Accelerated Supply

Gold which reaches the market through lending and leasing before it has been physically produced.

Account – allocated

An investment account where the client’s metal has been individually identified as belonging to that client, and is physically separated from all the other gold in the vault. Should the holding bank default holding bank, the investor becomes a secured creditor.

Account – unallocated

An investment account where the client’s precious metals have not been specifically identified, and can be lower-priced than an allocated account because some banks do not charge for this storage. The downside is the client carries higher counterparty risk and is an unsecured creditor should the holding bank default.

Advance Premium Forward

A forward contract offering a constant contango throughout the contract’s life and is similar to both a flat rate forward and stabilized contango.

American Option

An option that can be exercised on any day up to and inclusive of it’s expiry date.


Buying and selling a commodity in different markets at the same time to take advantage of price differentials between the markets.


The price at which a metals dealer offers to sell.


Official and standardized tests to determine the fineness and weight of a precious metal.

Austrian 100 Corona

A popular restrike bullion gold coin, with each coin containing .9802 ounce of gold.



The difference between a forward price and a nearby price when the nearby is in excess of the forward.


A physical gold product, either for trading or for accumulation. Bars are available in a large variety of shapes, weights and purities, with different bars being favored in different markets and geographic locations. In the precious metals industry, the words bar and ingot are used interchangeably.


An investor who is expecting prices to fall.

Bear Market

A market seeing an overall downward trend or where market sentiment predicts a downward trend


Bid or buy is the price a dealer is willing to pay for a precious metal. (Ask or sell is the price being offered by the seller for the same metal).


A means for raising debt through the capital markets. Gold-Backed Bonds are paper debt investments backed by Gold.

Boston Options

See Break forward options below.


Shorthand for Brilliant Uncirculated, used to describe a coin that’s in new condition.


An investor expecting prices to rise.

Bull Market

A market where the primary trend is up and sentiment is for it’s continued rise.


Precious metals in the form of bars of at least 99.5% purity. The word originally meant ‘melting place’ or ‘mint’ and derives from the French bouillon, meaning boiling.

Bullion Coin

A legal tender coin of which the market price is dependent on its gold content, as opposed to its rarity, design or face value. (The opposite being numismatic coin)

Boiler Room

Any business using high pressure sales tactics, false or misleading information, or scare tactics, to coerce an investor to make a purchase. Once common in the retail gold market, there are still unfortunately incidences of the practice being reported.

Break Forward Options

Similar to a standard call option, the difference being there is no initial cost.


Any professional agent handling client orders to buy and sell securities, commodities or other property in exchange for a percentage commission and or fees charged for the service.



The Chicago Board of Trade


A right (but not obligation), to buy a commodity or financial security at a specified future date.

Canadian Maple Leafs

Popular bullion coins minted by the Royal Canadian Mint available in Gold, Silver, Platinum and Palladium. See Maple Leafs below for full detail.

Cash Market

See spot market.


The Comex Clearing Association


See the Mexican 50 Peso.

Certificates (gold)

Gold certificates are a way of holding gold without taking physical delivery and are issued by individual banks. They confirm an investor’s ownership but the bank retains physical possession of the metal. Advantages for the client are storage fee savings and a gain in liquidity thanks to being able to sell portions of the holding.


Commodity Futures Trading Commission, the regulatory body in the US covering futures markets.


Brokers or dealers who change their position on an investment in-line with what they consider will lead an investor to enter a transaction.


Any stamped piece of metal (usually of known weight and fineness) issued to enable commerce.

Coin of the Realm

A legal tender coin issued by a government, for general national circulation.

Collector Value

The value of a coin over and above it’s intrinsic value (metal content), or face value – based on rarity and condition.


The New York Commodity Exchange, now a division of NYMEX, the New York Mercantile Exchange. The contracts in the COMEX gold market consist of 100 ounces each, with actively traded contracts being even months of the year.


Legal tender coins or medallions typically minted in gold or silver. Issued to commemorate specific themes, events, places, or people and tend to be collectible (see numismatics)

Commodity Pool

A venture (typically a limited partnership) where investors will contribute funds into a pool used to buy commodities.

Consignment Stocks

A bullion dealer can hold gold on consignment at their client’s premises. The gold will be the dealer’s property until the client withdraws it and pays the prevailing price. Similarly, the metal can be held by the dealer at a local bank until the client purchases.


The difference between a forward price and a nearby price when the forward price exceeds the nearby price. This is the typical case with gold and should there be no constraint along the supply line, the contango will reflects current interest rates and storage fees.


A fall in market prices after a sustained period of price rises.


A term used for the offsetting of a short futures or options position.



A financial instrument derived from a cash market commodity, futures contract, or other type of financial instrument.

Deferred Settlement

Where the settlement of a market contract is deferred by mutual agreement on a daily basis.


The transfer of an asset from the seller to the buyer. Delivery doesn’t necessarily mean physical shipment and can be a paper or digital transaction paper with the physical asset, eg gold bullion, remaining in a specified secure location.


The proportion by which a option’s price changes in response to a change of the underlying asset’s price. Delta measures sensitivity of an option’s price to any changes in the asset’s price.

Delta hedging

Metal bought (sold) by the grantor of a call (put) to cover potential risk. The more the price (of the underlying asset) moves either way, the higher the risk to the opposing party that the option could be exercised against them.


The spreading of investments among differing types of assets, commodities and securities in a bid to minimize risk in any situation.


A gold-silver alloy which is an intermediate product in the extraction of gold from certain mines.

Double Eagles

Popular investment U.S. coins issued between 1850-1933. With $20 face value, the coins containing .9675oz gold, come in two designs – the St. Gaudens and the Liberty.



Exchange for Physical – a mechanism allowing investors to open or close futures contracts through the physical market when the associated futures market is closed. A dealer will deal in the over-the-counter market, replacing the position with a futures market position on the opening of the exchange.

European Option

An option that can only be exercised on the date of expiry.

Exchange Options (1)

An option offered by an exchange, that is a standard contract and subject to the rules and regulations of the governing exchange.

Exchange Options (2)

An “exotic” option which allows the holder to exchange one underlying asset for another.

Executive Order 6102

Franklin D. Roosevelt’s now infamous Executive Order 6102 – Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government – see full transcript.

Exercising an Option

Where an option purchaser holds the writer/seller of an option to the agreed contract.

Exotic Options

A term referring to a more sophisticated option strategy with additional features over basic contracts.

Expiry Date

The date on which a derivative product expires or ceases to exist. Exchange products have set expiry dates, whilst OTC expiry dates are variable and agreed between the principals.


Face value

The legal monetary value stamped on a coin – also known as the symbolic face value.

Fiat Money

Money with no intrinsic value, declared by a government to be legal tender. The term derives from the Latin fiat (“let it become”, “let it be done”, “it shall be”).


The open area or background area in a coin’s design.


The purity of a precious metal as measured in 1,000 parts of the alloy. For example a gold bar of .995 fineness will contain 995 parts gold and 5 parts of another metal or metals.

Fine Ounce

A troy ounce of 99.5% pure (.995 fineness) gold

Fine Weight

The weight of a coin, ingot, or bar’s precious metal content, ie the item’s gross weight minus the weight of any alloying metals.


The London gold fixing takes place twice daily and sets a price at which all known orders to buy and sell gold on a spot basis (at the time of the fix) can be settled. The fix is used as a benchmark for spot transactions.

Forward Transaction

A purchase or sale for delivery and payment at an agreed date in the future. Much like a futures contract, with the major exception being forward transactions are not subject to the same standard procedures and regulations of a commodities futures exchange.

Futures Contract

An agreement made within an organized exchange taking or making delivery of a specific commodity or instrument at a set future date.


Gold Eagles

US minted gold bullion coins available in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations with a $5, $10, $25 and $50 face value. Each of the four sizes has a fineness of .9167, containing 91.67% gold (or 22 karat). The remaining metals are 3% silver, and 5.33% copper. Eagles are also available in silver and platinum.

Gold-backed Bonds

Debt raised through capital markets and issued with a gold option alternative as a means to enhance the value/attraction of the investment.

Gold Bug

A sometimes fanatical gold investor, frequently bullish on gold contrary to market sentiment. Gold Bugs tend to support a return to a gold-backed monetary system (a gold standard) away from the existing Fiat system.

Gold Fix (London)

A twice-daily setting of the price of gold by five members of The London Gold Market Fixing Ltd, which takes place on the premises of N M Rothschild & Sons. The Gold Fix is officially a price for settling contracts between members of the London bullion market, but it is also used for setting prices of gold bullion and gold-related contracts and products across the world.

Gold Loan

A financing mechanism in which gold is borrowed from a bullion bank and sold into the market to raise cash. This cash normally finances a gold mining operation, with the metal being repaid over an agreed period of time. Interest payable on the loan is paid either in dollars or gold depending on counter-party agreement.

Gold Standard

A monetary system based on the convertibility of paper money and base coinage into gold. As of 2013 no country uses a gold standard as the basis of its monetary system, with all national currencies now being fiat.

Good Delivery Bars

May also be referred to as large bars, good delivery bars are ingots that conform to London Good Delivery standard. Basic specifications include: a minimum fineness of 995.0 parts per thousand fine gold, bars should carry marks showing serial number, refiner’s hallmark, fineness and year of manufacture; and gold content will be in the 350–430 troy ounces range (11–13 kg)

Grading Service

Numismatic coins are graded for quality, with PCGS and NGC being the two major grading services in the United States. Coins are graded using letters and numbers to reflect overall quality, the worst being BS-1 (or Basal State 1) and the best MS-70 (Mint State 70). Graded coins are usually encapsulated in protective plastic, with a certificate, a procedure known as slabbing.


The earliest known weight unit for gold. Since the international yard and pound agreement of 1 July 1959, the grain or troy grain measure has been precisely defined in the International System of Units as being 64.79891 milligrams. One troy ounce contains 480 grains.


A basic unit of weight of the metric system. 31.1035 grams are equal to one troy ounce. One gram is 0.0353 oz. There are 1000g in a kilogram (kg) and 1000kg in a metric ton.



Hallmarks are a guarantee of certain purity or fineness of a precious metal as determined by formal metal (assay) testing. Marks or stamps on precious metals identifying the producer are often called hallmarks, but are actually Trademarks, Maker’s Marks or Responsibility Marks.


A transaction with intent of protecting any existing or anticipated market exposure from unexpected and adverse price movements.

History-dependent Options

Options where the outcome at expiry depends on the price performance of the underlying throughout the whole life of the option.

History-independent Options

Options where the outcome at expiry is based solely on the price of the underlying at the expiration date. Standard European and American options are history-independent options.



International Financial Statistics published by the International Monetary Fund (IMF).


The traditional definition of inflation is an increase in the money supply and available credit, which in turn increases the money supply (monetary inflation), but in modern use, inflation is used to mean higher prices (price inflation).


Any volume of metal cast into a convenient shape for stacking, storage and transportation may be referred to as an ingot. In the precious metals industry, the words ingot and bar may be used interchangeably although ingots are usually larger bars.

Intrinsic Value

The value of a coin’s metal content, as opposed to it’s face value or collector value.

Inverted Market

A situation where prices for future deliveries are less than the spot price. Also called backwardation.


Buying an asset with the intention to make money either through growth in the asset’s value which will be released on the asset’s sale or through refinancing; or which will produce income over the life of the asset beyond the asset’s purchase price and costs.

Investment company

Any company or trust using its capital to invest in other companies.



A measure of the purity of a precious metal. Pure gold is 24 karat and can vary in fineness ranging from a fineness of .9999 (also called four nines) to .990 (two nines), although .995 is the minimum fineness of Good Delivery bars.

Typically to work out the percentage of gold in an item of known Karat, divide the Karat value by 24 and multiply this by 100, so in a 9 Karat gold item, the sum would be 9/24 x 100 giving an answer of 37.5% or a fineness of .375

Kilo Bar

A bar weighing one kilogram or kg (32.1507 troy ounces). These are very popular in China and Europe.


A metric unit of measurement, separated into 1,000 grams. There are 1,000kg in a metric ton.


A popular Australian platinum coin, minted since 1987 and of .995 fineness. The platinum bullion coin is the most famous series of platinum coins of Australia and is notionally legal tender in Australia. Koalas are available in 1/20oz, 1/10oz, 1/4oz, 1/2oz, 1oz, 2oz, 10oz and 1 kg sizes with face values of 5, 10, 25, 50, 100, 200, 1000 and 3000 dollars.


Very popular South African gold coin. It is minted from gold alloy that is 91.67% pure (22 karats) and is available in 1/10oz, 1/4oz, 1/2oz and 1oz sizes. In 1980 the Krugerrand accounted for 90% of the global gold coin market.



A trading term meaning 100,000, coming from the Indian word for the same.


The London Bullion Market Association acts as a coordinator for all activities conducted on the behalf of its members and participants in the London Bullion Market. It is the principal point of contact between the market and market regulators.

Legal Tender

Any coin, note or form of currency which a nation’s monetary authority declares to be universally acceptable as a medium of exchange.


The inscription on a coin.

Limit Order

An order placed by a client for a transaction to be carried out at a set price point, with the order being triggered when the market reaches that price.


The process of converting securities, assets and other property into money.

Liquidity (1)

The ability of a market to absorb a reasonable amount of buying or selling at reasonable price changes.

Liquidity (2)

A measure of item’s ability to be readily convertible into money. Smaller physical gold bars are seen to be more liquid than larger bars.

London Fix

Two daily sessions in London at which the price of gold is “fixed” or set. See Gold Fix above.


To be long of a commodity, associated futures or options contract is to be a buyer and holder of that investment (for the longer term). The opposite is short.

Long-term Contract

One or more deliveries set to happen after a year following the contract execution.


The slightly frosty appearance of a coin caused by the way light interacts with the minted surface, usually apparent on an uncirculated coin.


Maple Leafs

Canadian Gold Maple Leafs are the official bullion gold coin of Canada, being produced by the Royal Canadian Mint. Canadian Gold Maples are one of the purest gold regular-issue coins available, having a minimum gold fineness of .9999, with some special issues being .99999 fine (five nines), meaning only 0.001% of the metal is non-gold. Gold used in Maples are from Canadian mines. They are available in 1/25, 1/20, 1/10, 1/4, 1/2 and 1oz sizes and are legal tender with face values of $1, $5, $10, $20 and $50. Maples are also available in silver palladium and platinum metals.

Margin (1)

The deposit required to be put up prior to opening a futures, forward or option contract.

Margin (initial)

The amount of money deposited per contract at the start of the trade.

Margin (maintenance)

A sum of money that needs to be maintained on deposit throughout the life of the trade.

Margin call

Money that is called for from the client during the life of any transaction. The money is used to cover exposure resulting from an adverse price movement – or from an endemic increase in margins by the exchange. There is a film of the same name dramatizing the beginnings of the 2007 financial crisis.

Mark to Market

The value of an open position at current price levels.

Market Maker

A dealer who makes a market, that is who quotes bid and offer prices to counter-parties and will deal at those prices.

Market Value

The price at which an investment, ie gold coin or bullion item trades. In the case of ordinary bullion this will be spot price plus a small dealer’s premium.


A round piece of metal which may look like a coin but is not an official coin of the realm. May also be referred to simply as rounds. Rounds/medallions can be issued by government or private mints and may be valued at intrinsic metal weight, or with an additional collector value.

Mexican 50 Peso

A popular gold coin originally issued in 1921 celebrating the 100th anniversary of Mexico’s independence, most Mexican 50 Pesos circulating in the regular (non numismatic) bullion coin market are restrikes, being minted from 1943 onward. 50 Peso’s are 1.2057 troy ounces with a fineness of .900

Metric Ton

1,000 kilograms (kg) or 32,151 troy ounces.

Mint Mark

A letter or symbol stamped on a coin to identify the minting facility where it was struck. May also be called a Makers mark, or Responsibility mark.

Mint State

Describes a coin in uncirculated condition. Shortened to MS and appended with numbers (see Sheldon Scale) to quantify degrees of quality, being MS-60 (Mint State or completely un-circulated condition), going through MS-61, MS-62, MS-63, MS-64, MS-65, MS-66, MS-67, MS-68, and MS-69, up to MS-70 (Mint State – perfect). Coins showing wear are graded below MS-60 and are graded from AU (About Uncirculated) down to G (Good). Below G, AG(Almost Good) leads down to BS (Basal State) – the worst condition a coin can possibly be in.

Modern Issues

Current and recent coins, either struck for circulation or for sale to investors and collectors.


Naked Short

A seller of a contract who doesn’t have the assets or security to back his position.

New York Futures Exchange (NYFE)

A subsidiary of the New York Stock Exchange devoted to the trading of futures and options on the NYSE composite index.

New York Stock Exchange (NYSE)

The largest organized securities market in the U.S. where prices are determined (usually) by supply and demand.


Acronym for Numismatic Guaranty Corporation of America, one of the two principal coin grading services in the U.S.


A .9995 fine platinum bullion coin issued by the Isle of Man between 1983 to 1989. Nobles are legal tender, but do not have a value associated with any currency. Available in 1/20, 1/10, 1/4, 1/2 and 1oz weights.

Noble Metal

Metals that are highly resistant to oxidation and corrosion, with ruthenium, rhodium, palladium, silver, osmium, iridium, platinum, and gold most commonly being considered Noble metals.


A nugget can either be a naturally occurring piece of native gold or a gold bullion coin minted by Australia. The coins have been minted in denominations of 1/20 oz, 1/10 oz, 1/4 oz, 1/2 oz, 1 oz, 2 oz, 10 oz, and 1 kg of 24 carat gold and carry legal tender status in Australia. They are one of few legal tender bullion gold coins to change their design yearly.

Numismatic coins

Coins whose prices depend more on their collector value based on rarity, condition, dates, and mint marks than on their intrinsic value, that is their precious metal content.


A student or collector of coins and currency.


The New York Mercantile Exchange, a future exchange where platinum and palladium are traded. Now merged with COMEX.

NYSE Composite Index

The composite index covering price movements of all common stocks listed on the New York Stock Exchange.



The front of a coin which contains the principal design unique to a particular coin (the reverse will typically show a national leader).


The right but not an obligation to buy or sell a commodity or security on a specific date in the future.

Option Premium

The price paid for an option is known as the premium.

Option Strike Price

The strike price is a pre-determined price at which an option may be exercised.


The over-the-counter gold market trades a 24-hour continuous basis accounting for the majority of global gold trading. Most OTC trades will be settled using gold stored in London, no matter where the deal may be actually transacted.

Ounce (metals)

In the precious metals industry, what is called an ounce actually means a troy ounce equal to 1.09714 regular or avoirdupois ounces. In metric measurements one troy ounce weighs 31.1035 grams.


The reverse of overbought. A single security or a market believed to have declined to an unreasonable level is referred to as being oversold.



Acronym for Professional Coin Grading Service, one of two pricipal coin grading services in the U.S.


An American unit of weight for gold, where one pennyweight is the same as 24 grains or 1/20 of a troy ounce.

Physicals Market

A market where the physical product is traded. The opposite of a futures market where contracts are traded.


A blank piece of metal which is used for stamping a round, coin or medallion.

Platinum Eagles

Modern platinum bullion coins minted by the U.S. Treasury and offered in 1/10, 1/4, 1/2, and 1 troy oz varieties, consisting of .9995 fine platinum. See Gold Eagles


The dollar amount or percentage a coin or bar sells over its intrinsic or spot value. Premiums are made up of dealer profit, mint profit and mining costs.


A coin produced for the collector market using special dies and planchets resulting in incredibly sharp detail and an almost flawless surface, with mirror-like fields.


An option giving the owner the right to sell a commodity or a financial security on a specified date in the future.



An rising price movement following a market decline. A rally can be short-lived or the start a bull run.


An officially issued reproduction of a former circulated coin, for example the Mexican gold 50 Peso.

Reserve Currency

A foreign currency held by central banks and major financial institutions. Any large international trade in commodities such as gold, silver and oil and iron ore, can be priced in the reserve currency, with other countries being required to hold reserves of this currency to pay for these goods.


The rear side of a coin and opposite of obverse.


Shorthand for 1oz silver rounds. Silver rounds are privately-minted .999 fine silver circular pieces of silver of a similar size to a silver dollar.


Safe Haven

Typically a place of safety or calm harbor for investors during periods of financial uncertainty, economic crisis and currency collapse. Many investors see gold bullion as a safe haven investment as gold prices typically rise when stocks and currencies fall.

Sheldon Scale

In 1948, a well-known numismatist called Dr. William Herbert Sheldon attempted to standardize coin grading by proposing what is now known as the Sheldon Scale. The scale was originally devised specifically for United States large cents, but it is now applied to all series and runs from 0 to 70, where 0 means a disc of metal may once have been a coin and 70 means that it is perfect.

Short Sale

The sale of an asset for future delivery without actual possession of the sold asset.

Silver Bug

Like a gold bug, but cheaper. Silver bugs rightly feel silver is undervalued against gold and when the gold/silver ratio reverts to it’s norm, silver prices will rise.

Silver Eagles

Popular 1oz silver bullion coins minted in U.S. and legal tender. See Gold Eagles.

Silver Institute

A nonprofit international association drawing its membership from every aspect of the silver industry.

Slabbed coins

Coins encapsulated in plastic as a means of protection against wear. Typically a slabbed coin has been graded and certified by one of the two major U.S. grading services, NGC and PGCS.


Popular UK minted gold coin. Named after the English gold sovereign, last minted in 1604, the name was revived during the “Great Recoinage” of 1816. Minting of these new sovereigns started in 1817, with the gold content being fixed by the coin act of 1816 at 1320/5607 (0.235420) troy ounces (7.322381 g), nearly equivalent to 113 grains. This equates to a fineness of 916?.

Sound Money

Also commonly referred to as hard money, honest money or commodity money. Sound money is a currency fully backed by a tangible commodity such as gold and silver. As of 2013, sound money no longer exists.

Spot (precious metals)

The price for physical delivery of bullion, based on 100oz bars for gold or platinum and 1,000oz bars of silver – although the spot price is used to calculate value of all precious metal transactions no matter what size.

Spot Market

A commodity market where delivery and payment need to be made within two working days of the transaction date.


The difference between the buying price and the selling price of an asset, commodity or financial instrument.

Standard Ounce

Defined as a troy ounce of 22 carat gold, 91.66% pure, .9166 fine.

Store of Value

A store of value is typically an asset or commodity with intrinsic value, that is capable of being stored for time. Gold is one of the best known stores of value

Symbolic Face Value

The nominal value given to legal tender coins sold for their metal content, with the face value bearing little relation to the coin’s true value.



An Indian unit of weight equal to 180 grains or 0.375 troy ounce. It was the base unit of mass in the British Indian system of weights and measures introduced in 1833, although had been in use long before this.

Tola Bars

Gold bars which are measured in tolas. Tola bars are usually manufactured in Europe, but traded mostly across the Middle East, India, Pakistan, and Singapore. The most popular tola bar is the 10 tola cast bar, weighing 3.75 troy oz.

Troy Ounce

A unit of weight most commonly used in the field of precious metals. One troy ounce equals 31.1035g, 480 grains, or 1.09711 regular (avoirdupois) oz.



An asset which is still the property of the holding bank, and so carries counter-party risk. Unallocated assets are not protected from the insolvency of the bank, ie the owner of the unallocated asset would be an unsecured creditor.


A coin in new condition. In the UK this may be called Brilliant Uncirculated or BU, whilst in the U.S. the term is Mint State or MS.



An option attached to a bond issue which is designed to give the holder a more leveraged (and so riskier) exposure to the underlying commodity.

Weak hands

Investors and traders who are shaken from their investment positions in periods of short term volatility, minor market corrections and price drops. Weak hands typically miss market highs.

World Gold Council (WGC)

The World Gold Council is the market development organization for the gold industry. Based in the UK, the World Gold Council’s 23 members comprise the world’s leading gold mining companies.

Writer, grantor

Alternative terms for the seller of an option.



The ISO code for spot gold.



A measure of the annual return on an investment expressed as a percentage.

Glossary provided by permission of Bullion.Directory

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.