CGA Precious Metals & Market Valuation 4 — Questions and Answers
Question 1: An appraiser is asked for a 'fair market value' of a gold ingot. Which scenario best defines this value?
- The price a willing buyer and seller agree upon, both informed and unpressured (Correct answer)
- The highest price achievable at a specialized auction
- The metal's melt value minus refining costs
- The price the owner paid when originally purchased
Correct answer: The price a willing buyer and seller agree upon, both informed and unpressured
Fair market value (FMV) is the hypothetical price agreed upon by a knowledgeable, willing buyer and seller with no compulsion to transact.
Question 2: Gold futures contracts traded on the COMEX are standardized at how many troy ounces per contract?
- 100 troy ounces (Correct answer)
- 50 troy ounces
- 400 troy ounces
- 1,000 troy ounces
Correct answer: 100 troy ounces
A standard COMEX gold futures contract represents 100 troy ounces of gold.
Question 3: Which precious metal has the highest density among commonly used jewelry metals?
- Iridium (Correct answer)
- Platinum
- Gold
- Palladium
Correct answer: Iridium
Iridium has a density of approximately 22.56 g/cm³, making it denser than platinum (21.45 g/cm³) and gold (19.32 g/cm³).
Question 4: When assessing the value of a vintage gold brooch, the appraiser should consider all of the following EXCEPT:
- The current spot price of rhodium (Correct answer)
- The weight of the gold content
- The maker's mark and period
- The current gold spot price
Correct answer: The current spot price of rhodium
Rhodium spot price is irrelevant to a gold brooch appraisal unless it has significant rhodium plating, which vintage pieces rarely do.
Question 5: A client's platinum ring tests positive for platinum but weighs significantly less than expected for its size. What is the most likely explanation?
- The setting contains hollow areas or a lower-density core metal (Correct answer)
- The specific gravity test is inaccurate for platinum alloys
- Platinum density varies significantly by refining method
- The ring has been incorrectly sized multiple times
Correct answer: The setting contains hollow areas or a lower-density core metal
Hollow construction or a base-metal core reduces overall weight while maintaining the appearance and surface material of solid platinum.
Question 6: What does the term 'fineness' mean when applied to precious metals?
- The purity of the metal expressed in parts per thousand (Correct answer)
- The quality of the surface polish
- The grain size of the crystalline structure
- The hardness on the Vickers scale
Correct answer: The purity of the metal expressed in parts per thousand
Fineness is the measure of precious metal purity expressed as parts per thousand (e.g., 999 fine gold = 99.9% pure gold).
Question 7: Gold's resistance to corrosion and tarnish is primarily due to its:
- High ionization energy and chemical nobility (Correct answer)
- Low melting point relative to other metals
- Crystalline lattice structure that repels oxidants
- High thermal conductivity dispersing reactive heat
Correct answer: High ionization energy and chemical nobility
Gold's high ionization energy makes it extremely resistant to chemical reactions, classifying it as a noble metal that does not oxidize or corrode under normal conditions.
CGA Precious Metals & Market Valuation 4
An appraiser is asked for a 'fair market value' of a gold ingot.
Which scenario best defines this value?