Gold 101 Glossary
A
Arbitrage: simultaneously buying and selling a commodity in different markets to take advantage of price differentials.
American Eagle: In 1986, the U.S. Mint began selling silver bullion coins in the denomination of $1. The next year, they added a series of gold coins to the series, eventually expanding to 1/10, ¼, ½, and 1 ounce gold versions. Each coin features a family of eagles on the reverse, hence the name.
Ask: The selling quotation of a coin either on a trading network, pricing newsletter, or other medium.
Assay: a test to ascertain the fineness and weight of a precious metal.
Austrian 100 Corona: re-strike bullion gold coin containing .9802 ounce of gold.
Authentication: The process of determining the genuineness of a coin or other numismatic item.
Avoirdupois: a system of weights for commodities except precious metals, stones, and drugs. One avoirdupois ounce equals 28.35 grams or 437.50 grains.
B
Bear market: a market in which the primary trend is down.
Bid: The buying quotation of a coin either on a trading network, pricing newsletter, or other medium.
Brilliant: A coin with full luster, unimpeded by toning, or impeded only by extremely light toning.
Brilliant Uncirculated: A generic term applied to any coin that has not been in circulation. It often is applied to coins with little "brilliance" left, which properly should be described as simply Uncirculated.
Bronze: An alloy of copper, tin and zinc, with copper the principal metal.
BU: brilliant uncirculated, used to describe a coin in new condition.
Bullion: precious metals in the form of bars that are at least 99.5% pure.
Bullion coin: a coin with a symbolic face value but trades at a price relative to its intrinsic value.
Bull market: a market in which the primary trend is up.
C
Call: the right, but not an obligation, to buy a commodity or a financial security on a specified date in the future.
Canadian Maple Leafs: modern bullion coins minted by the Royal Canadian Mint.
Cash market: see spot market.
Centenario: see Mexican 50 Peso.
Chameleon: a broker or dealer who changes his position on a financial strategy to what he thinks will cause a buyer to enter into a transaction.
Choice: An adjectival description applied to coin's grade, e.g., choice Uncirculated, choice Very Fine, etc. Used to describe an especially attractive example of a particular grade.
Circulated: A term applied to a coin that has wear, ranging from slight rubbing to heavy wear.
Circulation: A term applied to coins that have been spent in commerce and have received wear.
Circulation strike: A coin meant for commerce.
Classic Era: The term describing the period from 1792 until 1964 when silver and gold coins of the United States were issued. (Gold coins, of course, were not minted after 1933.)
Coin: a stamped piece of metal of a known weight and fineness issued for commerce.
Coin of the realm: a legal tender coin issued by a government, meant for general circulation.
Comex: one of the world's major commodities futures exchanges where gold and silver are traded. The Comex is in New York City and is a division of the New York Mercantile Exchange.
Commemoratives: legal tender coins or medallions usually minted of gold or silver to commemorate themes, events, places, or people.
Commodity pool: a venture, usually a limited partnership, in which buyers contribute funds for the purpose of buying commodities.
Correction: a decline in prices following a rise in a market.
Cost: The price paid for a numismatic item.
Corrosion: Damage that results when reactive chemicals act upon metal. When toning ceases to be a "protective" coating and instead begins to damage a coin, corrosion is the cause. Usually confined to copper, nickel and silver regular issues, although patterns in aluminum, white metal, tin, etc., also are subject to this harmful process.
Contango market: a normal futures market in which prices are higher in the succeeding delivery months than in the nearest delivery month. Opposite of backwardation.
Counterfeit: Literally, a coin that is not genuine. There are cast and struck counterfeits and the term is also applied to issues with added mint marks.
Cover: to offset a short futures or options position.
D
Date: The numerals on a coin representing the year in which it was struck. Restrikes are made in years subsequent to the one that appears on them. Also, slang for a more valuable issue within a series.
Denomination: The value assigned by a government to a specific coin.
Design: A particular motif on a coin or other numismatic item. The Seated Liberty, Barber, Morgan, etc. are examples of designs.
Design type: A specific motif placed upon coinage which may be used for several denominations and subtypes, e.g., the Liberty Seated design type used for silver coins from half dimes through dollars and various subtypes therein.
Designer: The individual responsible for a particular motif used for a numismatic series.
Device: Any specific design element. Often refers to the principal design element, such as the head of Miss Liberty.
Derivative: a financial instrument derived from a cash market commodity, futures contract, or other financial instrument. Derivatives can be traded on regulated exchanges or over-the-counter. Futures contracts, for example, are derivatives of physicals commodities, and options on futures are derivatives of futures contracts.
Double Eagles: U.S. $20 gold coins used as legal tender 1850-1933. Double Eagles contain .9675 ounce of gold and come in two designs: the St. Gaudens (Walking Liberty) and the Liberty.
E
Eagle: A gold coin with a face value of ten dollars. Along with the dollar, this was the basis of the U.S. currency system from 1792 until 1971. No U.S. gold coins were struck for circulation after 1933, and all gold coins issued prior to that time were recalled from circulation.
F
Face value: the legal monetary value stamped on a coin. See symbolic face value.
Fiat money: paper money made legal tender by law, although not backed by gold or silver.
Field: the open area or background on a coin.
Fineness: the purity of a precious metal measured in 1,000 parts of an alloy: a gold bar of .995 fineness contains 995 parts gold and 5 parts of another metal. Example: the American Gold Eagle is .9167 fine, which means it is 91.67% gold. A Canadian Maple Leaf has a fineness of .999, meaning that it is 99.9% pure.
Fine weight: the metallic weight of a coin, ingot, or bar, as opposed to the item's gross weight which includes the weight of the alloying metal. Example: a 1-oz Gold Eagle has a fine weight of one troy ounce but a gross weight of 1.0909 troy ounce.
Forward transaction: purchase or sale for delivery and payment at an agreed date in the future; 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: an agreement made on an organized exchange to take or make delivery of a specific commodity or financial instrument at a set date in the future.
G
Gold Eagles: modern gold bullion coins.
Gold standard: a monetary system based on convertibility into gold; paper money backed and interchangeable with gold.
Good delivery: the specification that a bar of precious metal must meet in order to be acceptable for delivery at a particular exchange.
Good delivery bar: a bar of gold or silver that is acceptable for delivery against a metals contract.
Grading service: a company that grades numismatic coins. Generally, graded coins are encapsulated in plastic, a procedure called "slabbing." PCGS and NGC are the two dominant grading services in the United States.
Grade: The numerical or adjectival condition of a coin.
Grain: earliest weight unit for gold. One troy ounce contains 480 gr ains.
Gram: the basic unit of weight of the metric system. (31.1035 grams = one troy ounce.)
H
Hallmark: mark or stamp on a bullion item that identifies the producer.
Hedge: a transaction initiated with the specific intent of protecting an existing or anticipated physical market exposure from unexpected or adverse price fluctuations.
I
Intrinsic value: the value of a coin's metal content.
Inverted market: a situation in which prices for future deliveries are lower than the spot price. Also known as backwardation.
K
Karat: a measure of the purity of a precious metal. Pure gold is 24 karat.
Kilo bar: a bar weighing one kilogram (32.1507 troy ounces).
Kilogram: 1,000 grams (32.1507 troy ounces).
Koala: Australian platinum coin, minted since 1987,.995 fine.
Krugerrand: South African gold coin.
L
Legal tender: currency in specified denominations which a creditor is compelled by law to accept as payment of a debt.
Legend: the inscription on a coin.
Liquidity: the quality of being readily convertible into cash.
London fix: two daily bidding sessions in London of five major gold firms, at which the price of gold is "fixed" or set.
Luster: a frosty appearance on the surface of a coin, usually an uncirculated coin.
M
(Canadian)Maple Leafs: modern gold, silver, and platinum coins minted by the Royal Canadian Mint.
Market value: the price at which a coin or bullion item trades.
Medallion: a round piece of metal resembling a coin but not a "coin of the realm." A medallion may be issued by a government or private mint. The Engelhard 1-oz silver prospector is a privately-minted medallion.
Mexican 50 Peso: gold coin first issued in 1921 to celebrate the 100th anniversary of Mexico's independence. The Mexican 50 Pesos in the bullion coin market normally are restrikes, minted from 1943 onward. Weight: 1.2057 troy ounce,.900 fine.
Metric ton: 1,000 kilograms or 32,151 troy ounces.
Mint mark: a letter or symbol stamped on a coin to identify the minting facility where it was struck.
Mint State: describes a coin in uncirculated condition.
Modern issues: current coins, whether struck for circulation or for sale to buyers or collectors.
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.
N
NGC: acronym for Numismatic Guaranty Corporation of America, one of two major coin grading services in the United States.
Noble: modern platinum bullion coin issued by the Isle of Man since 1983.
No-grade: Term applied to a coin returned from a third-party grading service that was not encapsulated because of varying reasons. (This could be for cleaning, damage, questionable authenticity, etc.)
Nugget: modern gold bullion coin minted by Australia, .9999 fine.
Numismatic coins: coins whose prices depend more on their rarity, condition, dates, and mint marks than on their gold or silver content.
Numismatist: coin collector.
NYMEX: the New York Mercantile Exchange, a future exchange where platinum and palladium are traded.
O
Obverse: the front side of a coin which contains the principal design.
Option: the right, but not an obligation, to buy or sell a commodity or a financial security on a specified date in the future.
Original: A term used to describe a coin that never has been dipped or cleaned, or a coin struck from original dies in the year whose date it bears.
Ounce: a unit of weight. In the precious metals industry, an ounce means a troy ounce equal to 31.1035 grams.
P
PCGS: acronym for Professional Coin Grading Service, one of two major coin grading services in the United States.
Pennyweight: an American unit of weight for gold in which one pennyweight equals 24 grains or 1/20 of a troy ounce.
Physicals market: a marketplace in which the physical product is traded, as opposed to a futures market where "contracts" are traded and physical delivery of the product may or may not take place.
Planchet: a blank piece of metal used for stamping a coin or medallion.
Platinum Eagles: modern platinum bullion coins minted by the U.S. Treasury.
Plated: A term used to describe a coin to which a thin layer of metal has been applied-for example, gold-plated copper strikings of certain U.S. pattern coins.
Premium quality: A term applied to coins that are the best examples within a particular grade.
Premium: the dollar amount or percentage a coin sells over its intrinsic value. Example: the American Eagle may sell at a premium of 5% to 8% subject to change, depending on market availability.
Proof: a coin produced using special dies and planchets that results in a sharpness of detail and a virtually flawless surface, usually mirror-like fields. Proof coins are produced for the collector market.
Put: an option that gives the owner to right to sell a commodity or a financial security on a specified date in the future.
R
Rally: an advancing price movement following a decline in a market.
Rare: A relative term indicating that a coin within a series is very difficult to find. Also, a coin with only a few examples known. A rare Lincoln cent may have thousands known while a relatively common pattern may only have a few dozen known.
Rarity: The number of specimens extant of any particular numismatic item. This can be the total number of extant specimens or the number of examples in a particular grade and higher. (This is referred to as condition rarity).
Regular strike: Term to denote coins struck with normal coining methods on ordinarily prepared planchets. Synonymous with business strike.
Relief: The height of the devices of a particular coin design, expressed in relation to the fields.
Restrike: officially issued reproduction of a former circulating coin.
Reverse: the back of a coin.
Rip: A numismatic purchase that is bought substantially below the price for which it can be resold.
S
Saint-Gaudens: Last name of Augustus Saint-Gaudens, the preeminent sculptor of the late nineteenth and early twentieth century. At the request of President Teddy Roosevelt, he redesigned the eagle and double eagle in 1907 although he died mid-production. Also, slang for the Liberty Head double eagle or Saint.
Semi-common: Term to denote coins that are neither scarce nor common. An example would be Uncirculated 1903 Morgan dollars.
Semi-numismatic: Term indicating a coin that has a significant bullion value and some numismatic value. The most recognized examples are Liberty Head and Saint-Gaudens double eagles.
Semi-prooflike: A term used to describe a coin that has some mirror-like surface mixed with satin or frosty luster. Reflectivity is obscured on such a specimen, unlike the reflectivity on prooflike and deep mirror prooflike coins.
Short sale: the sale of an asset for future delivery without possession of the asset sold.
Silver Eagles: modern 1-oz silver bullion coins.
Slabbed coins: coins encapsulated in plastic for protection against wear. Generally, "slabbed" coins are graded by one of the two major grading services.
Sovereign: English gold coin with a face value of one pound sterling and a gold content of .2354 ounce.
Spot: the price for the physical delivery of bullion bars, usually 100-oz bars of gold or platinum and 1,000-oz bars of silver.
Spot market: a market in which delivery and payment have to be made within two working days of the transaction date.
Spread: the difference between the buying price and the selling price of a precious metal coin or trading unit.
Specimen: Term used to indicate special coins struck at the Mint from 1792-1816 that display many characteristics of the later Proof coinage. Prior to 1817, the minting equipment and technology was limited, so these coins do not have the “watery” surfaces of later Proofs nor the evenness of strike of the close collar Proofs.
Strike: Term to indicate the completeness, or incompleteness, of a coin’s intended detail. v. The act of minting a coin.
Struck: A term used to describe a coin produced from dies and a coining press.
Symbolic face value: nominal value given to legal tender coins sold for their metal content. Example: the 1-oz Gold Eagle carries a $50 face value but sells for the value of its gold content plus a premium of 5% to 8%, while the market is volatile we at SGG reserve the right to increase this premium from time to time.
T
Tola: a unit of weight of India equal to 180 grains or 0.375 troy ounce (11.7 grams).
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: unit of weight for precious metals. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce equals 1.09711 avoirdupois ounce.
U
Uncirculated: a coin in new condition, sometimes said to be "brilliant uncirculated" or "BU." The term is often used interchangeably with Mint State.
Y
Yield: a measure of the annual return on an investment expressed as a percentage.