If you are already a big buyer of gold and silver, you would know that being able to measure with troy ounces is an indispensable part of any trader’s knowledge base. However, if you are just getting into gold investing, you are already one step ahead by being proactive in your learning. In this explainer, you’re going to learn the difference between troy ounces and other usual forms of measurement.
When you are buying gold, you are always going to have to measure by troy ounces. The dealers and traders in the market would assume you know this. Precious metals are never measured by the kitchen ounce.
Before new buyers can learn these standards, scammers try to take advantage of their naivety. (1) They might quote items per kitchen ounces but sell them at the troy ounce price. When their customers get home and get a chance to put their metals on the scale, they then realize they’re a few grams light.
Understanding the difference between these measurements can stop some unnecessary stress.
Ounces vs. Troy Ounces
To elaborate on the difference between a troy ounce and our typical ways of gauging mass and volume, let’s start with its closest relative: The dry ounce. Dry ounces are what we use to measure everyday things like fruits, grains, and sugar. Liquid ounces are used to measure liquids like milk, water, and even egg whites.
Liquid ounces measure volume. Dry ounces measure weight. So if you’re using liquid ounces, you would need a measuring cup. If you’re using dry ounces, you would need a weighing scale. (2)
There are 16 dry ounces in a pound. We can break regular ounces down into grams, which would give us 28.35 grams per ounce. These usually are the units you see in electronic scales near checkout counters in grocery stores.
However, regular ounces weigh regular things. Troy ounces weigh precious metals like gold, silver, platinum, and palladium. A troy ounce is a little bit heavier than the average ounce, converting to 31.1 grams per troy ounce and 1.097 dry ounces per troy ounce.
A Troy Pound
A troy ounce is roughly 10% heavier than the regular ounce, which makes a big difference when it comes to precious metals. There are about 12 troy ounces in one troy pound, though many traders do not currently use that unit of measurement. If you find yourself buying gold or silver that is one troy pound, that will only be 12 troy ounces.
So it’s interesting – a troy ounce is heavier than a regular ounce, but a regular pound weighs more than a troy pound. One dry ounce is only equal to 1/16 pounds, so a troy pound must heavier, right? Not quite. There are fewer troy ounces in a troy ounce than there are dry ounces in a dry pound.
Most of the bullion on the market is often measured in troy ounces or kilos. This avoids confusion in the conversion between troy ounces and the troy pound.
The History of the Troy Ounce
A thousand years ago, precious metals were weighed using the same system as everyday items. Historians believe that it led to complications within the ancient Roman monetary system, so Rome decided to establish a new measuring system exclusively for gold, silver, and palladium. Romans implemented this across the board and called it “uncia,” which became the modern-day word for ounce. (3)
As Europe rose to economic prominence in the 10th century, merchants and traders from all over the world had to get acquainted with the way they measured things. They had to come up with a system of their own that can make trading and bartering easier.
Back then, the Romans used bronze for currency with one standard measure being “aes grave” or one pound. It was convertible into 12 one-ounce units. (4)
It is believed that traders in a French town called Troyes had grown so accustomed to measuring with troy ounces that it necessitated implementation across the board in France’s trade markets. The French-born King Henry II of England came to adopt the troy weight system and used it widely in Britain’s coinage across the 1400s. By the early 1500s, it became the official standard for measuring gold and silver in Britain, which the United States followed nearly 300 years later in 1828. (5)
Avoirdupois Ounces
An avoirdupois ounce is the smallest unit in a system of weights where a pound is 16 ounces. It is the common measurement used in the United States, and something you’ll constantly hear when you’re new to buying gold and silver. It is still used in varying degrees across the United Kingdom, Australia, New Zealand, and other former British colonies despite the official adoption of the metric system.
The modern definition of the avoirdupois pound is precisely 0.45359237 kilograms. Avoirdupois comes from the Anglo-Norman French term aveir de peis, which means “goods of weight.” This term originally applied to merchandise that was sold in bulk and weighed on large steelyards and balances by the British and the French. (6)
Why is this Important?
Even today, an unlicensed pawnbroker or second-hand bullion dealer can sell you an ounce instead of a troy ounce. Dealing with legitimate sellers who assume you know the correct standard of measurement can cause a lot of confusion on your end, especially if you’re new. The small difference between an avoirdupois ounce and a troy ounce can make a product look like a good deal when in reality it is a total rip-off.
If you know and trust your source for bullion, this kind of scenario shouldn’t happen. However, the best way for you to make sure that the precious metals you’re buying are worth their weight in troy ounces is buying them in rounds and bars that have weights and purities engraved. This is not to say that a gold round isn’t a genuine troy ounce if it does not have an engraving. It just might be a little harder to sell down the road.
Always keep a pocket scale when buying bullion. Often, your best bet is to buy government minted products because they are always in genuine troy ounces. (7) If you’re going to the market for precious metals, it is essential to know the difference between the troy ounce and other units of measurement like the back of your hand.
Sources
- https://www.forbes.com/sites/oliviergarret/2018/02/13/how-to-spot-fake-gold-and-avoid-fraud/#6ec128ba1646
- https://www.cookinglight.com/cooking-101/ask-the-tk-dry
- https://www.investopedia.com/terms/t/troyounce.asp
- https://goldsilver.com/blog/what-is-a-troy-ounce/
- https://blog.providentmetals.com/the-origin-of-the-troy-ounce.htm
- https://en.wikipedia.org/wiki/Avoirdupois_system
- https://catalog.usmint.gov/coins/precious-metal-coins/bullion-coins.html
