Gold and Silver Terms: Common Precious Metals Terms Explained
Gold and silver have their own vocabulary. If you're buying, selling, or researching precious metals, you'll quickly encounter terms like spot price, premium, bullion, fineness, and troy ounce.
Here are some of the most common gold and silver terms and what they mean.
Assay
An assay is a test used to determine the purity or composition of gold, silver, or another precious metal. An assay can help verify how much precious metal an item actually contains.
Ask Price
The ask price is the price at which a dealer is willing to sell gold or silver. It is generally higher than the dealer's bid price.
Bid Price
The bid price is the price a dealer is willing to pay to buy gold or silver.
Bullion
Bullion is gold, silver, or another precious metal valued primarily for its metal content. Bullion is commonly sold as bars, coins, and rounds.
Bullion Coin
A bullion coin is a precious metal coin produced by a government mint. Bullion coins have a legal tender denomination, although their precious metal value is generally much higher than their face value.
Fine Gold
Fine gold refers to the purity of gold. Gold marked .999 fine is 99.9% pure, while .9999 fine gold is 99.99% pure.
Fine Silver
Fine silver generally refers to silver with a very high level of purity. Silver bullion marked .999 fine contains 99.9% silver.
Fine Weight
Fine weight is the actual weight of the pure precious metal contained in an item. It can differ from the item's total weight when other metals are present.
Fineness
Fineness expresses precious metal purity in parts per thousand. For example, .999 silver is 99.9% pure silver.
Gold-to-Silver Ratio
The gold-to-silver ratio compares the price of gold with the price of silver. It shows how many ounces of silver would equal the price of one ounce of gold.
Hallmark
A hallmark is a mark found on some precious metal items that can provide information about characteristics such as purity, maker, or origin.
Junk Silver
Junk silver is an informal term for older circulating coins valued mainly for their silver content rather than their collectible value.
Many U.S. dimes, quarters, and half dollars dated 1964 or earlier contain 90% silver and are commonly included in this category.
Karat
Karat, abbreviated K, measures gold purity on a 24-part scale. For example, 24K is essentially pure gold, while 18K is 75% gold.
Karat should not be confused with carat, a unit used to measure the weight of gemstones.
Melt Value
Melt value is the value of the precious metal contained in an item based on the current metal price. It is not necessarily the price a dealer will pay for the item.
Numismatic
Numismatic describes coins, currency, medals, and related items studied or collected for characteristics beyond their metal content.
A numismatic coin may have additional value because of its rarity, date, mint, condition, history, or collector demand.
Numismatist
A numismatist is a person who studies or collects coins, currency, medals, tokens, or related objects.
Premium
A premium is the amount charged above the underlying precious metal value when buying physical gold or silver.
Premiums can vary depending on the product, dealer, availability, and market demand.
Refining
Refining is the process of separating and purifying precious metals from other metals or materials.
Round
A round is a privately produced piece of precious metal that can resemble a coin but is not government-issued legal tender.
Scrap Gold
Scrap gold is gold valued primarily for its precious metal content rather than as a finished item. Its value is largely determined by weight, purity, and the current gold price.
Spot Price
The spot price is the current market price of gold or silver for immediate settlement. Precious metal spot prices are normally quoted per troy ounce and change throughout the trading day.
Spread
The spread is the difference between the price a dealer will pay for precious metal and the price at which the dealer will sell it.
Sterling Silver
Sterling silver is an alloy containing 92.5% silver and is commonly marked .925.
Troy Ounce
A troy ounce is the standard unit of weight used for precious metals. One troy ounce equals approximately 31.1035 grams, compared with approximately 28.35 grams in a standard ounce.
Why Gold and Silver Terms Matter
You don't need to memorize every term before buying or selling precious metals. Understanding the basic terminology can make it easier to compare products, evaluate prices, and understand what you're buying or selling.
Terms such as spot price, premium, spread, fineness, melt value, and troy ounce are especially useful when comparing gold and silver. Knowing terms like numismatic, bullion, and junk silver can also help you understand why two items containing similar amounts of precious metal may have very different values.