Below are definitions of some of the most commonly used terms in the precious metal investing world.
Assay – A test to determine the quality and purity of a gold or silver product. When a gold or silver product ships with an “assay”, this is a guarantee from the assayer that the product in question does indeed contain the described amount and purity of gold or silver.
Brilliant Uncirculated – A coin that has never been in circulation, and is in shiny, new, and immaculate condition.
Buy/Sell Spreads – The difference between a precious metals trader’s buying prices and selling prices, relative to the spot price of the metal they are trading. Ideally, buy/sell spreads are kept as low as possible.
Circulated – Coins that have been distributed to the public as currency. Usually in much worse condition than uncirculated coins.
Commodity – A physical product which is commonly traded and holds value based on the product’s industrial and commercial value.
Condition – The condition of a gold or silver bar, round, or coin. Common conditions are “New”, “Varied”, “Brilliant Uncirculated”, “Proof”, “Circulated”, etc.
Divisibility – How easy it is to piece out and distribute a fixed weight of a certain product. Ex: Ten 1 Ounce Silver Bars are more divisible than One 10 Ounce Silver Bar.
Gold-Silver Ratio – The amount of silver you can buy with one ounce of gold, based on present spot prices. Ex: a gold-silver ratio of 50 means that one ounce of gold would buy fifty ounces of silver at present prices.
Junk Silver – Any silver product that contains less than 90% silver content. Junk silver products usually contain between 35% to 90% silver. Ex: pre-1965 USA coins.
Legal Tender – Coins that can be used as national currency. Ex: The 1 Ounce American Gold Eagle has legal tender of $50 USD.
Liquidity – The ease of buying and selling a certain product or metal. Ex: 1 Ounce Silver Bars are extremely liquid, as their is a huge active base of both buyers and sellers.
Mint – The refining or fabricating company which created a certain bar, round, or coin. Ex: Golden State Mint.
Obverse – The “front” side of a coin, usually bearing a head or face design.
Paper Precious Metals – Any precious metal investment that doesn’t result in the investor holding gold or silver in hand. Ex: precious metal ETFs, precious metal certificates, etc.
Proof – A coin that has been struck with greater pressure than normal using special dies to make the design more highly polished. Proof coins are collectibles and trade at a higher premium than brilliant uncirculated or circulated versions of the same coin.
Purity – The gold or silver content contained within a bar, round, or coin. Usually displayed as .XXX. Ex – .999 1 Ounce Silver Bars, indicating 99.9% purity.
Reverse – The “back” side of a coin, with an alternate design usually displaying the coin’s purity and face value.
Spot Price – The live, up-to-date price of gold or silver. Determined by the latest trades on the futures market as well as over-the-counter markets.
Weight – The stamped weight of a bar, round, or coin. Ex: 1 Ounce Silver Bars.
Year – The year of issue for a gold or silver coin. Ex: 2012 Silver American Eagle