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If you\u2019re exploring the world of gold or other precious physical assets, you\u2019ll soon come across the word carat. It\u2019s one of those terms people often say with confidence, but if you\u2019re new to investing in physical assets, it can be a bit unclear what it means.<\/p>\n\n\n\n
Is it about weight? Purity? Value? <\/p>\n\n\n\n
Historically carob seeds were used as a standard for weighing gems before the days of scales, which is where the term \u2018carat\u2019 is thought to originate from. The seeds were thought to be incredibly uniform in weight. (We know now however, that they\u2019re not. Back in the day, there must have been a fair few traders blissfully unaware they\u2019d been shortchanged.)<\/p>\n\n\n\n
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When it comes to diamonds and other gemstones, carat refers to weight, not size or quality.
1 carat = 0.2 grams. That\u2019s less than the weight of a paperclip; tiny, but potentially very valuable.
A bigger carat weight often means a higher price, but it\u2019s not the only factor. A 1-carat diamond with poor clarity or a dull cut (that\u2019s one which has been cut with incorrect proportions, symmetry, or polish) can be worth much less than a smaller one that has a perfect sparkle. <\/p>\n\n\n\n
It\u2019s worth remembering the other three \u201cCs\u201d which affect a diamond\u2019s value: cut, clarity and colour. So with diamonds you need to be aware that carat is only one part which defines its value.<\/p>\n\n\n\n