You can’t spend more than a few minutes researching gold, silver, and other precious metal investments before coming across the term troy ounce. Instead of using the customary system of measurements which includes pounds and standard ounces, precious metals are weighed using the troy system.
What is a troy ounce?
A troy ounce is the primary unit of the troy weight system which is the international standard for precious metals. It comprises a troy pound of 12 ounces instead of the traditional 16-ounce pound. The usage of this system of weight dates back to the Middle Ages when gold investments proliferated and international trade demanded an agreed-upon system of measurement. A troy ounce is equivalent to 31.1034768 grams which makes it roughly 10% heavier than an ounce. It’s common to see the troy ounce term abbreviated as “t oz” or “oz t.”
Why do they call it a troy ounce?
The namesake of the troy weight system is a small town in France called Troyes which was an international trading hub in the Middle Ages. Traders from around the world eventually adopted the local weight system developed by merchants in this French commune. The British Empire followed suit in the 1500s, and the United States eventually joined the troy system in 1828. Today, it’s the established system for weighing and valuing precious metals.
Why are ounces and troy ounces different?
It’s easy to get confused when speaking of troy ounces and standard ounces. In reality, these units come from two disparate systems of weights. The troy ounce, as just mentioned, is associated with the troy weight system which is specifically used for precious metals. Alternatively, the ounce we use in everyday life is part of the avoirdupois system. The name couldn’t sound more foreign, but these are the measurements used for everything from weighing produce at the grocery store to getting weighed at a doctor’s appointment.
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Buying gold and silver in troy ounces
All kinds of precious metal products including bullion and numismatic coins are bought and sold across the world, requiring a universal measuring system for accurate evaluations. Since the troy weight system is exclusive to the precious metals market, many investors only first come across the unit of measurement when diversifying their portfolios.
Before you start purchasing any gold and silver products, such as coins and bullion bars, it’s imperative to gain an understanding of the troy weight system so you can navigate the market more confidently. Some of the most common bullion bar sizes are 1/10 oz, 1 oz, 10 oz, and 1 kilo (32.15 oz). Furthermore, many bullion coins are manufactured to weigh precisely 1 troy oz, although some coins include ½ oz and ¼ oz variations.
How to determine the value of gold assets
Gold spot prices are provided in the value of one troy ounce of 99% pure gold. That means the live spot price of gold represents how much a single troy ounce of gold would cost plus gold dealer premiums. If you’re selling gold items, you can expect to receive slightly less than the spot price due to similar fees. When gauging the value of gold bullion, you simply multiply the current spot price of gold by the weight of the bar or coin in troy ounces. Rare coins require more in-depth research and analysis to determine their value due to scarcity, demand, and other additional factors that impact their overall worth.
Troy Ounce FAQs
A troy ounce is heavier than the traditional ounce (avoirdupois). The former weighs about 31.103 grams while the standard ounce is equivalent to 28.349 grams. The troy ounce is roughly 10% heavier than the common ounce with which most Americans are most familiar.
No, a troy ounce is not the same as a standard ounce. A troy ounce is the base unit in the troy weight system which is specifically used for precious metals. On the other hand, the standard ounce is used in the avoirdupois system of weights which is most commonly used in the US.
The spot price of gold refers to the price at which 1 troy oz of gold is currently being bought and sold on the market. Since the value of gold is always changing, the worth of 1 troy oz is in constant fluctuation too.
The troy ounce is used when valuing and weighing gold and other precious metals. The spot price of these metals are based on a single troy-ounce unit because it’s the base unit of measurement for the troy weight system.