Learn About Troy Ounces, Their History, and Color Codes
Precious Metals investing comes with new verbiage, concepts, and terms that differ from investing in paper assets. Many of these terms are fairly easy to figure out, others need some help.
It is important for those who want to buy Gold and sell Gold, or buy Silver and sell Silver, among other metals, to become familiar with the terms used in Precious Metals investing. Being familiar with Gold and Silver spot prices can help investors know when is the best time to purchase bullion, but it is also helpful to know the amount of Precious Metal content in each bullion. One term that trips up many is the troy ounce. Today we will take a look at what exactly constitutes an ounce and how it differs from the typical ounce.
As you begin buying and selling Gold, Silver, and other Precious Metals, you will notice that Precious Metals are weighed differently than other common items. Precious Metals are weighed using the traditional troy weight system as opposed to the more familiar “avoirdupois” units that we employ when weighing other goods.
Goods such as chocolate or sugar or coffee are measured using avoirdupois ounces. The name may sound odd to you unless you know French, but the word avoirdupois is literally translated as “goods of weight” and is simply the unit of measure we in the United States use to weigh almost everything other than Precious Metals.
If you were to take a 1 oz Gold coin from your personal collection and place it on a standard grocery-store scale, you would find that your coin is approximately 10% heavier than an ounce of beef or mushrooms or chocolate. Simply put, the two measures of an ounce are not the same. A troy ounce is approximately 10% heavier than an avoirdupois ounce.
In addition to being heavier, a troy ounce of Silver or Gold has more Precious Metal content than an avoirdupois ounce. To ensure that your scales are accurate when weighing precious metals, it is important to use a scale that is approved by the National Type Evaluation Program (NTEP). NTEP-approved scales are legal for trade and can help you avoid any confusion about the weight of your product.
A troy ounce is a bit heavier than a regular ounce. One standard ounce is 28.35 grams, while a troy ounce translates to 31.1 grams. This small difference may not seem like much, but the troy system allows for more precision.
A pound is 12 troy ounces rather than 16 standard ounces. This difference isn’t noticeable at first glance, but it allows you to accurately weigh coins and bars that are tiny or thin.
TIP: When you go shopping for Gold and Silver products always keep the troy ounce in mind. If you are buying a 1/10 oz Gold coin, your dealer will likely quote it at about 30% lower per troy ounce than they would for a one troy ounce gold coin. That is because there is less Gold in the smaller coin.
The origins of the Troy weight system may sometimes be debated, but it is commonly believed that the name is derived from Troyes, a trade market in France. Merchants converged on that area from all over the world to buy and sell goods, so a standardized unit of weight would have made doing business much more efficient. Later, many areas of Europe devised their own version of the troy ounce, but the French troy system is believed to be most closely related to the one that we still use today.
The Avoirdupois system, on the other hand, is thought to have originated with King Edward I of England in the late 1300s. He ordered that a set of weights be manufactured for use in his kingdom. The new system was based on wheat grains because it was easy for merchants to measure by volume compared with items like stones or metals.
Troy weight was widely used in the United States until the middle of the 1900s when many countries began switching to a decimals-based system. Canada and Great Britain adopted decimalized systems by 1971 and soon most other nations followed suit. The U.S., however, did not switch officially until 1976 with the passage of the Metric Conversion Act.
Numerous companies manufacture Precious Metal products, and it can be difficult to keep track of the various weights of each coin or bar. The good news is that most manufacturers use standardized colors to indicate their products’ weights. For example, U.S.-Minted Gold coins are almost always yellow in color, so if the color matches what you are expecting, you can be confident that you have correctly identified the weight.
As a general rule of thumb, Gold and Silver products produced by foreign mints and governments carry their typical colors as well. You will find most Indian Gold coins marked with pink or red to indicate their 1/2 oz weight, and Canadian Maple Leafs are always noted with the colors gold or green.
In addition to color, some companies stamp their products with graphics that indicate the weight. The United States Mint stamps each Gold coin it produces with a mint mark and the face value, but it often does not show its weight in ounces. In other countries, however, you will find phrases such as “1/2 unze” or “1/2 once” to indicate a half-troy weight.
Scales for Weighing Precious Metals
Most people will only ever purchase Gold and Silver bullion in weights that are less than a full troy ounce, so scales built for weighing jewelry items often have the capability to accurately weigh amounts as small as 1 gram. If you expect that you may want to purchase or sell coins in the future, it would be wise to invest in a more precise scale.
Prior to the adoption of the metric system, French-born King Henry II of England chose to adjust the British coinage system to be more in line with the French troy system he felt was superior. The system was tinkered with periodically, but the troy weights we know today were first used in England during the 15th century.
By 1527, the troy ounce had become the official standard measurement for Gold and Silver in Britain, with the U.S. finally adopting the troy system in 1828. Just like the worldwide traders in Troyes, France, buyers and sellers today need a standardized form of measurement for Precious Metals.
The Troy Ounce Today
The use of the troy system continues today, even though most other countries have switched to the metric system. In fact, many countries adopted a rounded version of the metric system that is close to the troy ounce for its Precious Metal coins and bars because it is easy to work with. The United States Mint uses a modified version of the avoirdupois ounce for its Silver coins, which is slightly heavier than a troy ounce.
To avoid confusion, many companies stamp their weights on their products so that consumers know exactly how much they are paying for. In general terms, a standard Gold coin or bar will weigh approximately 1/35 of an ozt., but this can vary from product to product.
For example, the Gold Buffalo is 1/50 ozt., while the Silver American Eagle has a weight of 31.101 grams or 1 troy ounce (ozt.). The Perth Mint Gold Kangaroo coin comes in several sizes, including 1 gram, 10 grams, and 1 kilo (32.15 ozt.), while the popular Silver Maple Leaf coin comes in sizes ranging from 1 gram to 1 kilo.
The Gold and Silver Philharmonic, bars, and other Gold and Silver products have a wide range of weights that are available in all sizes. The diversity in weights can be attributed to the fact that most people purchase Gold and Silver coins in fractional weights due to their affordability compared with larger weights. It is not uncommon to see a person purchase a 1/20 ozt. Gold Buffalo or 10 gram Gold Maple Leaf coin because they cost less than a full ounce of Gold. They also look aesthetically pleasing in a collection.
The vast majority of people will never come across anything but fractional-weight Grams, which makes most Gold products fairly simple to understand. It’s not uncommon to see people get confused when buying and selling large weights of Gold, such as one-ounce coins and bars; however, the troy ounce helps make this process easier.
The troy ounce system is used in some form or another around the world to measure Precious Metal content in bullion. It is important to keep in mind that a troy ounce differs from a standard ounce when looking to purchase bullion. Precious Metal retailers and mints always indicate a product’s metal content, so be sure to keep an eye out when browsing products.
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