Here is a list of Gold Investment Terms In Plain English.

Assay: A test that determines the purity of metal.

Alloy: A mixture of metals. Refined gold is usually an alloy containing a small amount of some other metal. (see ‘Fine, Fineness, Fine Gold’)

Bid/Ask: The ‘bid’ or ‘buy’ is the price that the buyer is willing to pay for gold (bullion). The ‘ask’ or ‘sell’ is the price offered by the seller. (see Spread)

Bullion: Refined gold that is at least 99.5% pure. Refined gold usually comes in bars, wafers, coins, or ingots.

Bullion Coins: A legal tender coin. The market price for a gold coin is contingent on it’s gold content, value varies from coin to coin. Several countries mint their own gold bullion coins, with specific markings. These gold coins are considered legal tender all over the world.

Face value: The stated value of legal tender coin or currency. For example, the 1 oz American Eagle gold coin has a face value of $50.

Fine, Fineness, Fine Gold: The amount of pure gold contained in 1,000 parts of a gold alloy. Normal bars of gold contain 995 parts of gold, which translates to 0.995 fineness. The highest gold purity is nicknamed ‘four nines’ because it is 999.9 parts of a 1,000.

Futures Contract: A commitment to make or accept a delivery of gold on a specific date in the future. (see Option)

Gold Standard: A monetary system based on paper money backed by holdings of physical gold. It was the international standard for determining the value of currency and exchange rate. The Gold standard was generally abandoned during the 1930s depression. A similar system was reinstated from the mid 1940s until 1971, when gold-based national finances were officially ended by US President Richard Nixon.

Grain: One of the first weight units for the measurement of gold. It was used in ancient Greece, and named such because the weight was equal to one grain of wheat. One Grain equals 0.0648 grams.

Hallmark: Marks that indicate the producer of a gold bar, it’s serial number, fineness, and other identification.

Karat: Numbers 1 to 24 that indicate the fineness of the gold, 24 karat, or pure gold, contains at least 999 parts gold.

Kilo bar: A gold bar that weighs one kilogram.

Legal tender: A coin or currency declared to be money by a national monetary authority. It is a legally acceptable form of exchange, and can be used for payment. Several countries have nationally minted gold coins that are internationally accepted legal tender.

Liquidity: The ability to convert assets into cash without a significant loss in value. Gold is prized as a highly liquid asset.

London Fix: A twice daily bidding session, held in London. During the London Fix, five major gold traders fix, or set, the price of gold. The London Fix provides the generally accepted standard for gold trading worldwide.

Numismatic: A branch of coin trading that revolves around coins that are prized for their rarity, quality, and historical significance. Numismatic coins are usually more valuable than legal tender gold bullion coins.

Option: The right to sell a commodity, asset, or finical security at a specified date in the future. This is different from a futures contract because it does not imply an obligation. (see Futures Contract)

Pennyweight: An American unit for weighing gold. Twenty pennyweights equals one ounce.

Premium: The amount of value that the market adds to a the face value of gold.  A $50 coin may be bought or sold for $55 if that is the price the market demands. In that situation the coin’s premium would be $5.

Re-strike: A modern replica of previously minted coins. Sometimes a government will re-strike instead of introducing new coins.

Spot Price (Cash Price): The current price for physical gold to be bought, sold, or delivered immediately.

Spread: The difference between the bid and the ask while preparing a gold transaction (see Bid/Ask)

Troy Ounce: A unit of weight equal to about 1.1 ordinary ounces. When applied to gold, the word ounce means a troy ounce.

For a longer and more intense list of gold terms see The Certified Mint’s website at http://www.certifiedmint.com/glossary.htm .