In today's market, where investors seek tools to preserve the value of their money against inflation, melted gold, by offering the opportunity to buy gold at its real price without additional costs, has become a smart choice. In fact, if your goal in buying gold is purely to preserve capital and benefit from price fluctuations, this type of gold is one of the most efficient options.
How is Melted Gold Produced?
Melted gold is the result of melting used and recycled gold. This gold can include broken bangles, old jewelry, or even waste from goldsmith workshops. In melting workshops, these items are heated using specialized furnaces and converted into bars of specific weights.
However, a crucial point in the production process is examining the final gold purity. After melting, the bars are sent to assay units. Assaying is a process in which samples are taken from the molten gold, and its exact purity is determined in specialized laboratories. The results are engraved on the melted gold in the form of a "stamp code," which indicates its true purity; for example, 750 for 18 karat gold.
For investors, knowing the assay code and trusting its credibility is very important. The difference between melted gold and ornamental gold is that in ornamental gold, the purity is specified and controlled by the manufacturer, whereas in melted gold, if purchased without assaying, there is a risk of fraud in purity.
Characteristics of Melted Gold
Melted gold, as a popular option for investment and use in various industries, has specific characteristics that distinguish it from other types of gold. In this section, we will examine the purity, color, and assay code of melted gold.
Purity of Melted Gold
Purity indicates the amount of fine gold and the percentage of pure gold in the alloy. Melted gold is usually 18 karats, which means it contains 75% pure gold. This level of purity is practical and cost effective, as it offers a suitable combination of purity and strength. However, the purity may be slightly higher or lower, in which case accurate determination through specialized testing is necessary. Determining the exact purity assures investors and buyers that they are receiving the true value of the gold.
Color of Melted Gold
The color of melted gold can vary and is often due to the presence of other metals in its composition. This gold may appear yellow, coppery, silver, green, or even black. The color of melted gold does not in itself affect its value, as the value is determined based on its purity. Different colors may result from the mixture of copper, silver, or other metals during the production process. For example, the presence of copper gives the gold a coppery hue, while silver can give it a silvery tone.
Assay Code
One of the most important features of melted gold is the assay code, which serves as a unique identifier for each piece of gold. This code is assigned after thorough testing in specialized laboratories and indicates the precise purity and authenticity of the gold. The assay code allows buyers to be confident about the quality and purity of the gold and helps prevent fraud. This code is usually engraved as a number or a six digit code on the gold pieces and can be verified through authorized sources.
The Importance of These Characteristics
The combination of these features makes melted gold an attractive option for investment. Buyers can rely on the purity and assay code to obtain the true value of the gold and benefit from their investment. Additionally, the color variety of melted gold can be utilized in various applications, including jewelry making.
The characteristics of melted gold including purity, color, and assay code play an important role in determining its value and use. Awareness of these features helps investors and buyers make better decisions and maximize the benefits of their investment. Therefore, a thorough understanding of these characteristics and engaging with reputable sellers is essential for anyone considering the purchase of melted gold. These actions not only help preserve capital but also provide greater confidence in transactions.
Disadvantages and Risks of Melted Gold
Although melted gold is considered an attractive investment tool, like any other asset, it has its own advantages and challenges. A clear understanding of these factors helps investors make more informed decisions.
Advantages
- No making charges:Unlike jewelry, which involves high making fees, melted gold eliminates this cost, allowing purchases at the pure gold rate.
- Price close to the global market:Melted gold is traded entirely based on the daily gold rate, without the involvement of decorative or manufacturing costs.
- High liquidity:If accompanied by an official invoice and assay code, it can be quickly sold.
Disadvantages
- Risk of uncertified purity:If the purchased gold lacks an assay or is bought from an unreliable seller, there is a possibility of lower purity or fraud.
- Potential for fraud in the informal market:Buying without an invoice or proper verification especially through online platforms or from unprofessional individuals carries a high risk.
- Limited resale to professionals or specialists:Unlike coins or jewelry, which are familiar to the general public, selling melted gold requires a specific type of buyer or professional audience.
Comparison Table of Advantages and Disadvantages of Melted Gold
Feature | Advantages | Disadvantages |
Price and Cost | No making charges | — |
Purity and Authenticity | Verifiable through assay code | Risk of fraud if not properly verified |
Liquidity | High, if accompanied by an official invoice | Limited to specialized markets and gold dealers |
Investment Risks | Protection against inflation | Risk in informal or unverified transactions |
Decorative Use | Not applicable (suitable for investment only) | Not sellable for everyday ornamental use |
Methods of Buying and Selling Melted Gold
One of the main challenges in purchasing melted gold is ensuring its authenticity and the accuracy of its purity. In person purchases from reputable gold dealers are the first and most reliable method. Professional jewelers typically offer assayed gold with an official invoice, which includes the assay code, exact weight, and the details of both the buyer and the seller.
With the expansion of online gold markets and specialized brokerage firms, a second method has also gained traction. Some brokers or gold companies now offer melted gold accompanied by a certificate and laboratory testing report, providing a safer buying experience. In these cases, the gold is either stored in the brokerage's vault after purchase or physically delivered to the buyer.
In both methods, buyers should follow these essential precautions:
- Ensure the gold has a valid assay code
- Receive an official and traceable invoice
- Avoid purchases in unregulated markets or from anonymous sources
- Additionally, karat testing devices available in reputable stores can help verify the gold’s purity before purchase.
Non Physical Methods of Gold Investment
With the advancement of financial technologies and investment tools, it is no longer necessary to physically buy and store gold at home or in a safe. Today, a variety of non physical investment options are available, which not only offer easier access but also reduce risks such as theft, fraud, or additional storage costs. Below are three major and common methods:
1. Gold Investment Funds (ETFs)
Gold ETFs are among the safest and most popular non physical methods of investing in gold. In Iran, there are several reputable funds that are traded through the stock exchange, including:
- Zar Fund (Zarrin, Agah Brokerage ETF)
- Lotus Gold Fund (Talaye Lotus)
- Gohar Fund (Charisma)
These funds operate based on physical gold backing or gold based securities, and their units are traded daily on the stock exchange. You can invest in them with even a small amount less than the price of one gram of gold.
Key advantages of this method include:
- Information transparency
- Easy purchase process
- High liquidity
- Elimination of physical storage or theft risks
Unlike physical purchases, there is no need to verify authenticity or assay codes for ETFs.
The main limitations include:
- Exposure to stock market volatility
- Influence of capital market regulations
- Possibility of suspension or halting of trading under certain conditions
2. Gold Trading in Forex (Symbol: XAU/USD)
In the Forex market, global gold is traded under the symbol XAU/USD and is one of the most heavily traded assets worldwide. Investors and professional traders can open accounts on reputable Forex platforms to speculate on gold price fluctuations.
In this market, you do not own physical gold, but rather trade based on its price movements. The main advantages include:
- Leverage availability
- Extremely high liquidity
- 24 hour market access
However, there is a key distinction between "investing in gold" and "trading gold in Forex":
- For long term capital preservation, physical gold or ETFs are more appropriate.
- For short term profit from price movements, Forex is a powerful tool.
Nevertheless, risk management and strong analytical skills are essential for success in this market.
Futures Contracts and CFDs
Futures contracts and CFDs (Contracts for Difference) are instruments that enable indirect trading of gold with a settlement date in the future. On the Iran Mercantile Exchange (IME), it is possible to trade gold coin futures, which attract professional investors.
In CFDs, similar to the Forex market, the trader does not own the physical gold but instead profits or losses based on price changes. These trades are usually conducted on international trading platforms and require a strong understanding of technical analysis and market psychology.
Advantages of this method include:
- High leverage
- Ability to profit from both rising and falling prices
- Possibility of short term trading
However, it also involves high risk:
- Rapid price fluctuations
- The need for precise position management
- The potential for capital liquidation (margin call or stop out) are among the key challenges.
Melted Gold or Coins? Or ETFs? A Precise Comparison for Better Decision Making
Choosing between melted gold, gold coins, or ETFs depends on various factors: investment goals, amount of capital, investment horizon, and risk tolerance. In this section, we compare these three methods from key perspectives to make your decision easier.
Return
Under normal conditions, the returns of these three methods are very close. However, melted gold, since it lacks labor charges and taxes, may yield higher profits in the short term. ETFs, due to stock market fluctuations, sometimes have varying returns.
Risk
Melted gold carries the risk of fraud and is harder to sell. Gold coins with Central Bank standards have lower risk. ETFs bear the risk of the capital market but do not have the risk of physical storage.
Liquidity
Gold coins are highly liquid in the open market and banks. Melted gold, if accompanied by an invoice and assay code, has decent liquidity. ETFs are also traded with high liquidity during stock market hours.
Tax and Additional Costs
Melted gold is the lowest cost option. Coins do not have value added tax but do have minting costs. ETFs usually include fund and brokerage fees.
In the end, if you're looking for a high capital investment with physical possession, coins or melted gold are suitable. For those with less capital seeking a safe and hassle free method, ETFs are a better option.
Key Tips for Melted Gold Buyers and Investors
Investing in melted gold can be highly profitable if technical and legal details are observed. However, neglecting the details can result in significant losses. Below are the essential points you should consider before purchasing:
Assay Code Verification
The assay code is an identifier stamped on melted gold that indicates its exact purity. This code must match the official laboratory certificate. Strictly avoid purchasing gold without an assay code or with a damaged code.
Weight and Purity Testing
At the time of purchase, be sure to use gold testing devices to verify the authenticity of the gold. Even reputable stores may offer resold gold that requires retesting. The weight of the bars must also match the invoice.
Right Time to Buy
The best time to buy is when the market is calm or in a temporary downturn. Buying at peak prices usually results in short term losses. Also, try to avoid impulsive buying based on news or social media buzz.
Safe Storage Method
If you are physically storing melted gold, use a personal safe or bank safety deposit boxes. Keeping the purchase invoice and assay code is also essential for future resale.