Bullion Glossary

Account- Allocated: An account in which the client’s metal is individually identified as his/her, and physically segregated from all the other gold in the vault.

Account-Unallocated: An account in which the client’s metals are not specifically segregated.   The metals are bundled with other ownership.   This storage method is cheaper with inherent risk.

Alloy: The mixture of two or more metals, usually for purposes of strengthening the one, which is the dominant part of the alloy.  Gold is typically alloyed with copper.

American Option: An option that may be exercised on any date up to and including the expiry date.

Ask: The price that a seller is willing to take in order to effect a sale.

Au: Chemical symbol for gold.

Avoirdupois: Based on a pound of 16 ounces. It is the everyday system of weight used in the United States.

Bag marks: Minor abrasions on an otherwise uncirculated coin, caused by contact between coins.

Bar: A typical gold product, either for trading or accumulation.  Bars come in a variety of shapes, weights and purities.  Different bars are favored in different parts of the world.

Bid: The price offered to buy a particular precious metal item.

Bull-Run: A period of rising prices for a financial asset.

Bullion: Metal in the mass, usually coin, bars, or ingots.

Bullion Coin: A legal tender coin whose market price depends on its gold content, rather than is rarity or face value.

Business strike: A coin, which has been struck for circulation.

Certificate: Gold certificates are a method of holding gold without taking delivery.

Coin: A piece of metal intended to use as a legal tender and stamped with marks or inscriptions which show that it was issued by an authority that guarantees its weight and purity; typically a government or bank.

COMEX: The New York Commodity Exchange now a division of NYMEX, the New York Mercantile Exchange.

Counterfeit: A reproduction of a coin/bar by someone other than the government or entity authorized to do so.

Deliverable bar: A precious metal (gold and silver, for example) with a weight that is approved as a tradable unit on one or more of the commodity exchanges.

Delivery: The transfer of an asset from the seller to the buyer.

Derivative: An instrument or contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.

Dore: A gold-silver alloy, an intermediate product from certain gold mines.

Face Value: The nominal value given to a legal tender coin or currency (for example a 1oz Gold American Eagle coin has a face value of $50, but will always be traded at market price of gold.

Field: The open area on a coin—its background.

Fineness: Gold purity, usually expressed in part per thousand; thus .995, which is 95% pure.  Today they can produce metal up to 99.9999% pure.

Fine weight: The actual weight of the pure gold in a coin, ingot or bar, as opposed to the items total (gross) weight.

Fix: The London gold fixing takes place twice daily over the telephone and sets a price at which all known orders to buy or sell gold on a spot basis at the same time of the fix can be settled.

Futures Contract: An agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date.  These contracts are traded.

Gold Standard: A monetary system based on convertibility into gold; paper money backed and interchangeable with gold.

Good delivery bar: Large bars, the ingots that conform the London Good Delivery standard.

Good delivery standard: The specification to which a gold bar must conform in order to acceptable on a certain market or exchange.  Good delivery for the London Bullion Market is the internationally accredited good delivery standard.  A good delivery bar for London should weigh between 350 and 430 ounces (gold content) of a minimum purity of 99.5%.

Grain: One of the earliest weight units used for measuring gold.  One grain is equivalent to .0648 grams.

Gram: The basic unit of weight in the metric system (31.1033 grams = 1 troy ounce)

Hallmark: Mark or marks, which indicate the producer of a gold bar and its fineness or other characteristics.

Hedging: The use of derivative instruments to protect against price risk.

Intrinsic value:  The actual value of the precious metal within the coin.

Karat: Unit of fineness, scaled from 1 to 24, 24-karat gold (or pure gold) has at least 999 parts pure gold per thousand;18-karat gold has 750 parts pure gold and 250 parts alloy per thousand, etc.

Kilo Bar: A bar weighing 1 kilogram-approximately 32.1507 troy ounces.

LBMA: The London Bullion Market Association acts as the coordinator for activities conducted on behalf of its members and other participants of the London Bullion Market, and it is the principal point of contact between the market and its regulators.

Legal Tender: The coin or currency, which the national monetary authority declares to be universally acceptable, for issuance in the discharge of debt.

Legend: The inscription n a numismatic item.

Lettered edge:  Intaglio lettering milled onto the edge of a coin before striking or raised lettering on the edge of a coin produced by the use of a segmented collar die at the time of the striking.

Liquidity: The quality possessed by a financial instrument of being readily convertible into cash without significant loss of value.

Margin: A deposit required before opening a derivative contract to act as a deposit or fractional deposit.

Market value: The price a coin will bring in the open market which may be greater than or equal to its intrinsic value.

Medallion: A gold wafer in round form, resembling a coin.  It is not legal tender and should not be confused with genuine coin of a specific government.

Mint luster: The sheen or bloom on the surface of an uncirculated numismatic coin resulting from the centrifugal flow of metal caused by the striking of the dies.  Mint luster is somewhat frosty in appearance as opposed to the mirror-like smoothness on the field of a proof.

Mint marks: A letter, symbol or hallmark found on a coin that indicates the mining facility where it was struck.

Modern issues: Coins struck for current issue, for collectors, investors or circulation.

New York close: The New York gold market continues to sell after the London market has closed for the business day.  Depending on market fluctuations, it might be higher or lower than the London fix.

Numismatic: Coins valued for their rarity, condition and beauty beyond the intrinsic value of the metal content.

Obverse: The side of a numismatic item, which bears the principal design or device.

Ounce: A unit of weight equal to 1/16 avoirdupois pound or 1/12 troy pound.

OTC: Over-The-Counter—The OTC gold market trades on a 24-hour per day continuous basis and accounts for the bulk of global gold trading.

Planchets:  A round metal disk that is ready to be struck as a coin.

Premium: The market value of a coin or product less the intrinsic value of the same represents the premium.

Proof: A coin produced by a technique involving specially prepared dies and planchets, and usually special striking (often multiple times), resulting in particular sharpness of detail and virtually flawless.  A coin made specifically for collectors.

Proof set: A set of one proof coin of each current year denomination issued by a mint for a specific year.

Restrike: A numismatic item produced from original dies at a later date.  Example:  Mexican Pesos, 1947, coins are still in production with the same date.

Reverse: The side opposite to that on which the head or principal figure is impressed.  The reverse is the side of a coin opposite the obverse.

Settlement Date: The date on which a contract is scheduled for delivery and payment.  Spot settlement in the bullion market is two days after the transaction is struck.

Spot Price: The price for spot delivery, which, in the gold market, is two days, from the trade date.

Spread: The difference between the buying price and the asking price of a precious metal coin or bar.  Sometimes referred to “Bid” or “Ask.”

Uncirculated: A piece in new condition as issued by the mint.  If it retains its original luster, it can be called “Brilliant Uncirculated”

Troy Ounce: The standard weight in which gold is quoted in the international market, weighing 31.1035 grams.  It is named after the old French city of Troyes, where there was an annual trading fair in medieval times.