If you want to start investing in gold, you need to first understand the proper measurement metrics. For instance, the US measures gold in grams and ounces. So, you need to understand these terms to invest in gold.
Understanding the difference between them is vital since a slight change in the gold’s quantity can significantly affect its value. Let's start by understanding the difference between a gram and an ounce.
What Is a Gram?
The first term gram comes from the Latin term gramma, meaning "lightweight." If the gold weighs less than an ounce, you can know its exact weight in grams.
What Is a Troy Ounce?
The troy weighing system is an ancient system that traders and gold dealers use to this day. Gold traders in Troyes, France, first used this system during the 16th century. Many countries use the troy ounce as the official gold weighing system. Traders and dealers also use it for weighing silver, palladium, and other valuable metals.
Traders use the troy ounce (t oz or oz t) when dealing with large quantities of gold. Most central banks use the Good Delivery Bars because of their weight. These bars weigh 400-troy-ounces and match the criteria set for good delivery by the London Bullion Market Association. On the other hand, small traders and investors use 100-troy-ounce gold bars for their transactions. These bars are easy to manage, making them an optimal choice for small to medium amounts of gold.
As per the U.K. Royal Mint, one troy ounce equals 31.1034768 grams. Remember that the troy ounce is not the same as the standard ounce, as people usually use the standard ounces to find the accurate weight for grains
The Difference between Standard Ounce and Troy Ounce
When you hear precious metal dealers mention ounces, you need to understand that they are talking about the troy ounce. The standard ounce is a metric that people in the US use for groceries and foods, but not for gold or other valuable metals.
The main difference between both metrics is that 31.1 grams of gold equal one troy ounce, whereas the standard ounce equals less than 28.35 grams. While both metrics aren’t far off, when it comes to gold, even the slightest difference in calculations can have serious affects on the price.
Therefore, you can face serious issues if you use the wrong unit of measurement. For instance, you won't have the same thickness or heaviness in your jewelry items if you use the standard ounce rather than the troy system.
Gold Measurements around the World
Usually, gold dealers use the troy weight system for consistency. However, many use grains and pennyweights throughout North America when dealing with small gold quantities.
- The pennyweight is equal to 1/20 of a troy ounce and around 1.555 grams
- The grain is equal to 0.00208 troy ounces or 0.0648 grams when measuring the gold.
Keep in mind that the dealers throughout the US, UK, and EU use the troy system. So, if you want to buy or sell precious metals outside these regions, you need to follow different measurement systems.
For instance, if you want to buy or sell gold in South East Asian countries like India, Pakistan, Singapore, etc., you need to use "tola," which is the standard measurement choice in that region. Each tola is worth 3/8 troy ounces or close to 11.66 grams of gold.
If you go to China or Hong Kong to trade gold, you can find a different system known as the tael. It is also tahil, and the precise measurement can vary from country to country. For instance, one tael in China equals 50 grams, 37.799 grams in Hong Kong, and 37.5 grams in Japan.
The preferred measurement system in Thailand is baht, which is the same as 15.24 grams of gold. Learning about the measurement unit where you are trading gold is vital to avoid any confusion, and will make sure you don't lose any money.
Measuring Gold Purity
Besides measurement, the purity of gold is also a critical element that buyers need to consider. A single ounce of gold is roughly equal to 31.1 grams. However, this is only the case with gold bullion which is ".999" fine. The gold will have a lower gram count if it is less pure.
To find gold purity, you need to use the measurement metric "Karat." It represents the ratio of gold within a product. A gold item with a rating of 24 karats is pure gold. The 23-karat product is almost pure, containing close to 96.5% gold. Other metals in the product, such as copper, don't have significant value.
How to Buy Gold Safely
The first thing that you need to do is understand the measurement units of gold. Next, you need to keep in mind the following things to safely invest in gold.
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Buy Only Physical Gold
Today, we have plenty of options for investing in gold, such as buying futures, ETFs, etc. However, the one thing that these instruments lack is the safety and guarantee that physical gold offers.
Owning gold bars, coins, and bullion allows you to trade them without any issues. Many reputable gold dealers and online retailers are available, which makes buying gold much easier. After you purchase your gold, you can place it in your home’s safe or keep it in a storage facility.
2. Buy Pure Gold
Another thing you need to consider when buying gold is its purity. You can check the gold bullion to get relevant information about the manufacturer and weight.
Weight and purity are critical when determining the gold's value. You can seek professional assistance to find out about the gold's purity before buying it.
3. Purchase Workable Sizes
It is better to buy workable sizes of gold products. You might find it challenging to sell a 10-ounce bar of gold to a single buyer. However, smaller quantities of ten 1-ounce gold bars can be easier to sell. You can buy gold bars, coins, or bullions according to your choice.
All these forms offer significant value, and it is relatively easier to find a buyer for the gold coin in the market. For instance, the American Eagle gold coins have a higher value than various bars, even with only 91.67% of gold.
However, the case is not the same with unique gold coins, since they have different values. So, the most secure way to invest and trade this precious commodity is with gold bars.
4. Compare Prices
Before purchasing a gold product, you need to find all the deals and compare them. Some dealers offer lower prices, whereas some might give you discounts on buying large quantities. A critical thing to remember is that competitive prices are not the only thing you should consider.
You should avoid dealers who will charge you for shipping, delivery, administrative needs, payment processing, or any other “relevant” charges. These charges can significantly add to the cost of your purchase.
5. Buy from Reputable Sellers
Go through the reviews before doing business with a gold dealer. You can check out platforms like Better Business Bureau to learn more about your consumers. This way, you can know if the dealer is trustworthy and offering authentic products.
6. Operate Within the Law
Finally, you need to comply with specific laws for trading gold. You might also end up losing your precious assets. For instance, there are specific laws regarding taxes you need to know when purchasing gold in the US.
You can legally bypass these rules and regulations by purchasing small quantities of gold. Also, you can avoid legal issues by buying and keeping your gold in various safe havens like Switzerland.
When is the Best Time to Buy Gold?
Like any other commodity, you need to figure out the right time to buy and sell gold. If you buy gold at a higher price, you might find it challenging to sell it for a profit. The ideal strategy is to buy low and sell high.
So, keep an eye on the market to know when prices will rise and fall. Let's go over a few indicators that can help you find out about a potential change in gold’s prices.
- Foreign Reserves: If the country's central bank starts buying more gold for cash, it is a sign that the price for gold will rise.
- US Dollar Value Drops: US dollar and gold prices have an inverse relationship, so high inflation and low economic growth will weaken the US dollar. Consequently, the price of gold will increase.
- Industrial Demand: Gold is a popular commodity for various industrial processes. An increase in demand means a rise in gold prices.
- Decrease in Gold Production: Low supply will lead to scarcity, meaning gold prices will increase. As minting gold becomes more difficult and expensive, we can expect to see gold production fall. Thus, it can lead to an increase in gold prices.
Conclusion
The unit of measurement plays a critical role in gold's value. Therefore, you should get the precise quantity of the gold to learn about its purity and value. And if you want help buying gold in large or small quantities, you can contact us.
