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The world of precious metals trading—especially gold and silver—comes with its own unique language: full of specialized terms, abbreviations, and shorthand that every serious investor, jeweler, processor, or dealer should understand. 🔑 Key Fundamental Terms

1. Spot Price

The global real-time price of one troy ounce of gold or silver, usually quoted in US dollars. All physical trades are measured in relation to this price, either at a premium or a discount.

2. Premium

An added cost above the spot price charged by the seller—based on brand, size, availability, and target market. For example: A 1 oz American Eagle coin typically trades at a higher premium than a 1 oz cast gold bar due to its design, branding, and demand.

3. Discount

A sale below spot price—common in B2B institutional deals or in trading precious metal scrap. 💼 Ownership & Liquidity

4. Allocated vs. Unallocated

• Allocated – Gold or silver physically stored and assigned to a specific client
• Unallocated – The client holds a claim on a general pool of metal, not tied to specific bars. Lower cost, but higher risk in insolvency cases

5. Hallmark

A stamp on a bar or coin indicating a recognized refinery or mint, such as: PAMP, Valcambi, Heraeus, RMC

6. LBMA Good Delivery

A global standard for institutional-grade gold (400 oz) and silver (1000 oz) bars. Specifies weight, dimensions, purity, and approved refiner list. ⚖️ Weight & Purity Units

7. Purity Marks

Purity is marked in thousandths:

• 999 = 99.9% pure
• 999.5 = 99.95% (standard for Good Delivery bars)
• 999.9 = 99.99% “Four Nines Fine”
• 995 is also common in industrial-grade gold

8. Karat

A measurement mostly used in jewelry:

• 24K = 99.9%
• 18K = 75%
• 14K = 58.5% Less relevant in bullion trading, which usually involves 24K.

9. Troy Ounce

The standard weight unit in precious metals: 1 troy ounce = 31.1035 grams (Note: different from the common ounce, which is 28.35g) 🧪 Testing, Storage & Documentation

10. Assay

The process of verifying metal content. Common methods:

• XRF – Fast and non-destructive
• Cupellation – Fire assay, highly accurate
• ICP / Titration – Laboratory chemical methods (common for silver)

11. SKR – Safe Keeping Receipt

A certificate stating that the metal is held in secure storage. Used as proof of ownership or collateral—but verification is essential. 🚚 Trade & Delivery Terms

12. CIF / CIP / FOB

• CIF – Cost, Insurance & Freight included to buyer’s destination
• CIP – Shipping cost included, but insurance is separate
• FOB – Seller is responsible only until goods are loaded onto the vessel

💰 Market Products & Formats

13. Bar / Coin / Grain / Dore

• Bar – Bullion cast or minted
• Coin – Government-issued, legal tender with nominal value
• Grain – Small weight unit (64.798 mg)
• Dore Bar – A semi-refined bar directly from mining operations, prior to final refining

📊 The LBMA Fixing Price Gold and silver benchmark prices are set by the London Bullion Market Association (LBMA):

• Gold is fixed twice daily
• Silver is fixed once daily

These prices are based on institutional-level trades between banks, refiners, and large dealers. For example, as of March 27, 2025, the spot price of gold stands at $3,050 per troy ounce (999.5 purity).

14. OTC – Over The Counter

Refers to direct trading between two parties without using a formal exchange (like COMEX or LME). Most gold and silver deals in the physical market are OTC, offering more flexibility and confidentiality—but also requiring trust and due diligence.

15. OTG – On The Ground

A shorthand term meaning the gold (or silver) is already physically stored and available in a specified location. For example: “OTG gold in Zurich and Hong Kong” means the seller has inventory physically stored in those cities and ready for shipment or inspection.

16. 15/12, 12/9 – Spread Codes

These numbers are used to indicate gross and net discounts (or premiums) in off-market deals:

• 15/12 means:
  • 15% Gross Discount off spot price
  • 12% Net Discount to the buyer
  • The 3% difference is typically commission for intermediaries or brokers
• 12/9 is similarly interpreted as a 12% gross, 9% net deal.

These spread formats are common in large OTC bullion deals, especially in cross-border transactions.