Gold Refining and Purity Grades: How Raw Gold Becomes Investment Metal

Why the Refining Step Matters

Gold does not come out of the ground as the shiny yellow bars you see in dealer catalogs. What comes out of a mine is called doré — a rough alloy of gold, silver, and small amounts of other metals, usually between 60% and 90% pure. Between doré and a Good Delivery bar sits an industrial process called refining, which strips out the impurities and produces metal at a controlled purity level.

Understanding refining matters for two practical reasons. First, refining capacity is a real supply-chain bottleneck; when it fails, physical premiums can spike (as in March 2020). Second, "purity" is not a single concept but a spectrum, and different products in different markets sit at different points on it. A buyer who understands the spectrum can compare products properly.

The Two Dominant Refining Methods

The Miller process

The older of the two dominant industrial methods, dating to the 1860s. Chlorine gas is bubbled through molten doré. The chlorine reacts preferentially with the base metals and silver, forming chlorides that either volatilize or float to the surface as slag. The remaining gold is drained off at about 99.5% purity.

The Miller process is fast (hours, not days), inexpensive per unit of gold, and produces output that meets the LBMA Good Delivery minimum fineness of 99.5%. It is the workhorse of large-scale industrial refining. It does not reach the highest purities on its own, however — for those a second step is needed.

The Wohlwill process

Developed in 1874 by Emil Wohlwill. Miller-process gold is used as an anode in an electrolytic cell containing a chloroauric acid solution. Current is applied, and gold dissolves from the anode and plates out onto a pure gold cathode. The base metals stay in solution or deposit as anode slime. The gold that plates onto the cathode reaches 99.99% purity or higher.

Wohlwill takes longer than Miller and costs more per unit, but it produces the highest purity gold commercially available and the byproduct anode slime contains valuable platinum-group metals that can be recovered separately. Modern large refineries use both: Miller for the bulk step, Wohlwill for the finishing step when 99.99% output is required.

The Purity Standards

Karats and fineness — the same idea, two expressions

The two most common ways to express gold purity are karats and fineness. They measure the same physical thing on different scales.

The karat system divides pure gold into 24 parts. 24-karat is pure gold; 18-karat is 18 parts gold and 6 parts other metal, or 75% gold; 14-karat is 58.3% gold. Fineness expresses purity as parts per thousand: 999 fine is 99.9% pure, 995 fine is 99.5% pure, 750 fine is 75% pure (equivalent to 18-karat). Fineness gives more resolution at the high end where investment gold sits; karats are more common for jewelry.

Why 22-Karat Coins Exist

If pure gold is available and desirable, why does the American Gold Eagle carry 22-karat purity instead of 24-karat? The answer is durability. Pure 24-karat gold is soft enough to scratch and deform with normal handling. A coin held, transferred, and stored over decades will accumulate visible wear at 24-karat purity in a way that a 22-karat coin (with 8.33% copper alloy) will not.

For an investor whose primary concern is metal content per coin, this is a distinction without a difference: a 1-ounce American Gold Eagle contains exactly 1 troy ounce of pure gold, with the copper adding additional weight. But for anyone who handles their coins frequently, the durability of the 22-karat form is a real advantage over 24-karat products that show wear more easily.

The Assay Process

How does anyone actually verify that a bar or coin has the claimed purity? Through an assay. Two methods dominate.

Fire assay

The historical gold standard for assay, in use for centuries and still definitive. A small sample of the metal is melted with lead in a crucible. The lead dissolves the gold and carries impurities to the surface where they oxidize and are absorbed by a porous cupel. What remains is a small bead of near-pure gold, which is weighed precisely. The ratio of the bead's weight to the original sample weight gives the fineness.

Fire assay is destructive — the sample is lost — but it is the most accurate method known and remains the reference against which other methods are calibrated. LBMA Good Delivery assay work is fire assay.

X-ray fluorescence (XRF)

A non-destructive method suitable for verifying purity without damaging the bar or coin. X-rays are directed at the sample; the sample emits fluorescent X-rays at characteristic frequencies depending on which elements are present. A calibrated detector reads the frequencies and computes composition.

XRF is fast, non-destructive, and accurate for surface composition — but only surface composition. A bar with a plating trick could pass an XRF check that a fire assay would catch. This is one reason dealers doing large transactions still use fire assay for their most critical purchases, and it is why physical inspection and provenance matter alongside XRF for smaller retail transactions.

What Refining Capacity Actually Means

The global refining industry is concentrated. Switzerland historically hosts several of the largest LBMA-accredited refineries (Argor-Heraeus, Metalor, PAMP, Valcambi) and processes a large share of the physical gold that flows between wholesale markets. India has grown rapidly via MMTC-PAMP. South Africa (Rand Refinery), Australia (Perth Mint), and the United States (multiple refiners) also hold significant capacity. China's domestic refineries process most gold consumed domestically but do not hold the same central role in wholesale international flow.

When one of these capacity centers fails — as Switzerland did during COVID lockdowns — the flow between markets that depend on it slows or breaks. This is a real supply-side event even though nothing has changed about how much gold exists globally. Physical gold in one form cannot be delivered as physical gold in another form without refining, and refining requires capacity.

What This Means for a Retail Buyer

What This Site Does Not Distinguish

Our premium series treats all "gold" as the underlying metal, without distinguishing between purity grades. This is because the wholesale exchange prices we reference (COMEX, SGE, MCX, LBMA) each have their own delivery specifications, and the market for that specification is what the reference price represents. A COMEX-priced ounce and an SGE-priced ounce are effectively fungible after refining and remain fungible for premium comparison purposes. The refining step is a real cost in the physical flow between the two but is not embedded in the premium reading itself.