Reference
Gold and silver glossary: karat, fineness, spot, spread, premium, tola, nisab and more
More than fifty terms a buyer hears at the jeweller's and in market news, explained briefly with examples: from karat, hallmark, making charge and scrap to spot, futures, premium, spread, the troy ounce, the tola, the nisab and the hawl.
Gold and silver glossary
The vocabulary of the gold trade and the markets is large, and some words that look simple hide a difference that matters to the price. This glossary gathers what a buyer, a seller and a saver need in one place, grouped by topic, with a short definition and an example where it helps. Use it as a quick reference before a visit to the jeweller or when reading a market report.
Units of weight and measure
- Gram: the base pricing unit in most of the world; every "per gram" price refers to a specific karat.
- Troy ounce: 31.1035 grams; the unit gold is priced in worldwide, in US dollars. Not the avoirdupois ounce (28.35 g).
- Kilogram: 1,000 grams; the unit of large bars and bank trading.
- Tola: 11.6638 grams; the pricing unit in Pakistan and India.
- 10 grams: the common quoting unit in India for 22K and 24K.
- Pennyweight (dwt): 1.555 grams, a twentieth of a troy ounce; used by US scrap buyers.
- Sovereign: a British coin of 7.98 g of 22K (7.32 g of fine gold), legal tender.
- Gold pound (Egypt): a piece of 8 g of 21K (7 g of fine gold).
- Ottoman lira (Reshadi): about 7.2 g of 22K, traded in the Levant.
Karat and fineness
- Karat (carat, ct): the number of parts of gold out of 24 in an alloy; 18K = 75% gold.
- Fineness: purity in parts per thousand, the number stamped on a piece (750, 585, 916, 999).
- 24K / 999.9: practically pure gold; bars and coins.
- 22K / 916: jewellery in India, Pakistan and the Gulf; the Sovereign and the Krugerrand.
- 21K / 875: jewellery in Egypt, the Levant and the Gulf.
- 18K / 750: fine jewellery, Italian designs, stone-set pieces.
- 14K / 585 and 9ct / 375: everyday jewellery in the US and the UK.
- Sterling silver (925): 92.5% silver; the standard for silver jewellery.
- White and rose gold: gold of the same karat with different added metals that change the colour, not the purity.
At the jeweller's
- Making charge: the cost of the work, per gram or as a percentage of the gold value; never refunded when you sell.
- Hallmark: the official purity stamp with the assay and maker's marks; compulsory in the UK, India, Egypt, Kuwait and Bahrain.
- Assay Office: an independent body that tests and hallmarks precious metals (London, Birmingham, Sheffield, Edinburgh in the UK).
- HUID: the six-character Hallmark Unique Identification on Indian hallmarked jewellery.
- Wastage: an extra charge some Indian jewellers add for metal lost in working; negotiable.
- Scrap: used gold sold to a buyer by its weight of pure gold after a deduction.
- Melt value: the value of the pure metal in a piece at today's price; what scrap is priced from.
- Scrap deduction: the share of melt value a buyer deducts when buying from you (3–10% usually).
- Exchange: handing over an old piece for a new one and paying only the difference in weight and the new making charge.
- Stones: subtracted from the weight before pricing; worthless at the melt except appraised diamonds.
- Buying and selling price: what a shop sells at and what it buys at; the gap is the cost of getting in and out.
- Invoice: the record of weight, karat, making charge and tax; your evidence when you sell.
Bullion and investing
- Bar (ingot): pure gold stamped with weight, fineness and serial number by a refiner.
- Premium: what you pay above the raw price for a bar or coin; it falls with size.
- Refiner: the company that refines, casts and stamps gold.
- LBMA: the London Bullion Market Association; its Good Delivery list of refiners is the world standard.
- Good Delivery: the standard for bars accepted in the London and Dubai markets.
- Assay card: the sealed pack carrying a small bar's data and serial number.
- Bullion coin: a coin sold by its gold weight, not its face value (the Eagle, the Krugerrand, the Philharmonic, the Britannia, the Maple Leaf).
- Legal tender: a coin with a nominal face value, which gives the Sovereign and the Britannia their capital gains tax exemption in the UK.
- Gold ETF: an exchange-traded fund that holds gold and whose units trade like shares.
- Allocated gold: specific bars held in your name with a custodian, as opposed to a claim on a pool.
- Digital gold: fractional ownership of vaulted gold through an app; check custody and compliance.
- Collectible (US tax): how the IRS treats physical gold; long-term gains taxed at up to 28%.
The market and prices
- Spot: the price for immediate delivery of the ounce; the basis of every price.
- Futures: contracts to buy or sell gold at a later date on the New York exchange; usually a little above spot.
- Closing price: the last price of a trading session; the daily change is computed from it.
- Spread: the gap between bid and ask in the market, or between a shop's selling and buying prices.
- Market closed: from Friday evening to Sunday evening, New York time; spot stays at Friday's close.
- Dollar index (DXY): the dollar against a basket of currencies; usually inverse to gold.
- Real yield: the bond yield after inflation; when it rises, gold is pressured.
- Safe haven: an asset bought in crises to preserve value; gold is the best known.
- Gold-to-silver ratio: how many ounces of silver equal one ounce of gold; a gauge of relative cheapness.
- Central banks: among the largest buyers of gold for reserves in recent years.
- Moving average: the average price over a number of days; the current price is compared with it to read the trend.
- Volatility (standard deviation): a measure of the usual daily move; the basis of the expected range on the outlook page.
Zakat
- Nisab: the minimum holding at which zakat is due: 85 grams of pure gold or 595 grams of pure silver.
- Hawl: a full lunar year passing after the nisab is reached.
- A quarter of a tenth: the rate of zakat, 2.5% of the value.
- Worn jewellery: gold worn as ordinary adornment; its zakat is a matter of difference between the schools.
- Combining: adding gold and silver by value to reach the nisab, in the majority view.
Tax and regulators
- VAT / GST: 20% on jewellery in the UK; 15% in Saudi Arabia, 5% in the UAE, 10% in Bahrain, 5% in Oman on the full price; 14% on the making charge only in Egypt; 3% plus 5% on making in India; none in Kuwait and Qatar.
- Investment gold: bars and coins of high purity; VAT-exempt in the UK, zero-rated in Saudi Arabia and the UAE, often exempt from sales tax in US states.
- Tourist VAT refund: the UAE scheme that returns most of the VAT on visitors' purchases at departure.
- BIS: the Bureau of Indian Standards, which runs India's hallmarking.
- XRF: an X-ray analyser that reads a metal's purity without scratching it.
Testing and quality
- Compulsory hallmarking: a system in which the state or an assay office stamps every piece before sale.
- Acid test: rubbing the piece on a touchstone and applying acid for each karat; reveals a lower karat than claimed.
- Density test: comparing the weight in air and in water; pure gold has a density of 19.3 g/cm³.
- Gold plated (GP): a thin layer of gold over another metal; not bought as gold.
- Gold filled (GF): a thicker bonded layer; not solid gold.
- Vermeil: sterling silver plated with gold; valued as silver.
- Serial number: the number engraved on a bar and matching its certificate.
- Sealed pack: the heat-sealed assay card around a small bar; opening it raises the selling deduction.
- Melting loss: a small percentage some buyers deduct for metal lost in melting scrap.
To learn more about any term, start with how the gram price comes from the ounce and karats explained, and try the tools: the fair price, the zakat calculator and bullion.