Precious Metals Investment: Glossary of Terms

Acid Test: An acid test can tell you the fineness of precious metals so you know if there are any impurities. A fineness test of sterling silver, for instance, will show 92.5 percent silver and 7.5 percent of other metals such as copper.

Actual Gold Content: This number reveals the amount of gold that is in an object — typically expressed in karats. A 24-karat gold object is 100 percent gold.

Ag: The chemical symbol for silver is Ag. This is on the periodic table.

Allocated Account: If you’re looking to store physical precious metals safely, an allocated account is an option. This is a bank storage vault where your gold, silver and other physical metals are safe and segregated from other clients’ items. Each account is in a client’s name, and the client receives detailed lists of its contents. Everything in your allocated account belongs to you and doesn’t make up part of the dealer’s asset portfolio. An allocated account is the opposite of unallocated storage.

Allocated Gold: If you choose to invest in physical precious metals, allocated gold is physical bullion kept inside an allocated account vault. This gold is yours and unaffected by the overall performance of the vault owner’s portfolio or business.

Alloy: Many precious metals are actually alloys. An alloy is a mixture of two or more metals. Gold alloy often contains amounts of silver, zinc, nickel or copper. This can change the color of a metal or improve its hardness.

American Eagle: An American Eagle is a gold bullion coin produced by the U.S. Mint. The coin was first struck in 1986 and has a gold content of 91.7 percent (22 karats). It also contains copper and silver, which makes it an alloy. It’s currently the most sought-after gold bullion coin struck in America.

Antique Jewelry: Purchasing antique jewelry is an alternative method of investing in precious metals. Jewelry must typically be over 100 years old to be antique rather than vintage. Jewelry makers often craft modern jewelry to resemble antique items, so make sure you know what you’re buying.

Agua Regia: Typically used for testing the fineness of gold, aqua regia is a mixture created by combining hydrochloric acid with nitric acid.

Arbitrage: Making a simultaneous purchase and sale of a specific asset on two or more separate markets. This allows investors to profit from price differentials between the markets.

Argentum: You’ll sometimes hear silver referred to as Argentum. This is its elemental name in Latin.

Ask or Ask Price: An ask price is the lowest price a dealer will currently sell an asset for.

Assay: Precious metals you purchase may come with an assay. This is type of packaging that lists an item’s purity and weight. Receiving an assay with your purchase means the assayer guarantees a precious metal’s quality and purity.

Asset Class: An asset class is a type of investment available for investing. Gold, silver, oil, bonds and other commodities are asset classes.

Au: Derived from the Latin word “aurum,” Au is the chemical symbol for gold.

Aurum: The Latin name for gold. This is a direct translation.

Australian Kangaroo: Introduced in 1986, Australian Kangaroos were first known as gold nuggets. The design changes yearly and features different variations of kangaroos. They contain .9999 fine gold bullion and come in an encapsulated square for protection.

Australian Koala: Platinum coin minted by Australia since 1987. It has .995 purity.

Austrian 100 Corona: The Austrian 100 Corona contains .9802 ounces of gold and is a re-strike bullion coin.

Austrian Philharmonic: Released in 1990, the Austrian Philharmonic is a gold bullion coin with .9999 purity. The Weiner Philharmonic is on the front of the coin, and the back features several music instruments. It’s one of the most popular gold bullion coins in Europe.

Avoirdupois: Different substances require different weight measures. An avoirdupois is a system of measures and weights used for solid objects that aren’t stones, drugs or precious metals. This measurement is common in Great Britain and the U.S., and 1 pound equals 16 ounces with this system. An ounce under the system is 437.5 grains, or 28.35 grams.

Backwardation: A commodity’s spot price is usually lower than futures contract prices. Backwardation occurs when the opposite is true. A contango is the opposite of this, and backwardation presents in a commodity market via a downward sloping forward curve.

Bailment: A bailment signifies a transfer of physical property but not a transfer of ownership. The owner of the item (i.e., bailor) gives a recipient (i.e., bailee) possession for safekeeping. They create no contract of sale.

Bar: Precious metals cast into a bar shape for convenience. Bars do not carry numismatic value, so the purity of the bar is the major determinant of its worth.

Base Metal: Base metals are those that are not precious. These include aluminum, lead, iron, nickel, zinc and copper. They corrode and oxidize easily, but they’re still sometimes used as alloys with silver, gold and platinum.

Bear Market: A bear market occurs when investment markets go on the decline for a prolonged period. This can occur with stocks, precious metals, oil and other commodity markets. A bear stock market typically signifies an economy in recession, but this could create an increase in the value of gold, silver and other precious metals.

Ben Bernanke: As chairman of the Federal Reserve, Ben Bernanke oversaw historic drops in U.S. interest rates. The quantitative easing that occurred during his tenure is viewed as a contributing factor to the rise in gold prices. His term ended in 2014.

Bid Price: A bid price is the price that a dealer will buy a commodity at. This is the opposite of the “ask price.”

BIS Hallmark: Recognized standards ensure the purity of precious metals. The Bureau of Indian Standards (BIS) Hallmark certifies that a gold product meets or exceeds the standards set forth by the BIS — which is the national standard in India.

Blank Planchet: A plain metal disc created to strike coins. No design has been struck on the obverse, reverse or edge. Mints can use these for striking legal tender or non-currency rounds.

Boiler Room: New investors sometimes fall victim to scams. A boiler room is a company that uses scare tactics, high-pressure sales methods and other manipulative measures in order to sell investments for far more than they’re worth.

Brilliant Uncirculated: A brilliant uncirculated (BU) coin is in new condition and has not circulated among the general public. These meet a higher standard than bullion or circulated coins and still have their original mint luster.

Britannia Silver: A label used to identify the purity of silver. Britannia products are minted by the Royal Mint and include silver, gold and platinum variations.

British Sovereign: The British Sovereign is a gold coin that’s no longer in circulation in the United Kingdom but is still acceptable as legal tender. It contains .2354 troy ounces of gold and is 91.7 percent pure (i.e., 22 karats).

BU: Describes the condition of the product, referred to as Brilliantly Uncirculated (new, direct from the mint).

Bull Market: A bull market occurs when investment markets are on the rise for a prolonged period. This market trend is the opposite of a bear market. Bull markets can occur with stocks, silver, gold and other commodities. This trend can occur in a single commodity and while not affecting others.

Bullion: Used to described investment grade precious metals. When referenced without the descriptor “coin,” bullion describes precious metals in ingot or bar form. Gold and silver bullion are common investments. Marks signifying the bar’s weight and purity are present.

Bullion Coin: A bullion coin contains a precious metal, such as gold or silver, and represents a store of value. These coins sell based on their precious metal content and not their face value.

Business Strike: The U.S. Mint uses the business strike to produce coins that enter circulation for general use. This varies from a proof strike that’s meant for minting coins for investing or collectable purposes.

Bust: On the obverse of most coins is a bust. A typical bust features a person’s image above their upper chest. Washington on the U.S. quarter and Lincoln on the penny are examples.

Buy/Sell Spreads: The buy/sell spread of any investment is the difference between a trader’s buy price and sell price. This represents the estimated transaction costs of buying and selling the commodity it represents. This number should ideally remain low.

Canadian Maple Leafs: Minted by the Royal Canadian Mint, the Canadian Maple Leaf is a modern bullion coin that was originally struck in .999 pure gold bullion when released in 1979. Since that time, the purity has increased to .9999 pure gold bullion. The standard version has a minimum weight of 1 ounce.

Capital Appreciation: The capital appreciation is the amount that an investment’s market price rises. If you purchase a 1-ounce silver bar for $25 and the price of silver increases to $30 an ounce, the capital appreciation is $5.

Carat: The measurement for the weight of pearls and gems. One carat is equal to 200mg, 0.2 grams or 3.086 grains Troy. This is not to be confused with a karat — the accepted measurement of gold fineness.

Cash Market: Often referred to as the “spot market,” a cash market is a public market where traders can exchange assets for cash and receive immediate delivery. Settlement of these transactions must occur within two working days of the transaction itself.

Cash Price: The cash price of any asset — also known as the spot price — is the amount that a financial instrument is available for sale with immediate or close to immediate delivery.

Centenario: See Mexican 50 Peso.

Central Bank Gold Agreement: Signed in September 1999, the Central Bank Gold Agreement (CBGA) was a promise among major banks to not sell more than a specified amount of gold every year. The banks did this to ensure the market would not get flooded. The agreement was temporary, but it renewed in 2004 and again in 2009. The agreement lapsed in 2019, as central banks claimed a reduction in sales made the agreement unnecessary.

Central Device: A central device of a coin is the design elements that it features. This includes images, portraits, the mint date and any other inscriptions featured. This is separate from the coin’s field, which is the smooth background surface.

Certified Coin: A coin becomes certified once it has received authentication and a grading from a professional service such as the Numismatic Guaranty Corporation (NGC) or the Professional Coin Grading Service (PCGS).

Chain of Integrity: The Chain of Integrity serves as a method of guaranteeing a bullion bar’s authenticity. This is a system in which bars remain safeguarded in secure locations — such as banks, secure storage facilities and refineries — so their history of custody is verifiable. If the fineness listed on a bullion bar is incorrect, it’s traceable back to the original refinery.

Chinese Panda: Created with .999 gold bullion, the Chinese Panda is a premium coin first produced by China in 1982. It features a panda on the obverse, which is updated to a new design yearly. The China Mint individually seals each coin in a vinyl pouch.

Circulated: Any coin distributed for use by the general public. While it’s possible for these coins to remain in excellent condition, they typically show more wear than those that are uncirculated.

Coin: A piece of metal with a known weight and fineness that’s stamped and used for trade.

Coin Grading: A process that determines the condition or grade of a coin. This is a key factor in the value of a coin, and it takes into account the attractiveness, color, luster, strike and preservation of the coin. Low-graded coins can still maintain value due to their precious metal content. 

Coin of the Realm: Meant for circulation among the public for commerce, a Coin of the Realm is the coinage issued by a government for use within its borders.

COMEX: The COMEX is an exchange where investors trade major commodities futures. The exchange features both gold and silver futures, and these contracts play a major role in the current spot price.

Commemoratives: Coins minted in order to commemorate important individuals, events, places or themes. The 1776 bicentennial American quarter is an example. Many commemoratives are struck in gold or silver.

Commercial Traders: Companies that hold integral roles in precious metals markets — such as refiners, bullion banks and miners — face significant risks because of the potential for falling metal prices. They use commercial traders to transact futures contracts to minimize their risks via short positions. It’s possible to profit from these short positions even if prices drop.

Commodity: Any physical product — such as gold, silver and platinum — that’s commonly traded for its commercial or industrial value.

Commodity Market: A commodity market is a virtual or physical marketplace where investors can buy, sell or trade primary products or raw materials. Hard commodities represent natural resources — such as gold and silver. Soft commodities are livestock and agricultural products — such as pork and soybeans.

Commodity Pool: A commodity pool occurs when investors enter a limited partnership in order to combine their capital for purchasing commodities. This venture is typically a limited partnership.

Condition: The quality or grade of a bar, round or coin. Grading typically applies labels such as “Proof,” “Brilliant Uncirculated,” “New,” “Circulated,” “Varied” and more.

Contango Market: The normal situation when futures market prices are higher than the spot price. This is the opposite of backwardation. It’s identified with an upward-sloping curve.

Coronet: Featured on some early U.S. coins, a coronet is the tiara or crown featured atop Lady Liberty’s head.

Correction: After a rise in the value of a market, security or asset, a market correction signifies a drop in the price until equilibrium is met.

Cover: A cover is any defensive action that lowers the risk of an investment.

Cu: The metallurgical symbol on the periodic table that represents copper.

Cull Coin: Although they can maintain value because of their precious metal content, cull coins are in very poor condition due to damage or wear. We often refer to these as “filler,” “hole filler” or even “junk.” These carry no collectible or numismatic worth outside of the value of their precious metal content.

Deliverable Bar: Any precious metal whose physical characteristics — such as the hallmark, fineness and weight — have the approval of a commodity exchange as a tradeable unit. The Good Delivery specification on the London Bullion Market Association is an example.

Denomination: Typically used for banknotes and coins, the denomination of a currency type represents its face value. The actual value of an item can be much higher than the denomination depending on collectability, precious metal content and other factors.

Derivative: Any asset holding a value that relies upon an underlying asset or group of assets — also known as a benchmark. Derivatives can take the form of futures contracts, cash market commodities and other financial instruments. They’re traded between two or more parties and garner their value from fluctuations in the price of the underlying asset.

Device: See Central Device.

Die: In the minting process, a die is the engraved metal item used to create a design on coins or bars through the stamping or striking process.

Direct Investment: A direct investment is when someone purchases an asset directly in its physical form rather than futures contracts or other digital items. Physical jewelry, bars and coins are examples.

Divisibility: The divisibility of an item indicates the ease at which one can piece it out and then distribute it to other parties. For example, 10 5-ounce gold bars are easier to distribute (i.e., more divisible) than a single 50-ounce gold bar.

Doré: Raw precious metal taken right from a mine without going through the refining process. This makes shipping easier. Gold and silver are often combined and then later refined to improve purity.

Double Eagles: Used between 1850 and1933, the U.S. Double Eagle is a $20 gold coin produced as legal tender. These coins contain .9675 ounces of pure gold. They featured Lady Liberty prior to 1908, at which time the Mint replaced her with the Standing Liberty design. Contemporary Gold Eagle bullion coins have a similar design.

Dragon: The Australian Dragons are premium-priced bullion coins with .9999 purity. Each coin rests inside a sealed, square plastic case.

E-Gold: For every ounce of physical gold traded, hundreds of ounces get traded digitally. This E-Gold is similar to holding shares of a stock. It represents the physical asset and is a price-efficient method of trading the precious metal. This is typically less expensive than gold ETFs.

Eagle: Struck from 1795 to 1933, the Eagle is an American gold coin containing .4837 ounces of pure gold. “Eagle” is also a generic term for the modern buffalo coins produced since 1986 in the U.S. Mint — not to be confused with $20 Gold Eagles.

Edge: The side of any coin. This can be plain or feature reeding or lettering. It’s possible to identify coins with precious metal content by looking at the edge. For example, there is a copper ring around modern American quarters, denoting a lack of silver content found in pre-1965 quarters.

Electroplating: When combining metals, electroplating is the process of adding a thin metal coating to another metal through electrodeposition. Once the process is complete, both metals are part of the item.

Electrum: While doré bars are artificial alloys, electrum is a naturally occurring alloy of gold with either cadmium or silver. It often contains trace amounts of other metals. When produced artificially, it’s known as “green gold.”

Entry Load: If someone invests in a gold ETF, an entry load is the entry fee. The mutual fund calculates this fee, which is a percentage of the asset’s value. A gold ETF worth $1,000 with an entry load of 3 percent, for instance, would cost $1,030 per unit (i.e., $1,000 + $30).

ETFs: See Exchange-Traded Funds.

European Central Bank: Established by a political treaty with the mandate of avoiding inflation, the European Central Bank (ECB) determines how many bank notes are in circulation. The significant effect on inflation rates means it can also affect the prices of precious metals.

Exchange-Traded Funds: An exchange-traded fund (ETF) is a type of security that’s purchasable as if it were a regular stock. Rather than a physical investment, the security tracks a commodity, index, sector or other asset. ETFs can contain different investment vehicles — including stocks, bonds and commodities.

Exit Load: Charged by mutual fund houses, an exit load is a fee that investors might face when exiting investment schemes. This is similar to the entry load.

Face Value: The legal monetary value of currency granted by the entity minting it. Mints typically print this on the coin. See Denomination. 

Federal Reserve: Also known as The Fed, the Federal Reserve is America’s central banking system. It conducts monetary policy and thus has a significant effect on all aspects of the economy — including precious metals markets. 

Fiat Money: Fiat money is the currency created by governments to serve as legal tender within their borders. Gold or silver do not back its value, so it has no worth other than what’s guaranteed by the assigning government.

Field: On coinage, a field is the open and smooth background area of a coin that mints set the central device against.

Filigree Jewelry: Filigree is a jewelry-making technique that focuses on intricate metalwork and typically takes silver or gold and forms it into twisted threads or tiny beads. It’s a specialty jewelry-making method now, but in ancient times, it was the normal process in many regions.

Financial Hedging: Investors engage in financial hedging in order to reduce or eliminate the risk of an asset they currently own. They use futures contracts to accomplish this by taking an opposite and equal position to the one they already have. If they’re invested in a gold ETF and expect the price to fall, for instance, they could sell gold futures contracts based on the price falling. This will offset any losses.

Fine Gold: When used as a purity descriptor, fine gold is pure 24 karat gold. You may also see it listed as .999 fine gold. This can apply to jewelry, coins, bullion bars, and other forms of the metal.

Fine Ounce: Typically used when referring to gold, a fine ounce is a troy ounce of pure gold (i.e. at least .999 fineness). The term could also describe an ounce of pure silver.

Fine Silver: When used as a purity descriptor, fine silver is a silver item with a .999 fineness.

Fine Weight: Since most precious metal items contain a percentage of alloy metal, the fine weight of an item is its weight minus any alloy metals. A 1/10 ounce Gold American Eagle, for instance, only contains 0.1 troy ounces of gold. Even though its entire weight is 0.10909 troy ounces, its fine weight remains 0.1 troy ounce.

Fineness: A precious metal’s purity. This is measured in 1,000 parts of an alloy. Fine gold, for instance, has a fineness of at least .999. Fine gold is thus 99.9 percent gold with the remaining percentage composing of other alloy metals.

Fool’s Gold: Iron pyrite. Fool’s gold has similar visual qualities to actual gold. Its physical properties, however, are different. Gold is soft and malleable, but iron pyrite is brittle and hard.

Forward Transaction: Similar to futures contracts, forward transactions are agreements to buy or sell an asset for immediate payment and delivery at an agreed-upon date in the future. It differs from futures contracts since it doesn’t fall under the standardized regulations and procedures required by commodities futures exchanges.

French Franc: Struck between 1899 and 1916, French 20 franc gold coins contain .1867 troy ounces of pure gold and are 91.7 percent pure (22 karats). They’re also commonly referred to as “Roosters.”

Futures Contract: When parties agree to purchase or sell a specific financial instrument or asset at a certain price in the future on an organized exchange, they have created a futures contract. Also simply referred to as “futures,” these contracts are available every month and play a significant role in the spot price of precious metals.

Futures Price: A financial asset or commodity’s price at a specific future date is known as a futures price. Various considerations – including current spot price, storing costs, potential government actions, time until delivery, and risk-free interest rates – go into calculating this amount.

German Silver: Frequently referred to as nickel silver, German silver is a metal alloy containing nickel, copper, and zinc. It sometimes also contains lead and tin. Similar to fool’s gold in that it only visually resembles a precious metal, there is no actual silver in these items.

GLR: An acronym for “Gold Lease Rate.” The GLR is the set interest amount on an unsecured gold loan. This number is reached with the equation: GLR = LIBOR – GOFO.

GOFO: An acronym for Gold Forward Offered Rates. GOFO is the set interest amount when trading gold for U.S. dollars. The LBMA publishes this rate daily.

Gold: Gold is a yellow precious metal – listed on the periodic table under atomic number 79 – that is highly valuable, malleable, and ductile. It’s often used in decorations, jewelry and to guarantee the value of the currency. It’s long been considered a precious metal, but its use as a form of currency only goes back to 550 BCE. An item must be at least 10 karats to be labeled as gold in the U.S. The metal’s value and price are universal. 

Gold as a Hedge: In the investment world, “gold as a hedge” denotes gold’s ability to hedge against the declining value of currencies. It’s reasoned that the precious metal’s value will increase as the dollar’s purchasing power declines.

Gold Bug: Also written as “goldbug,” a gold bug is an individual who enthusiastically believes that people should own gold. They are typically well informed on the potential dangers of fiat currency and support governments reverting to the gold standard.

Gold Color: Depending on the alloys mixed in with the metal, gold color can carry a variety of hues such as green, red, yellow, and white. Nickel (creating a white color), copper (creating a reddish color), silver, and zinc (each creating a greenish color) are the most common alloys in gold.

Gold Eagles: First released in 1986, the Gold Eagle is a modern American gold bullion coin. Struck in the U.S. Mint with 91.7 percent pure gold (22 karat), it’s the most popular gold bullion coin in America. Alloys in the coin include copper and silver.

Gold Electroplate: The electroplating process that deposits 24 karat gold onto other metals. A minimum thickness of seven-millionths of an inch is required. See Electroplating.

Gold Exchange Standard: An alternative to the gold standard. The gold exchange standard is a monetary system that allows governments to guarantee a fixed exchange rate that is not fixed to a gold amount – but rather to another country’s currency that recognizes the gold standard. This system is essentially an offshoot of the gold standard.

Gold Flashed: A gold coating on top of other metals. Unlike electroplating, it must be less than seven-millionths of an inch thick. Also referred to as gold washed.

Gold Fund: Typically taking the form of gold exchange-traded funds (ETFs) or mutual funds, gold funds allow investors to pool their resources into an investment vehicle. All assets in the fund are linked to gold. Investments in gold mining companies, gold futures contracts, and physical gold bullion are the most common types.

Gold Futures: Gold futures are exchange-traded contracts based on the future price of gold that is purchasable and deliverable at a future date. The contracts must be filled by a specific closing date. They typically track the price of gold and offer an alternative to investing in physical forms of the precious metal.

Gold Investment Trusts: Allowing investors to trade shares similar to any stock on the market, gold investment trusts are companies that invest their shareholders’ funds in a manner that tracks the value of gold.

Gold Loan: Typically involving jewelry, gold loans are a secure form of loan where the collateral is a gold item. Pawn shops engage in this activity frequently. You’ll receive a percentage of the gold’s value as a loan and the loaner will keep your item. Payment usually takes place in monthly installments, but once you pay the loan in full, your gold item gets returned to you. In addition to pawn shops, this type of loan is offered by private banks, financial institutions, and even federal banks.

Gold Monetization Scheme: Launched in 2015, India’s Gold Monetization Scheme (GMS) incentivizes Indian citizens to deposit gold they’re currently storing privately (e.g. at home, temple trusts, etc.) with banks approved by the government. Depositors earn interest on their gold while reducing India’s dependence on imported gold.

Gold Nugget: Raw gold. Gold nuggets are placer gold typically found in river beds. It gets washed out from rocks and sculpted into a nugget shape due to constant friction from streaming water and surrounding rocks.

Gold Plate: See Gold Electroplate.

Gold Plated Jewelry: Unlike solid gold items, gold-plated jewelry is created through processes that layer gold onto other metals that are less valuable.

Gold Sovereign Bond: Another method of investing without owning physical metals, gold sovereign bonds are issued by governments and represent a specified weight of gold. While they represent gold value, these securities are both issued and redeemed with paper currency. 

Gold Standard: The gold standard is a monetary system where the worth of currency is based on the value of gold. This was very common during the 19th and early part of the 20th centuries. Citizens could exchange currency for physical gold, but this standard fell out of use during the Great Depression.

Gold Filled (GF): Usually making up at least.05 percent of a metal’s total weight, Gold Filling is a method of mechanically bonding a layer of gold to another metal. This layer is at least 10 karats and usually applied to a base metal. These items feature the overall weight, karat fineness and the letters G.F. inscribed somewhere on their surface.

Gold Filled Jewelry: Jewelry that is made up mostly of sterling silver or other metals but with a solid layer of gold bonded to it through the gold filling process.

Gold-Silver Ratio: For those who invest in multiple precious metals, the gold-silver ratio offers an easy method for purchasing one metal with the other based on current spot prices. A ratio of 40, for instance, would mean an ounce of gold could purchase 40 ounces of silver.

Good Delivery: A good delivery is a specification created by exchanges that standardize the requirements that a bar of precious metal must meet in order to be acceptable for delivery.

Good Delivery Bar: Recognized as meeting a particular exchange’s requirements, Good Delivery bars are large bars of precious metals cast by refiners that are recognized and approved by the gold community. These bars are only kept in accredited storage facilities so that a chain of integrity is maintained. Once an end-user receives the bar – such as a consumer purchasing gold for investment – the Good Delivery status ends.

Grading Service: An essential part of the precious metals exchange, grading services apply grades to numismatic coins. The Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) are the most recognizable services. Their grades help determine the value of coins based on attributes separate from precious metal content.

Grain: Equal to 0.0648 Troy grams, grain is the oldest unit of weight currently known. A single grain of barley or wheat initially determined its weight. A Troy ounce contains 480 grains. An Avoirdupois ounce contains 437.5 grains.

Gram: In the metric system, a gram is the most basic unit of weight. It can measure both weight and mass. The Troy weight system uses grams as a measure of gold. It is equal to approximately 1/32 Troy ounce.

Green Gold: See Electrum.

Half Eagle: Issued between 1795 and 1929, U.S. Half Eagles are gold coins with a face value of $5. Consumers can spend them as legal tender, but the .24187 ounces of pure gold they contain is far more valuable than $5. Their size is similar to that of a Jefferson nickel.

Hallmark: An integral part in determining the value and source of precious metals, hallmarks are stamps or marks featured on bullion items that denote purity, serial numbers, weight, and place of origin. Other characteristics may also be present.

Hedge: See Financial Hedging.

Indirect Investment: As a method of avoiding the purchase of physical items, an indirect investment offers an ancillary method of investing. Silver contracts futures, gold ETFs, and E-Gold are a few examples.

Inflation: In economics, inflation describes the rise in price of an economy’s level over time. As inflation increases, the purchasing power of money decreases. Investors typically view gold, silver, and other precious metals as a hedge against inflation.

Ingot: Used interchangeably with the word “bar” within the precious metals industry, an ingot is a block of gold, silver, steel, or other metal cast into a convenient shape for easier storage, transportation, etc.

Intrinsic Value: Distinct from numismatic value, intrinsic value denotes the value of an item based solely on its metal content. It’s possible for an item – such as a coin or collector’s piece – to hold more worth due to its numismatic value rather than intrinsic value. The opposite is also true.

Inverted Market: A financial situation where futures contract prices for an item are currently lower than the spot price. Often referred to as backwardation.

Investment Trusts: Companies that invest their shareholders’ funds into assets that track the price of specific items. Gold bullion investment trusts, for instance, contain stocks and other assets that track the value of gold.

Junk Silver: An informal term, junk silver is a descriptor for silver coins that are in cull or fair condition. They contain no collector or numismatic value – only the intrinsic worth of the silver contained inside.

Karat: Rather than measuring weight, karats are a unit that signifies the purity of gold alloys. A 24 karat item is considered pure gold. You can calculate the number of karats in an item by multiplying its pure gold mass by 24 and then dividing this by the item’s total mass. The term derives from “carob seed” – a seed that once balanced the scales used to weigh gold.

KDM Gold: A type of gold alloy, KDM gold contains 92 percent gold and 8 percent cadmium. The alloy may also be referred to as “Kadium.” Although it was once popular, it’s no longer in circulation due to health hazards.

Kilo Bar: A bar of precious metal that weighs one kilogram – or 32.1507 troy ounces.

Kilogram: A kilogram is a unit of measurement containing 1,000 grams or 32.1507 troy ounces.

Koala: First minted in 1987, an Australian Koala is a .995 fine platinum coin.

Krugerrand: First minted in 1967, a Krugerrand is a gold coin from South Africa. They are 91.7 percent pure (22 karats) and contain copper as an alloy. The Krugerrand was a massively popular coin in America’s gold bullion market starting in 1974 and extending into the early 1980s.

Legal Tender: Constituting a variety of currency types, legal tender is a form of money recognized as a valid form of payment. The law compels creditors to accept legal tender to settle public and private debts. Jurisdictions dictate what constitutes legal tender within their borders.

Legend: A coin’s inscription. The legend of a coin is the inscription featured on the coin surrounding the central items and coin descriptor. “United States of America” on the U.S. penny is considered a legend, but since the “One Cent” inscription is a descriptor of the coin, it is not a legend.

Libor: Typically abbreviated to ICE LIBOR – meaning Intercontinental Exchange Libor – LIBOR is an acronym for London Interbank Offered Rate. This signifies the benchmark interest rate global banks use to loan to one another.

Liquidity: Used to describe a variety of assets, liquidity is the ability of an item to be easily converted into cash. Mutual funds, 1-ounce silver bars, and stocks are typically highly liquid since there are many buyers and sellers for these assets.

London Bullion Market Association (LBMA): Headquartered in England, the London Bullion Market Association is the recognized global organization that represents the gold market and sets daily gold prices.

London Fix: Occurring twice a day on a dedicated conference line, the London Fix sets the price per ounce for several precious metals. These include gold, silver, palladium, and platinum. It serves as an informal benchmark for global precious metal prices.

London Gold: Stored in London and provided by the London International Financial Futures Exchange, London Gold is a product with .995 purity. It’s representative of spot gold trading throughout the world. Also known as LOCO London.

Luster: Sometimes referred to as “Coin Luster” or “Mint Luster,” luster is the reflective effect on a coin’s surface produced during the minting process. Uncirculated coins often have this frosty appearance.

Making Charge: In jewelry production, the making charge is an additional expense added to items that represent the cost of design, production, taxes, and other involved expenditures.

Malleability: A metal property signifying its capability of being extended or shaped through processes such as forging or blacksmithing. Gold is highly malleable and thus a popular metal to use in jewelry.

Maple Leafs: Minted by the Royal Canadian Mint, Maple Leafs are coins that contain either silver, gold, or platinum. Their value can differ significantly based on weight, denomination, and precious metal type, but gold Maple Leafs were the first gold bullion coins ever minted with a .999 purity. Modern gold Maple Leafs have a purity of .9999.

Market Risk: In the world of investing, market risk is the possibility that investors could lose money. The price of an asset, for instance, could drop immediately after a person invests their money. This is a reality faced by everyone from individual investors to international banks.

Medallion: Resembling coins but not functioning as legal tender, medallions are round pieces of metal featuring a design. These can be privately minted or released by a government mint. Also referred to as “medals.” The American Liberty Silver Medal is an example.

Melt Value: The melt value of a coin or bar is the value of the precious metal contained within the item. The spot price of the metal contained within the item dictates its worth. For example, a coin containing an ounce of silver would have a silver melt value of $25 if the spot price of silver were $25 – even if there were alloy metals present.

Metric Ton: A measurement denoting 1,000 kilograms or 32,151 troy ounces.

Mexican 50 Peso: Celebrating Mexico’s 100th year of independence and first issued in 1921, the Mexican 50 Peso is the country’s official gold coin. It’s one of the largest bullion coins used as currency, and it contains an alloy of 90 percent gold and 10 percent copper. They weigh 1.2057 troy ounces and contain 37.5 grams of gold. Those currently found in the market are typically restrikes minted during or after 1943.

Millesimal Fineness: Used in many European countries, millesimal fineness is a system that measures the purity of silver, gold, and platinum alloys by parts per thousand. For example, an alloy with 83 percent silver could be listed as 830. These hallmark stamps are an extension of older schemes and an alternative to the karat system used in the U.S. and United Kingdom.

Mint: A producer of coin currency. A mint can be private or public. Governments grant mints the authority to manufacture coins that are distributed as legal tender within the country’s borders.

Mint Mark: Featured on coins, a mint mark denotes the minting facility where an item was struck. These take the form of symbols or letters, and lack of a mint mark serves as an identifying trait for some coins.

Mint State: A graded coin, packaged in a plastic slab with an MS ration (ex: MS-70). Higher the MS grading, the better the condition of the coin.

Minting: The process of producing a coin by stamping or striking a blank planchet.

Modern Issues: A modern issue is a current coin minted for either circulation or for sale to collectors and investors. In America, the modern issue typically describes a coin minted after 1964.

MS-60: In coin grading, MS-60 denotes an uncirculated coin that still has noticeable deficiencies. It’s the lowest grade given to mint state coins and signifies that the coin has poor luster, a poor strike, bag marks, or other issues. MS-61 and higher grades signify better quality. Coins with more wear fall into a letter grading system. AU means there is little wear, but G signifies significant wear.

NGC: The Numismatic Guaranty Corporation (NGC) is one of the most recognizable and respected grading services in the world. Grades from this company help collectors and investors decide the value of a coin.

Noble: Issued in 1983, the Manx Noble is a series of silver, gold, and platinum bullion coins created in private mints but distributed by the Isle of Man. The Noble was the first platinum coin ever produced for collectors. These coins are legal tender but do not have a standard face value.

Nominal Face Value: Also known as “par value” or simply “face value,” nominal face value denotes the redemption price of an asset. This can vary significantly from an item’s intrinsic value. A 1-ounce Gold Eagle, for instance, is much more valuable than the nominal face value of $50.

Nugget: Not to be confused with gold nuggets as a raw commodity, the Australian Gold Nugget is a gold bullion coin with a .9999 fineness (24 karats). The Australian government mints them in a variety of denominations.

Numismatic Coins: A favorite of stalwart collectors, numismatic coins are coins that have a worth higher than the base value denoted by precious metals. A $5 coin containing $24 worth of silver, for instance, may be worth thousands of dollars due to its collectability. These coins’ values come more from their rarity than anything else.

Numismatics: The study of coins, paper money, medals and other metallic art.

Numismatist: A specialist in numismatics.

NYMEX: The New York Mercantile Exchange. A commodity futures exchange founded during the late 19th century and headquartered in Manhattan. Platinum, palladium and other metal futures get traded on the exchange along with agricultural and energy assets.

Obverse: The obverse of a coin is its front side. It’s here that the device — typically a portrait and date — is featured.

Options: Depending on the contract an investor holds, an option is an agreement that grants the opportunity to buy or sell an asset. There is no requirement to buy or sell. It is a derivative that has a set price and expiration date.

Ounce: An ounce is a unit of weight. Within the precious metals industry, investors are referring to a “troy ounce” — 31.1035 grams — when they mention ounces.

Pamp: Based in Ticino, Switzerland, Pamp is part of a group of precious metal refiners trusted to create gold bars with the Good Delivery status. This represents the beginning of the Chain of Integrity. Pamp was founded in 1977.

Panda: See Chinese Panda.

Paper Gold: A term that recently originated online, paper gold refers to investment products that typically track gold prices but are not guaranteed to. This is a method of investing in gold without having to take physical ownership. While this can save money on storage, banks can increase their supply at will. This means there’s little rarity and prices may not reflect gains in the value of gold.

Paper Precious Metals: Investment vehicles that are related to the price of precious metals but do not grant physical ownership of the metal to investors. Silver ETFs and gold options are examples.

PCGS: See Professional Coin Grading Service. 

Pd: The chemical symbol for palladium. It is number 46 on the periodic table of elements.

Pennyweight: The pennyweight is a unit of measurement equal to 24 grains — or 1/20 of a troy ounce. Its use originated during the Middle Ages, and it has an abbreviation of “dwt.”

Philharmonic: See Austrian Philharmonic.

Physicals Market: Also known as the spot market or cash market, the physicals market is where investors can buy or sell physical commodities for cash. Items exchanged include gold bars, silver coins and other precious metal items. Delivery is immediate.

Placer: A form of mining that recovers gemstones and precious metals. Mining takes place in alluvial deposits — those which form as water wears down large mineral stones.

Planchet: See Blank Planchet.

Plastic Case: Cases used by collectors, investors and grading services to encapsulate items — typically currency — for safe storage.

Platinum Eagle: The American Platinum Eagle serves as America’s official platinum bullion coin. It contains 99.95% fine platinum, and while they were once available as fractional denominations, only the 1-ounce version still gets produced.

Position: The amount of an asset, security or other investment owned or short sold by an investor.

Precious Metal: Separate from base metals, precious metals are metals that have a high economic value due to their rarity. Silver, gold, platinum and palladium are the most well known and are commonly used to create jewelry, coins, metals and other items.

Premium: When you purchase bullion of any kind, you will typically pay over spot price. This premium reflects the cost of mining, refining, fabrication, transportation, dealer fees and other necessary costs. You may end up paying higher premiums for rare coins, but this is based on their numismatic value rather than precious metals content.

Professional Coin Grading Service: Founded in 1985, the Professional Coin Grading Service (PCGS) is one of the most respected coin grading services in the world. The grade provided by PCGS experts allows investors and collectors to assign accurate numismatic values.

Proof: Through the use of highly polished dies, multiple strikes and greater strike pressure, proof coins have a pristine surface and incredible sharpness on the surface. Their fields are almost mirror-like, and they’re valued higher than their circulated and brilliant uncirculated counterparts.

Pt: The chemical symbol for platinum. It has an atomic number of 78 on the periodic table of elements.

Pure Gold: A piece of 24-karat gold or an item with a gold content of at least 99.99%.

Purity: The total percentage of a precious metal in an item. For gold, this is measured in karats. You can typically find purity stamped on the item — whether it’s a bar, coin or round.

Put: See Options.

Quarter Eagle: Issued between 1795 and 1929, the Quarter Eagle is an American gold coin with a $2.50 face value. Each contains .121 pure gold ounces and is about the size of a modern dime.

Rally: A rally is a period in which the prices of an asset — such as gold or silver — experience sustained increases. This usually describes a fast and substantial growth in a short period.

Reeding: In numismatics, reeding is a technique where small “reeds” are carved into a surface. You can see such reeding on the edge of the Washington Quarter. This reduces the risk of counterfeiting and also offers an alternative identification method based on touch.

Resistance: In terms of market prices, resistance describes a price point that appears likely to pause any further rise. This price is viewed as difficult to surpass, but once it’s overcome, it could serve as a “support” to stop a price drop below that point.

Restrike: Although not usually legal tender, restrike coins are officially issued reproductions of coins that once circulated. Old dies are often used to create these new coins to exact specifications. Governments will choose one date to reproduce, and this date must be one that holds no numismatic value since the originals and restrikes are indistinguishable.

Retail Buyers: Unlike those who invest professionally, retail buyers are regular people who invest in assets such as gold, silver, stocks and other financial instruments.

Reverse: The back of a coin. Most legal tender coins feature a nation’s insignia, coat of arms or recognizable feature as the device on the reverse.

Rolled Gold Plate (RGP): A piece of gold jewelry containing less than 1/20 of gold that ranges from 10 to 14 karats.

Rose Gold: A gold item that has copper as an alloy. The mixture of the two metals creates a pinkish hue.

Rounds: Coin-shaped pieces of metal that have no date stamp or face value. Private mints often make these from precious metals. These mints frequently model them after real coins, but they are not legal tender.

Shanghai Gold Exchange: Organized by the People’s Bank of China, the Shanghai Gold Exchange (SGE) is a nonprofit organization created for the purpose of trading precious metals. Two daily auctions conducted by the SGE dictate the Shanghai Gold Benchmark Price.

Short Position: When an investor believes an asset’s value will drop in the short term, they can take a short position by borrowing shares at a certain price, selling them to other investors and ideally buying them back at a lower price to return to their initial owners. They pocket the difference in price. If prices rise, they will lose money.

Short Sale: When an asset gets sold for future delivery even though the asset isn’t currently possessed.

Silver Eagles: First released in 1986, the American Silver Eagle is a 1-troy-ounce silver coin minted by the U.S. Mint and containing 99.9% pure silver. It has a face value of $1.

Silver Rounds: Round pieces of silver that resemble coins but do not have a date stamp or face value.

Slabbed Coins: In order to protect them from wear, slabbed coins are encapsulated in plastic. This often takes place after a professional grading service has graded them. The grade appears on the capsule.

Smelting: A form of metallurgy, smelting is the process that extracts metal from its ore by applying heat. This is one of the early steps precious metals go through on their journey to investors.

Solid Gold: The Federal Trade Commission says that any item with at least 10 karats of gold that isn’t hollow is “solid gold.”

South African Krugerrand: See Krugerrand.

Sovereign: Struck during the height of the British Empire, sovereigns are English gold coins containing .2354 troy ounces of 91.7% pure gold (22 karats). They have a face value of one pound sterling.

Sovereign Gold Bond: Issued by the Reserve Bank of India and backed by the Government of India, Sovereign Gold Bonds offer the ability to invest in gold without taking physical possession. These bonds earn interest, can be bought or sold on exchanges and can even serve as collateral for loans. They’re linked directly to the price of gold.

Speculative Position: The maximum short or long position that options or futures exchanges will allow investors to hold.

Spot Market: Markets where payment and delivery must be immediate. Any transaction must conclude within two working days.

Spot Price: The spot price of a precious metal is the current and up-to-date price at which the metal can be purchased for immediate delivery. The futures market has a significant effect on the current spot price, and the London Fix typically decides this value. Only dealers typically have the capital to purchase gold, silver and other precious metals without a premium.

Spread: See Buy/Sell Spreads.

Symbolic Face Value: The symbolic face value of a precious metal coin is the nominal worth it holds as legal tender. This is considered symbolic since the coin’s precious metal content is higher than the face value. For instance, the 1-ounce Gold Eagle is worth more than its $50 face value.

Tola Bars: Manufactured in Europe, tola bars are gold bars measured in “tolas.” They are primarily traded throughout Singapore, Pakistan, India and the Middle East. The 10-tola cast bar contains 3.75 troy ounces and is the most popular of tola bars.

Treasury Bond: A government treasury bond is a debt security issued by a country in order to raise capital. In America, these bonds have a fixed interest rate. The yield rates of these bonds can affect the demand for gold.

Troy Ounce: Equal to 31.103 grams, a troy ounce is the measurement used for gold, silver and other precious metals. It’s different from the Avoirdupois ounce — the measurement most Americans recognize — and is equal to 1.333 Avoirdupois ounces. Troy ounces are the basis of the Gold Fix.

Troy Pound: Equivalent to 12 troy ounces.

Unallocated Account: Offered by some banks, an unallocated account is a storage option that doesn’t separate a person’s precious metals from others kept in storage at the bank. This is cheaper than an allocated account, but it carries a higher risk for precious metal owners.

Unallocated Gold: Gold stored in an unallocated account.

Uncirculated Coin: Sometimes referred to as Brilliant Uncirculated (BU), uncirculated coins are strikes that are released to the public but do not go through general circulation. These are accessible through coin dealers and mints.

Universal Value: Often used to describe gold’s worth, universal value represents a situation where an item holds the same value for individuals around the world. While currencies may have varying purchasing powers, gold has a universal benchmark.

Vermeil: Typically referred to as gilded silver or silver-gilt, vermeil is silver that’s been gilded with gold. Vermeil may also describe gold gilded onto bronze.

Weight: The weight of a coin, round or bar is typically stamped onto it.

White Gold: A gold item that has a silver-like appearance due to the presence of white alloy metals such as nickel, silver or palladium. Commonly used with diamond jewelry.

World Gold Council: Working across all components of the gold industry, the World Gold Council is an organization that focuses on the stimulation and sustainment of gold demand throughout the world.

World Platinum Investment Council: Working across all components of the platinum industry, the World Platinum Investment Council is an organization that focuses on the stimulation and sustainment of platinum demand throughout the world. 

Yellow Gold: A pure gold alloy that contains copper or zinc. The mixture creates a yellowish hue.

Yield: In the investing world, yield is the return that the holder of a security receives from a company. Stocks, bonds and other assets and commodities offer investors a yield.