Alloy- Mixture of more than one metal, usually preceded by the name of the most predominant or most important metal in the mix, such as nickel alloy.
Arbitrage- To simultaneously buy and sell commodities or securities in different markets to take advantage of price differentials.
AR- Denotes Argentum, i.e. silver.
Ask Price- The selling price offered by the dealer (also "sell" or "offer" price).
Assay- An analytical test to determine the actual metal content of an object or coin, i.e. the fineness of the precious metal as a percentage of the total content. To test
AU- About uncirculated. Grade level between extremely fine and uncirculated. Typically, either has full mint sharpness without mint bloom, or has nearly full mint luster with traces of rubbing or enough bag marks to interfere with design details
Au- Denotes Aurum, i.e. gold.
Bag Marks- When coins are struck they are placed in bags and then moved to the place where they will be distributed to the public for everyday use. In that moving the coins rub up against each other and acquire small marks; these are called bag marks. The fewer the number and the less severity of the marks the higher the value of the coin.
Bar- Typical gold product, either for trading or for accumulation. Bars come in a variety of shapes weights and fineness and different bars are favoured in different parts of the world
Base Metal- A non-precious metal i.e. not silver, gold, platinum, or palladium. Usually copper or bronze but today it also includes aluminium, stainless steel and cupro-nickel.
Bear- Someone expecting prices to fall
Bear Market- Describes investment markets such as stock markets or bond markets in which prices are, or are soon expected to be, in decline. The opposite of a bear market is a bull market.
Bid or Ask- "Bid" or "buy" is the price a dealer is prepared to pay for gold bullion. "Ask" or "sell" is the price offered by the seller.
Brilliant Uncirculated- A condition of grading. On copper and bronze coins it means bright and shiny just as they came from the mint. On silver coins it means with little or no toning, perhaps the middle coins from a roll where the outer coins have toned.
Bull- Someone expecting prices to rise
Bull Market- Describes investment markets such as stock markets or metals markets in which prices are, or are soon expected to be, on the rise. The opposite of a bull market is a bear market.
Bullion- Originally meaning "melting place", from the French bouillon, boiling, derived from the Latin bullio. Gold or silver in general or in mass almost pure form.
Bullion Coin- A legal tender coin whose market price depends on its gold content, rather than its rarity or face value.(Examples: Australian Platinum Koalas, Canadian Gold Maple Leafs, U.S. Silver Eagles)
Canadian Maple Leafs- modern bullion coins minted by the Royal Canadian Mint.
Carat (with a "c")- A measurement of weight which is generally used in reference to gems. It is equal to about 3.086 grains Troy or 0.2 grams. It is not to be confused with KARAT (with a "k") which is a measurement of the fineness of gold. CFTC - Commodity Futures Trading Commission, the regulatory body in the US covering futures markets
Coin- A form of money, today the fractional part of a paper note. Usually round and struck in metal, but there have been square, triangular and other shapes also struck. In the 7th Century BC the first stamped piece of metal was issued in Lydia.
Comex- The New York Commodity Exchange, now a division of NYMEX, the New York Mercantile Exchange. The contracts in the COMEX gold market consist of 100 ounces each, and the actively traded contracts are the even months of the year.
Contango- A contango between two dates exists where the price of the asset for a forward date exceeds the price of the nearer date. This is the usual situation in gold and if there is no constraint anywhere along the supply pipeline then the contango will reflect prevailing interest rates and storage charges
Currency- From the Latin currentia, a stream. Thus anything that flows from one hand to another: coins, banknotes, pigs, shells or any medium of exchange which is acceptable. Today we use the term to refer to paper money.
Debasement- When a government uses less precious metal in the coining of money, while still retaining its original face or exchange value. The prime example is the posthumous coinage of Henry VIII which contained so much copper that the thin silver veneer wore off quickly.
Delivery- The transfer of the asset from seller to buyer. This does not necessarily involve physical shipment but can be done on paper with the bullion remaining in the vaults of a specified bank
EF (Extremely Fine)- A grade where there is little actual wear except on the high points. On copper and bronze original lustre might well still be in evidence. A most appealing and attractive grade, much undervalued by the market place in its inane seeking of the ultimate perfection.
Face Value- The nominal value given to legal tender coin or currency (for example a 1-oz. Gold American Eagle coin has a face value of $50). The value is usually marked, imprinted, or stamped on a coin.
Fiat Money- A medium of exchange where we accept the value that a government or issuing body puts on something. Real money has an intrinsic or metal value, fiat money has the backing in principal of a government and thus is simply paper which governments and their central banks print and given a value through government fiat or decree.
F (Fine)- A grade when the coin or note has seen considerable wear, but is still very collectable. Many collectors like a used coin because they feel that it has actually been somewhere. Collectors on a budget also like this grade.
Fineness- Gold purity, usually expressed in parts per thousand; thus 995 or "two nines five" is 995/1000 or 99.5% pure. 995 was the highest purity to which gold could be manufactured when "good delivery" (q.v.) was determined, but for very high technology applications now it is possible to produce metal of up to 99.9999% purity. Fine Gold is pure, 24 Karat, .999 fine gold.
Fix- The gold fix takes place twice daily in the offices of N M Rothschild in London. The five members of the fix meet at 10:30 and 3:00 London time and commence the fix with a "trying" price. The fixing members representatives relay the price down to their dealing rooms, who are in contact with as many bullion dealers as are interested (or who have interested clients) and these market members then declare how much metal, on a net basis, that they require to buy or sell at that level.
The dealers are themselves in contact with their clients, who may change their order, or add or cancel an order, at any time. The position declared by the dealers is the net position outstanding between all their clients (i.e. if one bank has clients wanting to buy a total of two tonnes, and other clients wanting to sell a total of one tonne, then he declares himself as a buyer of one tonne). Each fixing member then nets off the position and declares himself, as the representative of all those interested parties, as a net buyer or seller (and of how much), or to be "in balance".
If the market is out of balance with more gold required than offered, then the price will be adjusted upwards (and vice versa) until balance is achieved (because some clients will pull out if the price does not suit them). At this point the price is "fixed". On very rare occasions the price will be fixed when there is an imbalance, at the discretion of the chairman of the fix. The fix is thus entirely open and any market user may participate through his bank.
Futures- Futures contracts are traded on futures exchanges with the clients trading on "margin", i.e. depositing a percentage of the value of the underlying contract (q.v). Futures contracts are generally centrally cleared and do not include principal-to-principal trading
Gold- A precious metal and, for most of history, the precious
Gold Standard- A monetary system based on convertibility into gold; paper money backed and interchangeable with gold.
Grade- Rating of a coin's place on a scale whose lower extreme is illegible wear, and whose upper extreme is perfect preservation. A verbal, or in the United States, a numerical way of trying to describe the quality of a coin. Because the price of a coin is in many ways dependent on the grade, some individuals will try to over state the grade of a coin.
The terms Mint State (MS) and Uncirculated (Unc.) are interchangeably used to describe coins showing no trace of wear. Such coins may vary to some degree because of blemishes, toning or slight imperfections as described in the following subdivisions
Perfect Uncirculated (MS-70) |
Perfect new condition, showing no trace of wear. The finest quality possible, with no evidence of scratches, handling or contact with other coins. Very few regular issue coins are ever found in this condition. |
Choice Uncirculated (MS-65) |
An above average Uncirculated coin which may be brilliant or lightly toned and has very few contact marks on the surface or rim. MS-67 through MS-62 indicate a slightly higher or lower grade of preservation. |
Uncirculated (MS-60) |
Has no trace of wear but may show a number of contact marks, and surface may be spotted or lack some luster. |
Choice About Uncirculated (AU-55) |
Barest evidence of light wear on only the highest points of the design. Most of the mint luster remains. |
About Uncirculated (AU-50) |
Has traces of light wear on many of the high points. At least half of the mint luster is still present. |
Choice Extremely Fine (EF-45) |
Light overall wear shows on highest points. All design details are very sharp. Some of the mint luster is evident. |
Extremely Fine (EF-40) |
Design is lightly worn throughout, but all features are sharp and well defined. Traces of luster may show. |
Choice Very Fine (VF-30) |
Light even wear on the surface and highest parts of the design. All lettering and major features are sharp. |
Very Fine (VF-20) |
Shows moderate wear on high points of design. All major details are clear. |
Fine (F-12) |
Moderate to considerable even wear. Entire design is bold with overall pleasing appearance. |
Very Good (VG-8) |
Well worn with main features clear and bold although rather flat. |
Good (G-4) |
Heavily worn with design visible but faint in areas. Many details are flat. |
About Good (AG-3) |
Very heavily worn with portions of lettering, date and legends worn smooth. The date may be barely readable. |
When grading coins any defects should be noted, such as bent, scratched, etc. Cleaning or mutilations of any kind should be mentioned. (i.e., Extra Fine with rim nick at 9 O'clock, small scratch on face) |
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Grain- One of the earliest weight units used for measuring gold as it was the equivalent of one grain of wheat and barley. One grain is equivalent to 0.064799 grams.
24 grains are equivalent to one pennyweight. There are 480 grains in a troy ounce, and 437.5 grains in an Avoirdupois ounce.
Gram- A metric unit of mass and weight. A gram equals approximately 1/32 troy oz. It is used in troy weight as a measure of gold.
Hoard- A group of coins which have been buried or hidden by an someone in the past who anticipated coming back to dig them up. Usually, but not always, they are the same generic type of coin.
Intrinsic- The actual metal value of the coin. In the past the intrinsic or metal value was very close to the face value of the coin. It had to be that way otherwise no one would accept the coins in payment. Today we are told that the piece of metal has a face value of #5 and we accept it although the intrinsic value might well be only a few pence.
Karat- Unit of fineness, scaled from one to 24. 24 karat gold (or pure gold) has at least 999 parts pure gold per thousand; 18-karat has 750 parts pure gold and 250 parts alloy, etc.
Kilo Bar- A bar weighing one kilogram -approximately 32.1507 troy ounces.
Krugerrand- South African gold coin.
Liquidity- The quality of being readily convertible to cash.
London fix- two daily bidding sessions in London of five major gold firms, at which the price of gold is "fixed" or set.
Maple Leafs (Canadian)- modern gold, silver, and platinum coins minted by the Royal Canadian Mint.
Market Value- The price a coin will bring in the open market, which may be greater than or equal to its intrinsic value.
Metric ton- 1,000 kilograms or 32,151 troy ounces.
Mint- As a grading term it is the same as Uncirculated, indicating a coin which has not seen circulation. Mint of course also refers to a place where coins are struck.
Mint state- Uncirculated. Coins showing no trace of wear. Coins graded MS 60-70.
Mintage- The number of coins of an issue that were struck.
MS-60- the lowest grade of Mint State coins. Higher-grade coins are labeled MS-61 up to MS-70. Coins showing wear are graded below MS-60 and fall into grades from AU down to G, with G being a coin showing great wear and AU being a coin showing little wear.
Numismatic- The study of coins, medals, tokens, banknotes and other means of exchange. Such a broad field encompasses a very wide range of interests, from the historical developments associated with coins and banknotes or the technical aspects of production to the artistic aspect of the designs - to name but a few.
Coins that are valued for their rarity, condition and beauty beyond the intrinsic value of their gold content. Generally, premiums for numismatic coins are higher than for bullion coins.
NYMEX- New York Mercantile Exchange in New York, where platinum and palladium, as well as other commodities are traded on a daily basis.
Obverse- The side of a coin which bears the monarch's portrait or the most important legend, which usually includes the name of the monarch or the country. This is considered the most important side of the coin and commonly known as `heads'.
Premium- Market value of a coin less the intrinsic value of the same represents the premium. A silver coin which contains $10 in silver (intrinsic value) and sells for $20 (market value) has a 100% premium.
Proof Set- A set of coins issued in proof quality by a mint. The coins will, in modern times, come in a case or some sort of presentation packaging.
Proof- In this country proof is a method of striking and not a condition. A proof coin is struck most carefully with polished dies and a polished flan. It will be struck more than once to get the high relief to show all the fine details. Sometimes you will get a lead piece with half of a coin, this is done to proof the die before striking.
A coin made specifically for collectors that is not made for circulation.
Prooflike- A condition when the coins are issued in a quality which is better than the normal circulation striking but not up to Proof quality. The surfaces will shimmer.
Rarity- An attempt to describe how many examples of a coin still exist. When an exact number are not known then a scale of rarity is used. A scale might go from EC (Extremely Common) to S (Scarce), or from R for Rare to R5 for Extremely Rare. This `guesstimate' of the number available is usually based on knowledge rather than mint reports of the number struck.
Reverse- The `tails' side of the coin, the opposite of the obverse or `heads' side.
Seignorage- The difference between the metal or intrinsic value of the planchet plus the cost of striking deducted from the face value of the coin. In the past this was a relatively small proportion of the value, today it is increasingly larger. It is interesting to note that some small denominations actually cost more to strike than their face value. Seinorage is also lordship, right or privilege claimed by an overlord; a royalty on mineral's or a percentage on minted bullion
Sovereign- A gold coin first struck by Henry VII in 1489, to the value of twenty shillings. In 1816 under the Currency Reform Act the guinea was abolished and the sovereign made the unit of gold currency.
Sovereign originally meant the supreme ruler or head of state and now means supreme power residing in an individual or state and the resulting independence of action which this brings.
Spot price- Sometimes referred to as the cash price. The current price in the physical market for immediate delivery of gold.
Spread- The difference between Bid (the price a buyer is prepared to pay for gold) and Ask (the price a seller offers) prices.
Sterling- When it refers to the fineness of silver it is the British standard of 925 parts silver per 1,000 parts total. British coins were struck in Sterling Silver until 1919, at which point the metal content was changed to 500 fine silver.
Tola bars- gold bars measured in tolas, the most popular of which is the 10-tola cast bar (3.75 troy oz). Although manufactured in Europe, tola bars are traded primarily in the Middle East, India, Pakistan, and Singapore.
Troy Ounce- The standard weight in which gold is quoted in the international market, weighing 31.1035g (see also our Weights Conversion table). Named after the old French city of Troyes, where there was an annual trading fair in mediaeval days and where this was a unit of weight.
Troy Weight- A measure of weight for precious metals. Where an ounce of feathers is weighed avoirdupois at 28 grams an ounce of gold is weighed in troy weight at 31.1 grams.
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