: Spot = $450 x.750 = $337.50 (18Kt./oz) divided by 20
=$16.875 (18kt./dwt) for a ring that weighs 8dwt = $135 cost.

I actually made up a spreadsheet up on the wall of gold and platinum
prices so we can just look at it instead of calculating it all the
time, but it’s the same numbers…


Divide the daily spot price of the gold by 31.1. That gives you the
cost of one gram of pure gold. Multiply that figure by.75 which gives
you the cost of one gram of 18k. Multiply that figure by the weight
of the piece and you have the “melt” cost, or price. Of course if you
want to know the actual cost of the gold in a piece you have made,
you have to go back to what you actually paid for it from the refiner
or wherever you bought it, including shipping, insurance etc. and use
that figure instead of the daily spot. You can do this in
pennyweights if you wish, in which case you substitute the 31.1
figure with 20, the number of dwts in a troy ounce. Hope this helps.

Jerry in Kodiak

If you are producing 18kt gold by alloying the metal in the studio
there is also an additional cost incurred for the other metal
components used in the alloy. This cost, even though minimal by
comparison to the gold portion of the alloy, still needs to be
included in the metal price.

If you are buying pure gold, regardless of the form, you are most
likely paying some additional expense beyond just the spot price of
the metal, such as shipping charges or postage and handling or a %
above spot, depending upon the source. These costs also need to be
factored into the metal price.

There will undoubtedly be some amount of loss (of metal) no matter
what process is being used to manufacture the item. Whether as
sawings and filings going into the bench tray during fabrication, or
as grindings during the clean up of cast pieces. If this (lost) metal
needs to be sent out to be reclaimed it will incur another expense
when processed by a refiner. Even if the metal is reclaimed and
refined in the studio and made into a reusable form of metal, there
will still be labor involved in this reclamation, which should also be
regarded as a cost in the overall price of the metal.

All of these things should be duly considered and adequately
appropriated into the cost analysis of the metal price to insure that
the real cost of the metal is accurate and accountable. If not, you
will be loosing money on every gram or dwt of gold you sell. Granted,
it may not seem like much, but 50 cents a gram over the course of a
years production can amount to a tidy sum.

Finally, don’t forget to consider adding an appropriate markup to
your metal price to provide a return (profit) on the material
investment you are making in the production of your jewelry.

Michael David Sturlin

It seems to me that people are forgetting the additional costs such
as the alloys and shipping and are charging just for the gold

Judy Shaw, GJG

Hi Allan,

Can anyone suggest an easy formula for figuring the exact cost of
the 18K gold used in a piece, of course allowing for the daily
price fluctuations? Should I use pennyweights or ounces? 

The easy way to figure out gold cost is to use the karat decimal

10k =.416
14k =.583

v18k =.750

So for 18k there are 750 part out 1000 that are pure gold. So the
ratio is important, not the unit of measure. Use either karats or
grams. What ever is used locally.

Example; If you have 10. grams of 18k yellow gold. 7.5 grams are pure
gold and 2.5 grams are alloy.

At $450.00 USD oz. you would divide $450.00 by 31.104 grams = $14.47
per 24k grams.

Take you 7.5 grams times $14.47 = $111.42

Alloy is quickly figure out $1.00 per gram times 2.5 grams = $2.50

$111.42+ 2.50=113.92 for 10grams of 18k gold. Don’t forget to add a
little for shipping and taxes. And maybe a little more, for a profit

Jim Zimmerman
Alpine Custom Jewellers & Repair