The world of precious metal investing can seem alien and intimidating at first, but only because it’s new. The same applies to everything, but once you spend some time in and around it, once you understand the terms used, then things get much easier. Below are some of the most commonly used terms in this industry, ones you will see a lot and ones you need to understand.
- Bar: As well as coins, precious metals are also cast into bars with a distinctive shape and stamp, both of which are unique to the company that created the bar.
- Bullion: Refers to bars and coins (often called Bullion Coins) that have a precious metal content that is at least 99.5% pure.
- Canadian Maple Leafs: A famous stamp created by the Royal Canadian Mint, used on both gold and silver coins.
- COA: A Certificate of Authenticity is often given with a “proof” coin to prove legitimacy.
- Circulated: Refers to an official coin that has been in circulation as part of a standard currency.
- Face Value: The actual denomination of a coin, regardless of the precious metal value.
- Fine Weight: The precious metal content of bullion.
Gold Standard: A paper-backed system based on conversions to gold.
- Hallmark: A stamp that shows who made the bullion.
- Ingot: Another word for “bar”.
- Karat: A measure of purity for gold. The maximum amount of karats is 24, which signifies the purest gold.
- Kilogram: A measurement that is used throughout Europe and is equivalent to just over 31 troy ounces, or 1,000 grams.
- Kreugerrand: A famous and sought-after gold coin that is minted and used in South Africa.
- Legal Tender: Something that is “Legal Tender” is official currency and a shopkeeper, bank or anyone else providing an official service is required to accept it as payment by law.
- Legend: The “Legend” on a coin is simply the inscription.
- Luster: The “Luster” of a coin indicates the glossy, shiny outer surface that is applied to some uncirculated proof coins.
- Market Value: The price at which the bullion is typically traded at.
- Mint Condition: A coin described thusly indicates one that is in perfect condition, as if coming straight out of the Mint where it was struck.
- Neodymium Magnets: Small and cheap magnets that are used to determine whether silver is real or fake.
- Numismatic Coin: This is a coin that can be sold to a coin collector, often one where the value is decided upon by its rarity.
- Numismatist: A “Numismatic” indicates someone who loves coins, often a coin collector.
- Ounce: A common weight used in precious metals.
- PCGS: The Professional Coin Grading Service is one of the most popular and respected coin grading services in the United States.
- Premium: When used in reference to “Bullion Coins”, the word “Premium” often denotes increased value (on top of the precious metal content) because of the rarity of it.
- Proof: A “Proof” coin is a normal coin that has been produced to a higher standard and struck in limited numbers.
Rounds: Silver Rounds are shaped like coins, but are blank and not intended for circulation.
- Silver Eagles: A modern bullion coin created by the US Mint.
Sovereign: Gold Sovereigns are bullion coins produced by the Royal Mint in the UK. These contain 22-Karat gold and are typically not sold with any sort of “Premium”.
- Spot: The “Spot” price indicates the actual precious metal value. If the market says that silver is worth $16 an ounce and you pay $17 for a one ounce coin, you are paying $1 over “Spot”.
- Troy Ounce: The most commonly used weight measurement for precious metals, a “Troy Ounce”, is a little over a standard ounce, equating to just over 31 grams as opposed to 28.
- Uncirculated: A coin that is described as “Uncirculated” is one that has not been in circulation. In most cases such coins were never intended for circulation and are sold at a premium because of this.
If you’re still not sure about one or more terms used in this industry and you would like us to explain them to you, we’d be happy to help. Simply add a comment and we’ll get back to you as soon as possible.