Anybody investing in precious metals like silver and gold has to be familiar with the unit of measurement used in the precious metal market. Instead of the gold price per gram, you get the gold price per troy ounce. Troy ounces are different from the avoirdupois ounce commonly used in the U.S. Although both weight systems use the word “ounce”, they are very different. If you are not aware of this difference, it could cost you a lot of money.
The United States uses the avoirdupois system of weight as a standard. This is a unit of measurement that is used to weigh almost everything with the exception of gems, pharmaceutical drugs, and precious metals like gold and silver. The system is based on a pound that contains 16 avoirdupois ounces or equal to 453.59 grams. The avoirdupois ounce equals 28.3495 grams.
History of the Troy Ounce
The Troy unit of measurement originated in England around the 15th century. The troy ounce became the official unit for gold and silver in England in 1527. It is believed this measurement was derived from the Ancient Roman system. For a while different European countries used different was to derive the Troy Ounce. The Paris Troy ounce was different from the Holland Troy ounces. The current troy ounce is based on the British Imperial system.
When buying or selling gold or silver, you should know the difference between the gold price per gram and the price of gold per ounce. Back in 2016, China sold 30g of Silver Panda coins made of 99.9% silver, however, countries like the United States sell a full troy ounce which equals 31.1034 g and is made of 99.9%. The Chinese Silver Panda weighs 1.1034 grams less silver than other silver bullion coins. This is a 3.5% reduction in the weight between a Chinese Silver Panda and an American Eagle Silver coin. This means the coin only had 96.452 troy ounces of fine silver. If the silver spot price is $20 a troy ounce, an American Silver Eagle coin weighing exactly 1 troy ounce will be worth $20. The silver will be worth $19.30. This is an important consideration when you purchase silver coins from foreign countries.
Buying Precious Metals
Whenever buying gold and silver, you need to be educated so that you don’t get ripped off. You might end up paying too much for gold or buying coins that are of little value. Precious metals can be used to hedge against inflation which is why savvy investors buy them to diversify their portfolios. Precious metals are rare and because of this, they will always have value. However, before buying any precious metals, find someone with experience and a financial advisor you can trust.
Tips for gold investors
You should try to find a reputable dealer, someone who can do more than sell but will be interested in sharing some knowledge with you.
Read whatever the offer says. Take note of the weight and the composition. Is it 90% or 99.9%, the composition will affect the value of the gold? Do not settle for something if it’s not good quality simply because it is cheaper. Gold appreciates with time and the purer your gold the better the returns you will get when you liquidate it.
Ask questions. The importance of knowledge cannot be overstated. If you are not sure of something ask. The dealer you buy from should be able to back his claims. If he cannot guarantee authenticity then you should be prepared to walk away.