Glossary of Bullion Terms

Acid Test - A means to test the fineness of gold by using nitric acid and aqua regia. This testing will lose some small amount of gold.

Actual Gold Content - The amount of gold that exists in an object, that means all the alloys have been subtracted.

Ag - The chemical symbol for silver.

Allocated Account - A bank storage account held by dealers in clients' names, in which the clients have their precious metals physically segregated from other metal in the vault and are given detailed lists of the weights and assays of their precious metals. The client has full title to this precious metal. Metal in an allocated account does not form part of a precious metal dealer’s assets. This is as opposed to unallocated storage.

Alloy - A mixture of two or more metals. Such as gold alloy which is mixed with other metals (copper, silver, nickel or zinc) to improve its hardness and change its color.

Arbitrage - In order to profit from a difference in the price, the investors simultaneously purchase and sale a product. It is the practice of taking advantage of a price difference between two or more markets.

Argentum - Latin name for the element silver.

Ask Price - The current lowest price that the customer could buy. In fact, if a customer decides to buy it, he should pay higher than "ask price”. This price is as opposed to bid price.

Assay - A test to determine the purity and weight of a precious metal (such as gold or silver products). If a gold product delivers with an "assay", that means the product is guaranteed by the assayer that the product in question does indeed contain the described amount and purity of gold.

Au - The chemical symbol for gold.

Aurum - Latin name for the element gold.

Aqua Regia - A mixture by mixing concentrated nitric acid and hydrochloric acid in a volume ratio of 1:3. It is commonly used in testing the fineness of gold.

Backwardation - also called inverted market, is a situation in which prices for future deliveries are lower than price for a nearer delivery date, or spot price. It describes a downward sloping forward curve in a commodity market. Backwardation is the opposite of contango.

Bar - A mass of metal cast or shaped into a convenient shape. It is a generic term for a bar of gold or silver and a non-numismatic form of precious metal bullion.

Base Metal - commonly refers to all non-precious metals. They are oxidize, tarnish or corrode relatively easily when exposed to moisture or air, such as Zinc, copper, nickel, aluminum, iron and lead. These metals are commonly used in alloying gold, silver and platinum.

Bear Market - Describes a market condition, a prolonged period in which investment prices fall, along with widespread pessimism. It usually occurs when economy is in a recession and unemployment is high, or inflation is rising quickly. Opposite of bull market.

Bid Price - The current highest price that the customer could sell. In fact, if a customer decides to sell, his selling price is closest to "bid price", rather than the "bid price”. This price is as opposed to ask price.

Blank Planchet - A round metal disk that is ready to be struck as a coin. In other word, the round metal has not yet been struck with an obverse, reverse or edge design.

BU - stands for brilliant uncirculated, describes a coin in a new condition. A BU coin means that the coin has never been circulated, and retains its original mint luster.

Bull Market - Describes a market condition, a prolonged period in which investment prices are rising, or soon expected to rise. It usually occurs as a result of an economic recovery, an economic boom, or investor psychology. Opposite of bear market.

Bullion - traditionally stands for precious metals bars or ingots, such as gold bullion and silver bullion which are officially recognized as being at least 99.5% purity and are in the form of bars or ingots rather than coins. In the United States, the most commonly traded gold bullion pieces among individual investors weigh 10 oz. or less.

Bullion Coin - a coin is made of precious metal and kept as an investment or a store of value. It is traded at a price close to its intrinsic or precious metal value, rather than its face value.

Britannia Silver - An alloy of silver which contains 95.84% silver, with the balance usually copper. It should be distinguished from Britannia metal which is a pewter-like alloy containing no silver.

Carat - a unit for mass which is used for measuring the weight of gemstones and pearls (1 carat is equal to 200mg). Distinguished from "karat" which is used for measuring the fineness of gold.

Cash Market - also called "spot market", is a public market in which financial instruments or commodities are traded for cash and for immediate delivery. In cash market, settlement happens in T+2 working days.

Cash Price - also known as spot price, is a price quotation in a cash market, that means the commodities (such as gold and silver products) immediate or nearly immediate delivery.

CU - The metallurgical symbol for copper.

Contango - is a situation in which the futures price (or forward price) of a commodity is higher than the expected spot price. It describes an upward sloping curve for futures prices over time. Opposite of backwardation.

Condition - The condition of a gold or silver bar, round, or coin. Common conditions are "New", "Varied", "Brilliant Uncirculated", "Proof", "Circulated", etc.

Certified Coin - A coin authenticated and graded by a professional service.

Cull coin - Coin in a exceedingly poor condition that is extremely worn or damaged. Generally, coin are graded as Basil State, Fair, or Poor by wear are considered Cull, "hole filler" or simply "filler" coins.

Denomination - Properly describes a currency amount, usually for coins or banknotes. For the coin, denomination is equivalent to its face value.

Deliverable Bar - A precious metal (such as gold and silver) with a weight, fineness and hallmark that is approved as a tradable unit on a commodity exchange.

Doré bullion - A impure alloy silver contains a variable but usually appreciable percentage of gold.

Edge - The side of coin which may be reeded, lettered or plain.

Electrum - A natural alloy of gold and silver, with trace amounts of copper and other metals. It can be produced artificially, and is often known as green gold.

Face Value - The value of a investment coin (such as gold coins, or silver coins) which is printed on the coin by the minting authority. It is symbolic face value, rather than its actual worth.

Fine Gold - Indicates the fineness or purity of a gold coin or gold bullion. It means the gold item is a pure gold, 24 karat, or .999 fine gold.

Fine Silver - Indicates the fineness or purity of a silver coin or silver bullion. It means the silver item is a pure silver, 99.9% or higher pure.

Fineness - The degree purity of a precious metal usually expressed in parts per thousand. For example, American Gold Eagle is .9167 fineness, which means it contains 91.67% gold,and 8.33% other metals. Pure gold is expressed as .9999 or 9999, rather than 1.0000, or 100%.

Fine Weight - The metallic weight of a coin, bar, or ingot, rather than the item's gross weight which contains the weight of the alloying metal. Such as a 1/10 oz Gold American Eagle, its fine weight (gold content) is 0.1 toz, and its gross weight is 0.10909 toz.

Fine Ounce - A troy ounce of gold or silver which has a minimum fineness of .995 (99.5%).

Forward transaction - An transaction agreement to purchase or sale for delivery and payment at an agreed date in the future. It is similar to a futures contract, except that forward transactions are not subject to the standardized procedures and regulations of a commodities futures exchange.

Futures Contract - Also called Futures, is a standardized contract (details the quality and quantity) to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. Futures contracts are available for each month of the year.

German Silver - A metal alloy of copper, nickel and zinc, sometime also containing tin and lead. It is named for its silvery appearance, rather than containing silver.

GLR - stands for Gold Lease Rate, the interest on an unsecured gold loan. In fact, it is the derived rate. GLR is defined as: GLR = LIBOR - GOFO.

GOFO - represents Gold Forward Offered Rates, is the interest you should pay if you swap gold for US$. It is a common transaction in London and published daily by LBMA.

Good Delivery - The specification that a bar of precious metal must meet in order to be acceptable for delivery at a particular exchange.

Gold/Silver ratio - a ratio of the gold price to the silver price. In other words, it measures how many ounces of silver it takes to buy an ounce of gold.

Hallmark - Mark or marks which is struck on items made of precious metals. Such as the mark on the gold bar indicates the producer, weight and its fineness or other characteristics.

Karat - A unit of purity for gold alloys, rather than weight. The word "karat" is from the carob seed, which was used as balance scales to measure the weight of gold in ancient Asian bazaars. Pure gold is considered to be 24 karat.

Karat Gold - A gold alloy mixed with other metals, such as silver, copper, or zinc. It is used in the manufacture of jewelry. The higher the karat, the higher the gold content in the item. In U.S., the gold jewelry must be at least 10 karat, otherwise it cannot be called gold.

LIBOR or Libor - represents London Interbank Offered Rate, it is the average interest rate used in borrowing from other banks. It is more officially abbreviated to ICE LIBOR (for Intercontinental Exchange Libor).

London Fixing price - A precious metal price which is fixed by the London Gold Market Fixing Ltd via conference call, which is used as a benchmark to pricing the major global precious metal products and derivatives. The gold fixing price is fixed twice each business day at 10:30 am and 3 pm, and the silver price fixing is set or fixed once a day, at 12:00 am London local time.

London gold or LOCO London - a way of gold trading. In a narrow sense, London gold is a traded product provided by the London International Financial Futures Exchange, and stored in the city of London underground vault in a purity of 99.5% with 400 ounces of gold bricks. Broadly speaking, London gold represents all of spot gold trading.

Obverse - The front of a coin containing the principal design. The device on the obverse usually consists of a portrait and date.

Pennyweight - An American unit of weight for gold which is equal to 1/20 of a troy ounce.

Premium - The additional cost of a coin or bullion item, over and above the spot price of the precious metal contained in the item. The premium contains the costs of fabrication, distribution and a minimal dealer fee. Rare coins carry an additional premium called numismatic value.

Proof coin - A coin produced using highly polished dies and special plainchants that result in a sharpness of detail and a virtually flawless surface, usually mirror-like fields. It is created by striking the coin multiple times, using higher pressure, and polishing the dies. Proof coins are different with business coins. They are generally made for collectors rather than for normal use.

Pure Gold - 24 karats gold or gold content is 99.99% in a gold item.

Physical Market - A marketplace where the physical commodities are bought and sold for cash and delivered immediately. It is also called cash market or spot market, as opposed to the futures market.

Precious Metal - A rare and high economic value metal. The commonly traded in coin form and used in the jewelry industry are gold, silver, palladium and platinum.

PD - The chemical symbol for palladium.

PT - The chemical symbol for platinum.

Reeding - A technique wherein "reeds" are carved or milled into a surface. In numismatics, reeded edge is to prevent counterfeiting, and helps enable different coin denominations to be easily identified and distinguished from each other by sense of touch alone.

Reverse - The back side of a coin. The device on the reverse usually consists of a country's coat of arms or an insignia.

Spot price - The current price at which precious metal is being traded at a specified time and place. It is calculated according to the most recent average bid price offered by the worldwide professional traders. Generally, the London spot price is used as the world barometer, after conversion from pounds to dollars.

Spread - stands for “bid-ask spread” which is the difference between the bid price and the ask price. If you would like to sell gold, a broker will offer to buy it for the bid price. And if you would like to buy it, the broker will offer to sell it to you for the ask price. The spread is the broker's profit. The ask price is always higher than the bid price, because nobody would like to lose money in business.

Troy Ounce - abbreviated as "oz t". Troy ounce is commonly used to measure the mass of precious metals, such as gold, silver. 1 troy ounce is equal to 31.1034768 grams, or 1/12 per troy pound (1 troy pound ≈ 373.24 grams, that is lighter than avoirdupois pound), distinguishing from avoirdupois ounce which equals to 28.3495231 grams. In modern times, the troy ounce is the only measurement unit of troy weights system is widespread used in the British Imperial and American. In fact, the gold fixing price is based on the unit of troy ounce.

Unallocated Account - An account in which the client's precious metal are not separated from other metals that may be held by the bank. Since some banks do not charge for storage, unallocated account may be cheaper than an allocated account; however, the client carries higher counterparty risk.

Uncirculated coin - A coin is released to the public but not intended for general circulation. However, it is available through a mint or through a local coin dealer. These type coins sometimes said to be "Brilliant Uncirculated or BU.

White Gold - An alloy of gold contains at least one white metal, such as silver, nickel or palladium. It is commonly used as a setting for diamond jewelry.