This glossary explains the words you meet when buying gold and silver in the United States: troy ounces, spot price, premium over spot, karats, fineness and the bid-ask spread. Each entry is written for US buyers, so it covers state sales tax, the IRS collectibles rule, IRA-eligible metal and coins from the US Mint such as the American Eagle and the American Buffalo.
It is meant for first-time buyers and for anyone who wants to check a dealer quote before paying. When the terms are clear, the next step is simple: see which dealer sells the lowest-priced 1 oz gold coins today, shipping included.
All terms
B
- Bid-Ask Spread
- The bid-ask spread is the difference between the dealer's selling price (ask) and buyback price (bid) for the same coin or bar. It is your cost if you buy and sell right away.
- Bullion
- Bullion is gold, silver, platinum or palladium in bars, rounds or coins whose price depends mainly on metal weight and purity, not on rarity or design.
F
- Fineness
- Fineness is the share of pure metal in a coin or bar, written in parts per thousand. A gold bar marked .9999 is 99.99% gold; a coin marked .900 is 90% silver or gold.
K
- Karat
- Karat (k or kt) measures gold purity in 24 parts. 24 karat is pure gold, 14 karat is 14/24 or 58.3% gold, and 10 karat is the lowest purity that may be sold as gold in the US.
L
- LBMA Good Delivery
- The LBMA (London Bullion Market Association) runs the Good Delivery List of accredited refiners and the standard for large bars traded between banks. It also oversees the LBMA Gold Price benchmark.
N
- Numismatic Coins
- Numismatic coins are coins valued for rarity, condition, history or collector demand rather than metal content. Proof coins, graded coins and old US gold coins are typical examples.
P
- Precious Metals Sales Tax
- In the US there is no federal sales tax on bullion. Each state decides whether gold, silver and platinum purchases are taxed, and profits on sale are taxed federally as collectibles gains.
- Premium Over Spot
- Premium over spot is the difference between a dealer's selling price and the metal value of a coin or bar, usually shown in dollars or as a percentage of spot.
S
- Spot Price
- The spot price is the current wholesale price for immediate delivery of one troy ounce of gold or silver, quoted in US dollars and updated nearly around the clock on trading days.
T
- Troy Ounce
- A troy ounce is the unit used to weigh and price precious metals. It equals 31.1035 grams, about 10% more than the 28.35 gram avoirdupois ounce used for groceries in the US.
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