How Many Carats of Gold Should You Choose? Buying Investment Gold

Find out how many carats of gold to buy for investment purposes. Discover the advantages and disadvantages of different carat values and choose the best option for your portfolio.

Gold has always been a popular investment vehicle, thanks to its ability to preserve value and protect against inflation. One of the key questions when investing in gold is how many carats to choose.

In this article, we explain why carat count matters and how to select the most appropriate gold for investment purposes.

What is gold carat and why does it matter?

Carat (K) indicates the purity of gold.

24-carat gold represents pure gold, while lower-carat gold is alloyed with other metals such as silver or copper. The most commonly used carat values are as follows:

• 24 carat (999.9 fineness): Pure gold with a gold content of 99.99%. This applies to most investment gold bars and investment gold coins.
• 22 carat (916 fineness): 91.6% gold content, which is more durable due to the alloyed metals. An example among investment gold coins is the popular Krugerrand.
• 21.6 carat (900 fineness): 90.0% gold content. Examples among investment gold coins include the popular Louis d'or and the Vreneli. For coins, 90% purity is also VAT-exempt.
• 18 carat (750 fineness): 75% gold content, commonly used in jewellery. Not recommended for gold investment as it is subject to VAT.
• 14 carat (585 fineness): 58.5% gold content, also commonly used in jewellery. Not recommended for gold investment as it is subject to VAT.

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Why choose 24-carat gold for investment purposes?

When buying investment gold, purity is the key consideration. 24-carat gold — that is, pure gold — is the right choice because:

Value stability: Pure gold has the highest value and preserves it over the long term.

Ease of resale: Investment markets worldwide accept 24-carat gold, making it easier to sell.

No VAT: In the European Union, 24-carat investment gold and investment gold coins of 21.6 carats and above are exempt from VAT, which can represent significant savings.

Wide availability: Most investment gold coins and bars are made from 24-carat gold.

Why consider lower-carat investment gold?

VAT-exempt but lower-carat investment gold coins can generally also serve as circulating currency — this was particularly true of 20-franc Napoléon gold coins. The alloying increases wear resistance.

Summary

Buying investment gold can provide long-term security, particularly in times of economic uncertainty.

The best choice is 24-carat gold bars or coins, or investment gold coins of at least 21.6 carats, as their purity and value guarantee the greatest return. Download our 72-page gold investment study, in which you can learn everything about investing in gold!

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