Gold and silver prices have been on a steady rise over the past decade, with a few dips over that time, but maintaining an incline overall.
However, a sharp increase has hit over the past few weeks, causing an explosion in the value and popularity of gold.
With this increase, we want to know just how much of your old jewellery you’d need to get rid of to buy a brand-new car.
How much gold do you need to buy a car?
The cheapest brand-new car in Australia is the Kia Picanto Sport manual at $19,190 plus on-road costs, which will be the base study of our experiment.
Simple maths will tell you that you need 94.1 grams of gold to buy a new car in Australia, but there are more nuances to it than weighing out 94.1 grams worth of jewellery from your grandmother’s dresser.
Gold purity is measured in karats, and unless it’s gold that has directly come out of the ground, refined gold labelled as 24k is only 99.9 per cent pure.
It’s quite rare to find any jewellery made out of 24k gold as it's often very soft and malleable, making it prone to a lot of visible wear. This is why you’ll usually see it in 18k or 14k, a mixture of alloys such as copper, zinc, nickel, and silver.
That affects the price you will receive for gold when you take it in to be melted down or pawned.
There is then a cost to factor in when it comes to scrapping your gold jewellery. If we assume that the jewellery you’re taking has no design value and is purely worth its material cost, then you will lose money on things like commission, grading, and materials cost to smelt it down.
You can lose anywhere between 20 and 40 per cent of material value when scrapping gold from dedicated gold buyers and up to 60 per cent just taking the jewellery to a pawn shop.
There’s no real way around this unless you take a gamble on the used market or spend copious amounts of time trying to refine the jewellery you have back to 24k, only to still be hit with commission costs from a dedicated gold buyer.
Wedding bands range anywhere between three and six grams, so we will meet in the middle at six grams on average, and we get lucky that all the jewellery is 18k.
We take it to a cash for gold buyer, which leaves us with around 4.5 grams of actual gold per ring, which equals circa $912 if you factor in the 99.9 per cent purity following refinement.
Then there’s the average of about 30 per cent loss for commission and refinement, which leaves you with $638 for a pretty sizeable wedding band. You then need to do this 30 times to buy your new Kia Picanto Sport manual, and you’re still up for registration, stamp duty, and insurance costs.
While gold is certainly on the rise, it’s a stark reminder that you need a lot of it to make a large purchase. You essentially need to either be married and divorced 30 times to find 30 wedding bands' worth of 18k gold or somehow come into an extensive collection of it.
It would also need to be pretty old jewellery too. With shop commissions and labour costs factored into the construction of jewellery, you are never paying exactly what the materials are worth when you buy jewellery.
Zane Dobie comes from a background of motorcycle journalism, working for notable titles such as Australian Motorcycle News Magazine, Just Bikes and BikeReview. Despite his fresh age, Zane brings a lifetime of racing and hands-on experience. His passion now resides on four wheels as an avid car collector, restorer, drift car pilot and weekend go-kart racer.
