Why is Platinum More Expensive than Gold Jewelry?

April 7, 2012 | By More

platinum paisley wedding band ring

There are several factors involved in pricing platinum jewelry vs. gold jewelry, from the obvious to the less obvious.

The Metals Price of Platinum vs. Gold

Platinum, as a precious metal, is normally valued much higher in the precious metals commodity market than gold. Whereas historically gold has been valued at considerably less than platinum, for one of the first times in history, platinum is priced lower than gold on the market. As of the date of this post, gold is priced at $1,634.10 per ounce and platinum is priced at $1,602.00 per ounce. This is not usual for the market. Many years ago, the disparity was much more pronounced. Gold was often in the $1,000 range per ounce and platinum was in the $2,000 range. What we are seeing the market today is out-of-the-ordaniry.

Whit this in mind, you would think that gold and platinum jewelry would cost the same. Try to purchase platinum wedding bands vs. white gold wedding bands at any jeweler–online or offline, and you will quickly find that a Platinum ring still cost 2-3 times more than a gold one.

Why the Price Disparity? 

As mentioned above, traditionally just the raw precious metals would have had a significant difference in price when it comes to purchasing platinum vs. gold–and that would have accounted for a portion of the price difference. In the past, platinum jewelry cost as an average of 4-5 times the price of the same jewelry piece in gold. Today, the cost difference for platinum is down to about 3.5 times the price of gold. An example: This hammered wedding band in 14k white gold ($575 as of the date of this post) compared with the same hammered wedding band in platinum ($1,925). That is just under 3.5x the cost difference.

But the question must be asked: if the price of gold and the price of platinum are about the same, then why is there still such a difference in cost?

There are several reasons: 

1. Platinum is approx. 60% heavier than 14k gold. So the same ring that weighs 10.0 grams in gold weight will weigh approx. 16.0 grams in platinum. Therefore, you are paying more money per weight for the same ring design. Since jewelry (on the wholesale side) is valued based on metal content per item, you are already looking at about a 60% difference in wholesale cost–even when the precious metals prices are equal (which is usually not the case with platinum, except on the day that I chose to write this post!)

2. Whereas platinum jewelry is 95% pure platinum, 14k gold jewelry is 58.3% pure gold. Another way to think of this is to think of it in terms of parts per karats. For example: We know that 24k gold is pure. But in the United States we are mostly purchasing 14k gold, which means that the jewelry you purchase is 14 parts gold and 10 parts other alloys (14/24), making it 14k. Likewise, 18K Gold is 18 parts gold and 6 parts other alloys. Platinum, on the other hand, is 95 parts pure platinum and 5 parts other alloys. So platinum jewelry is a much purer and denser metal-type than gold. As such, platinum jewelry costs more than gold,  not only because it is 60% heavier (a 10 gram ring vs. a 16 gram ring noted in #1 above), but those grams of precious metal are more pure, and therefore, more valuable and costly in platinum compared to gold. To explain this in one other way: 10 grams of 14k gold is going to still be more valuable than 10 grams of platinum, because in those 10 grams of metal, one is 58.8% pure and the other is 95% pure.

platinum hammered wedding band ring
3. Labor & Demand. It generally costs a manufacturer more time and money to create platinum jewelry than gold jewelry. Platinum is more difficult to work with and is more labor intensive compared to gold. So even if the two above factors were not in play, platinum properties, such as the hardness level and pliability of the metal, are still in force, and therefore the labor costs of making platinum jewelry are higher than gold jewelry. Another reason for increased labor costs has to do with supply and demand. Since platinum is not in as high a demand compared to gold jewelry, not as much volume of platinum is produced and therefore some manufacturers must charge more to work on an item of jewelry takes longer to make and is not as often sold.

When you combine the three above factors, you see that even when the commodities price of both metals are at an equilibrium, platinum still retains its luxury status as the metal of choice for high-end jewelry.

So the next time you are in the market for that platinum or gold wedding band, which will it be?

Related Post: White Gold vs. Platinum

You Might Also Like:

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  2. Gold Takes Lead Over Platinum by Head
  3. Platinum and Gold: When Metals Collide

Category: Gold Prices, Jewelry News, Jewelry Tips

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