As interest in the gold and silver bullion markets rises (along with prices), we thought our readers would benefit from an understanding of the terms they will encounter as they explore the various places bullion is traded.
Glossary of Bullion Terms
Ask Price
The price a seller is willing to accept for a commodity, also known as the offer price. Theseller will typically also state the amount of the commodity willing to be sold at that price.
Bid Price
The offer made by a trader or a dealer to buy a commodity. The bid will state both the price at which the buyer is willing to purchase the commodity and the quantity to be purchased.
Bourse
A French term derived from the Latin word for purse, it is often used to describe markets where stocks, bonds, and precious metals are traded. It is also commonly used to describe sales floors at coin shows and conventions. (See “exchange” below.)
Bullion
Bullion is a precious metal such as gold, silver, or platinum in the form of bars, ingots, or coins. The value of bullion is determined by its purity and weight.
Bullion Coin
A bullion coin is a coin that is valued by its weight in a specific precious metal rather than any face value that may be placed on it. An American Gold Eagle, for instance, has a stated face value of $50 but its bullion value is 30 times that. A bullion coin should have its weight and purity clearly indicated as well as the name of the entity that coined it. That could be a national or private mint. (See “round” below.)
Carat
A carat (spelled with a C) is a unit of measurement of the weight of diamonds and other precious stones and is equivalent to 200 milligrams or 0.4 grams (0.014 ounces). While you may see the term used in reference to the purity of gold, the proper term when describing gold is “karat,” spelled with a K. (See “karat” below.)
Collectible Coin
A collectible coin is one that’s value is based upon the coin's rarity, demand, condition and mintage. A collectible coin may be rare and worth considerably more than its bullion value.
Exchange
The marketplace where items like stocks, bonds, and bullion are traded. Major bullion exchanges are located in New York, London, and Zurich, but exchanges exist in several other countries as well. (See “bourse” above.)
Karat
A measure of the fineness of gold. One karat represents 1/24th pure gold mixed with other metals. Thus 24-karat gold is 100% pure 24/24ths) and 22-karat would be 91.667% pure gold. Most gold coins made for circulation were in the 22-karat range, usually combined with silver to add durability. Bullion is typically 99.9% pure, often referred to as “fine,” although that term has no precise meaning in bullion trading.
Melt Value
Melt value is the value of a coin if melted and sold for its bullion content only.
Round
To be properly called a coin, the object must be legal tender in the country of issue and should have its value stated in that country’s currency. Thus, other than silver and gold coins issued for circulation such as US $10 Gold Eagles, coin-like objects that are not intended for use in everyday commerce are properly called “rounds” and tokens. That being said, governments, including the US, produce commemorative and bullion rounds they refer to as coins. But private mints will properly call their products rounds and bars.
Spot price
The spot price is the market price for immediate delivery of a commodity such as gold, silver, wheat or oil.
Spread
The spread is the difference between what a dealer will charge to sell an item and what they will pay to purchase it. Also referred to as the markup and discount, respectively.
Troy ounce
A troy ounce is the measurement used in the pricing of precious metals such as gold and silver. A troy ounce is 480 grains or exactly 31.1034768 grams whereas a “regular” (avoirdupois) ounce is only 28.35 grams. When the term “ounce” is used without the adjective “troy” it is thus a lower weight since a troy ounce is roughly 10% heavier than a “regular” ounce.
The Great American Coin Company® offers gold and silver bullion in all types and sizes from under one gram to 100 ounces. Some bullion coins like American Gold and Silver Eagles have added value as collectors’ items. While they may cost a little more to buy, their collectability typically adds value beyond their bullion price. That collectability premium tends to grow with time independently of metal prices. Visit our website for complete details and prices.
