Gold glossary: talk like an expert

Here are some terms you need to know to follow the latest news related to gold on the markets.

** Troy ounce ** The troy ounce, which symbol is “oz t,” is a standard mass measure of precious metals such as gold, platinum or silver. It is heavier than the “standard” ounce (about 9.7% heavier), and is exactly equal to 31.1035 grams of gold (a standard ounce is equal to 28.3495 grams). When buying gold or any other precious metal, always make sure that the mass unit is the troy ounce. The standard or international ounce is used for all other weight measurements, except for precious metals and gems.

** Monetary gold ** This term refers to gold coins serving as currency. Napoleon, Louis d’or, Souverain… These coins are usually round and often show a facial value, that is to say a monetary value. Otherwise, it is their gold weight that is taken in consideration. Some of these items are listed for both purchase and sale.

** Spot rate ** The spot is the benchmark rate for gold-related financial transactions. It reflects the value on the physical market for the immediate delivery of gold. This rate is valued between the purchase price “ask” and the selling price “bid”.

** Gold certificates ** Throughout history, gold certificates were gold ownership titles that could be exchanged for a predetermined amount of physical gold. Today, these certificates are financial products offered by banks to their investors.

** Gold deposits ** Gold loans over a specified period of time and paid in the form of gold ounces.

** Cross-currency swaps ** Exchange of gold against currencies (euro, dollar, pound, etc.). The price of gold is fixed at the signing of the contract. At maturity, the exchange is reversed in the opposite direction at the pre-established price. This allows a gold holder to lend his asset and earn a return on the loan period.

** GOFO (or “Gold Forward Offered Rate”) ** The GOFO is the rate applied to swap transactions (exchange) Gold to USD. It is determined by market makers, the market makers of the London Bullion Market Association (LBMA) and the major companies involved in precious metals activities in London. It is fixed daily for periods ranging from one month to one year.

** Location/Quality swaps ** Temporary gold exchange between two sites or two quality standards