Difference between Ounce and Troy Ounce
Before investing in gold or any other precious metal, one must know the various forms of measuring the weights of these precious metals. Gold is mostly weighed in troy ounce in international markets and trader’s websites, and hence this makes it important to know what is a troy ounce of gold. Of course, you can also access the weights in other measurements, such as ounce, gram, and pennyweights and so on.
However, an ounce in other contexts refers to Avoirdupois ounce, which has a lesser weight than the troy ounce. The commodity market uses the troy ounce for quoting prices of gold, silver, platinum and so on, and hence the investor has to learn what is a troy ounce of gold. If you intend to buy gold bars or coins on online shops, you must realize that a troy ounce is about 9.7% heavier than the Avoirdupois ounce. A troy ounce has 31 grams in it whereas an avoirdupois ounce has 28 grams in it.
Gold for currency coins
Gold was also used as currency coins and in this case it was an alloy of other metals. Pure gold is very soft and cannot be used for making circulation coins, as they can get damaged easily. Another reason for adding other metals in the coin is that this makes the production costs less in the case of currency. A certain value is stated on the coin, and the value of the coin must not exceed this stated value, otherwise it will lead people to melt it and get the greater value of the coin. Nowadays, it is not possible to use precious metals in circulating currency, as the intrinsic value of these coins has gone too far ahead.
Amount of Gold in coins and Purity
Bullion coins are made of all precious metals and especially of gold, in various specific sizes in order that they can contain an exact amount of gold in it. All the modern bullion gold coins mention the amount of gold contained in it in the form of troy ounces and the investor can know the value of what is a troy ounce of gold. For instance, it may be mentioned one ounce of fine gold. But this should not be construed that it weighs exactly one ounce. Krugerrands are made from gold which has a purity of 22 karat. This means that it is 91.667% pure. Hence, roughly about 8% of the coin is not gold and is made of some other metal to make an alloy. The coin is not make completely of gold, but has one ounce of fine gold, or gold of 22 karat.