Jargon Busting: 20 Top Terms to Know When Investing in Gold & Silver

The world of gold and silver investment can sometimes seem confusing and intimidating to newcomers due to some of the ‘lingo’ used by those already in the know. However, it need not be that way. We have put together this jargon-busting guide to help those new to bullion investment become more savvy in some of the terminology commonly used in the precious metals market.

1. What is an assay?

An analysis of a metal used to determine its purity.

2. What does ‘bear market’ mean?

A market in which the primary trend in prices is down, encouraging selling.

3. What does ‘Bull Market’ mean?

A market in which the primary trend in prices is upwards, encouraging buying.

4. What is the definition of Bullion?

Gold coins or bars which are bought primarily as a store of value for their precious metal content.

5. What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is a tax charged on the profit when you sell, give away or dispose of an asset you own that has increased in value. These assets can include shares, bullion, & real estate property. (Keep a lookout for CGT free bullion products!)

6. What is a Die?

A metal tool featuring an engraving which is used to strike a design onto a coin.

7. What does ‘fineness’ mean?

The purity of a precious metal measured in parts per thousand. For example, a gold coin or bar measuring 999.0 fineness contains 999 parts gold and 1 part of another metal.

8. What is the gold/silver fix?

A benchmark used for the trading of gold and silver bars and coins. This is set by a daily bidding session in London, at which the price of gold or silver is ‘fixed’.

9. What is the gold-silver ratio?

This ratio shows us how gold and silver are performing against each other and is derived by dividing the price of gold by the price of silver per ounce. This calculation gives us the amount of silver ounces in value it would take to buy one ounce of gold.

10. What are gold reserves?

Reserves of gold held by the central banks, usually for currency protection and balancing payments and deficits. These are often topped-up in times of economic uncertainty.

11. What does ‘hedge’ mean?

A transaction designed to protect an investment portfolio from market uncertainty, to attempt to maximise profits while minimising risk.

12. What are milk spots?

Small white marks that sometimes appear on silver coins. These tend to show on bullion coins and may be caused by polishing agents used by the mints.

13. What is a mintmark?

A letter or symbol sometimes stamped on a coin to identify the mint where it was struck.

14. What is an investment portfolio?

A collection of investments made by an individual, sometimes including a wide range of assets including bullion.

15. What is physical gold/silver?

Real gold and silver – bars, coins and jewellery - that can be touched and held in your hand, unlike ETFs (Electronic Traded Funds) and mining shares.

16. What is a ‘premium’?

The additional cost of bullion over and above the metal content at the current spot gold or silver price.

17. What are Proof Gold/Silver coins?

High quality coins with a higher standard of details, quality and finish, usually with a limited issue and supplied boxed with a certificate. These coins are generally sought after for their collectable value, as well as their precious metal content.

18. What does spot price mean?

The current price at which gold/silver is being traded. Usually taken from the London spot price and quoted in value per Troy Ounce.

19. What does the ‘spread’ mean?

The difference in price between the highest price a buyer will pay for a coin or bar (bid price) and the lowest price a seller can sell for (ask price).

20. What is a Troy ounce?

The troy weights system is commonly used to measure the mass of precious metals, such as gold and silver. A troy ounce is equal to 31.1034768 grams and differs from the commonly used Avoirdupois ounce (28.34g).

When buying or selling gold and silver, it may be useful to be familiar with some of the terms listed above, making it easier to understand the process. It can also make things clearer for you when dealing with others in the world of precious metals investment and when doing your research on the market before making your decisions.

Here at Atkinsons, our experienced team are here to help if you need a little more information. Give us a call on 0121 355 0620 or email us at info@atkinsonsbullion.com

This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.