This glossary explains the words you meet when buying gold and silver in the UK: troy ounces, carats, hallmarks, spot price, premium over spot and the dealer spread. Every entry is written for UK buyers, so it covers VAT on investment gold, Capital Gains Tax on Royal Mint coins and the role London plays in the global bullion market.
It is meant for first-time buyers and for anyone who wants to check a dealer quote before paying. Once the terms are clear, compare the lowest delivered prices on gold coins from UK dealers, ranked by the real final cost including shipping.
All terms
B
- Bid-Ask Spread
- The bid-ask spread is the difference between the price a dealer sells metal at (the ask) and the price it pays to buy it back (the bid). It is the cost of a full round trip: buying today and selling later at an unchanged spot price.
- Bullion
- Bullion is gold, silver, platinum or palladium in a form valued mainly by its metal content: bars, ingots and bullion coins of known weight and fineness. Its price follows the spot price plus a small premium.
C
- Carat
- A carat is a measure of gold purity on a scale of 24: 24 carat is pure gold, 18 carat is 18 parts gold in 24 (75%), and 9 carat is 37.5% gold. In the UK it is written "ct", for example 9ct or 22ct.
F
- Fineness
- Fineness is the purity of a precious metal, written in parts per thousand. Gold of 999.9 fineness is 99.99% pure; a 22 carat Sovereign is 916.7, meaning 916.7 parts in every 1,000 are gold.
I
- Investment Gold and VAT in the UK
- In the UK, investment gold (bars of at least 995 fineness and qualifying gold coins) is exempt from VAT under HMRC VAT Notice 701/21. Silver, platinum and palladium bullion are normally charged VAT at the standard rate of 20%.
L
- LBMA Good Delivery
- LBMA Good Delivery is the standard set by the London Bullion Market Association for large gold and silver bars and the refiners allowed to make them. Only bars that meet it can settle trades on the loco London market.
N
- Numismatic Coins
- A numismatic coin is a coin valued mainly for its rarity, age, condition or design rather than its metal content. Proof coins, limited mintages and historic dates are sold at prices well above the metal value.
P
- Premium Over Spot
- The premium over spot is the amount a buyer pays above the metal value of a coin or bar, usually shown as a percentage of the spot price. It covers minting, distribution, delivery and the dealer's margin.
S
- Spot Price
- The spot price is the current wholesale price of one troy ounce of a precious metal for immediate delivery. It is traded mainly in London and on futures exchanges, quoted in US dollars, and shown in pounds by converting at the GBP/USD rate.
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 ordinary (avoirdupois) ounce of 28.3495 grams used for food in the UK.
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