One ounce of gold – the common standard for bars and coins

Additional information > The fundamentals of precious metals – a broad introduction to the basic principles > The ounce: A unit of measurement for precious metal bars & coins

One ounce of gold – a summary

Gold coins and gold bars are available in many different denominations. Their primary feature is the weight of the product.
One troy ounce (weighing 31.1034768 grams) has become the standard unit for precious metals.
In addition, bars and coins are also offered in gram and kilogram units. For some bullion coins (e.g. the Swiss Goldvreneli) the face value reflects the unit rather than the precise weight.
The standard one-ounce unit of measurement has the advantage that different types of coin can be compared with each other. In addition, these coins are generally produced in large quantities, which means that premiums are consequently lower. This is then reflected in a comparatively lower purchase price.
Central banks and other large corporate clients mainly purchase good delivery bars as precious metal deposits for currency stability. These standard bars are issued by certified manufacturers as 400-ounce gold bars or 1,000-ounce silver bars.
The London Bullion Market Association (LBMA) defines the standards for good delivery bars and certifies approved manufacturers.
The troy ounce is also used as the basis for determining the market pricing of precious metals on international trading platforms.

What are the implications of the unit of measurement for precious metal trading?

Frequent buyers of gold coins and gold bars know bullion products are offered in different weights. The ounce remains the commonest standard measurement alongside grams and kilograms, allowing buyers to quickly compare precious metal offers across the markets. One gold ounce is also the measure the two most important gold trading centres – the London and New York stock exchanges – employ to fix the gold price. Furthermore, the ounce is the weight unit used for silver, platinum and palladium products.

The use of the ounce as a unit of measurement has a long tradition firmly embedded in the history of mankind. In ancient Rome, for instance, the ounce was used as a measure for various foods, such as weighing a defined amount of grain. At that time, the reference weight was 27.288 grams, with the Latin ‘uncia’ literally meaning one twelfth of the non-metric Roman libra. The apothecary ounce and the perfume ounce, a measure of fluid volume, only emerged later.

Over time, the ounce became equivalent to one sixteenth of a pound with its weight varying between 27 and 31 grams. This unit of measurement is abbreviated to “oz” (from the Italian onza) though the term ounce is commonly used in English-speaking countries. In the Anglo-American measurement system, it is also called a “troy ounce” (oz.tr.) after the French trading city of Troyes, which was an important trading centre in the Middle Ages. Even today, the “standard ounce” is used for certain foods in some European regions and this “avoirdupois-system ounce” corresponds to a weight of 28.350 grams.

What do the terms ounce and troy ounce mean?

Whenever the unit of weight concerns precious metals, the term troy ounce is always used. However, the short form ‘ounce’ has also become common in informal language. Nevertheless, for precious metals, these are considered equivalent terms. A troy ounce corresponds to precisely 31.1034768 grams, though it is commonly rounded off to 31.103 grams representing the equivalent of a precious metal ounce.

However, gold coins worth one ounce can still weigh a little more than the standard 31.103 grams. So a distinction is made between a coin’s fine weight and its total weight, where the fine weight refers exclusively to the pure precious metal content exclusive of any other metals, while the total weight includes the full gross weight of all the alloy materials. For example, some coins have copper or silver added to the core gold to create a harder wearing surface.

The Krugerrand gold coin, which contains 2.830 grams of copper in addition to one ounce of gold, is a prime example of this practice, producing a coin with a gross weight of 33.930 grams. Another popular coin, the Goldvreneli, also has a high copper content and consists of 90% gold plus 10% copper. The gross weight of a 100-franc Goldvreneli coin is thus 32.258 grams. However, its fine weight is 29.030 grams, the equivalent of just under an ounce of gold.

Good Delivery bars in ounces

Generally speaking, precious metal alloys are a non-existent issue for bars, because, with few exceptions, these are created as purely investment products. Gold bars have a high fineness of at least 995/1000 and are available in troy ounces, grams and kilograms. The gold ounce at 31.103 grams remains one of the most popular weight units for gold bars.

Good Delivery bars represent a special feature. These are standard bars comprising 400 ounces of gold (12.4 kg) or 1,000 ounces of silver (31.1 kg). Such bars are calibrated to meet strictly defined requirements in terms of their quality and dimensions, making them suitable for international trade. These quality specifications are defined by the London Bullion Market Association (LBMA), and only manufacturers able to match the LBMA’s high standards of quantity and quality over several years are eligible to receive the organisation’s coveted certificate. LBMA certification is thus an internationally recognised seal of approved quality for precious metal products.

The demand for Good Delivery bars is mainly from central banks and other institutional customers who employ these precious metal deposits as a hedge against currency fluctuations. LBMA-certified manufacturers also produce bars and coins in smaller ounce sizes for the convenience of private buyers. Here too, the bar manufacturer’s LBMA certification acts as a guarantee of quality.

The importance of the ounce for private investors

Alongside the needs of larger corporate clients, the troy ounce unit of measurement is still highly valued by private precious metal buyers. One ounce is the most important unit of weight for gold coins, and, with few exceptions, all known types of coin are produced in this denomination. This is particularly so for bullion coinage, where this unit commands the highest circulation, with coins often minted on demand in theoretically unlimited quantities. In addition to the Krugerrand mentioned above, this includes the following gold coins:

Gold coin	Country	Fineness	First minted	Weights options in troy ounces	Trivia
American Eagle	US	916,7	1986	1, 1/2, 1/4, 1/10 oz
Aus. Kangaroo	AU	999,9	1986	10, 2, 1, 1/2, 1/4, 1/10, 1/20 oz and 1 kg	The world’s largest coin is the Australian Kangaroo produced in 2011 with a weight of around 1 tonne.
Aus. Koala	AU	999,9	2007	2, 1, 1/2, 1/4, 1/10, 1/25 oz
Britannia	GB	999,9 (bis 2012 917,0)	1987	5, 1, 1/2, 1/4, 1/10, 1/20 oz
China Panda	CN	999,0	1982	1, 1/2, 1/4, 1/10, 1/20 oz and 1g, 3g, 8g, 15g, 30g
Goldvreneli	CH	900,0	1897	2,903 g, 5,807 g , 29,032 g
Helvetia	CH	900,0	1883	5,807 g
Krügerrand	ZA	916,6	1967	50, 5, 1, 1/2, 1/4, 1/10, 1/20, 1/50 oz
Libertad	MX	999,0	1981	1981 1, 1/2, 1/4, 1/10, 1/20 oz
Lunar Serie I, II	AU	999,9	1996	10, 2, 1, 1/2, 1/4, 1/10, 1/20 oz and 10, 1 kg
Maple Leaf	CA	999,9 (bis 1981 999,0)	1979	1, 1/2, 1/4, 1/10, 1/15, 1/20 oz	5 pieces of the 100 kg Big Maple Leaf were produced in 2007. One of them was later stolen from the Bodemuseum in Germany.
Sovereign	UK	916,7	1817	36,61 g, 14,64 g, 7,322381 g, 3,661 g
Wiener Philharmoniker	AT	999,9	1989	1, 1/2, 1/4, 1/10, 1/25 oz	The Big Phil is a 1000 oz (31.103 kg) version of the Philharmonic produced in 2004.

The metric Chinese Panda, available as a 30-gram coin as well as in several other denominations, is an exception among popular bullion coins.

The troy ounce of 31.103 grams is also widely used for precious metal bars as an alternative to 25- and 50-gram units. The denomination itself plays a critical role in determining the price of gold bars. The more copies of a weight unit that can be produced, the lower the cost of minting or casting. Gold bars under 100 grams are mainly minted, rather than cast, in order to create a smoother and more elegant surface.

As a result, the cost of producing a 20-gram gold bar is comparatively high due to its smaller circulation than one ounce bars, which are thus produced in larger quantities which in turn directly impacts upon the purchase price. This precious metal premium factor should not be underestimated.

The market price for gold coins and gold bars is generally based on the gold price in troy ounces. This is used to establish the current buying and selling price of gold products. Owners of bars and coins thus tend to keep a watchful eye on the current spot price for physical gold. Those who have invested in gold futures instead, which is generally not possible nor advisable for private investors, are therefore more interested in monitoring the Comex gold futures market on the New York Stock Exchange.