Great Lakes Monetary Consultants


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GLMC Glossary of Terms

Alloy: a mixture of two or more metals.  (Most gold and silver coins have a small amount of one or more alloy metals to strengthen the coin.)

Assay: to analyze and determine the purity of metal.

Ask:  Ask or sell is the price offered by the seller. (See also definition of Spread below.)

Avoirdupois:  a system of weights (or mass) based on a pound of 16 ounces, which is the everyday system of weight historically used in the United States.  One (1) avoirdupois ounce is equal to 0.91146 Troy ounce, which is the standard for precious metals.

Bar: typical gold or silver product, either for trading or for accumulation. Bars come in a variety of shapes weights and fineness and different bars are favored in different parts of the world.

Bear Market: expectation that stock market prices will fall.

Bid:   Bid or buy is the price a dealer is prepared to pay for gold or silver bullion.  (See also definition of Spread below.)

Bullion: platinum, gold or silver in the form of bars or other storage shapes, including coins and ingots.  Originally meaning 'melting place' or 'mint', probably from the French bouillon, boiling.

Bullion coin: precious metal coin traded at current bullion prices, whose market price depends on its gold or silver content, rather than its rarity or face value.

Bull Market: expectation that market prices (stocks, gold or commodities, etc.) will rise.

Business Strike: a coin produced for general circulation (as opposed to a proof or uncirculated coin specially made for collectors).

Bust: a portrait on a coin, usually including the head, neck and upper shoulders.

CFTC: Commodity Futures Trading Commission, the regulatory body in the US covering futures markets.

Coin: a flat, stamped piece of metal usually issued by a government as money.

Commodity:  A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand.

COMEX: the New York Commodity Exchange, now a division of NYMEX, the New York Mercantile Exchange. The contracts in the COMEX gold market consist of 100 ounces each, and the actively traded contracts are the even months of the year.

Condition: the physical state of a coin.

Counterfeit: a fake coin or other piece of currency made so that people will think it's genuine.

Currency: any kind of money - coins or paper money - that's used as a medium of exchange.

Current Account Balance: records a country's net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

Debt (external): describes the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

Delivery: the transfer of the asset from seller to buyer. This does not always involve physical shipment; it can also be on paper with the bullion remaining in the vaults of a specified bank.

Denomination: the different values of money. 

Exchange Rates: provides the official value of a country's monetary unit at a given date or over a given period of time, as expressed in units of local currency per US dollar and as determined by international market forces or official fiat.

Exchange Traded Fund (EFT):   A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

Face Value:  The nominal value given to legal tender coin or currency, which may or may not be related to its actual value.  Consider these two examples:  1) a 1-oz. Gold American Eagle coin has a face value of $50, but will always be bought and sold at a price close to the market price of one ounce of gold.  2) a dime's face value is 10¢, the amount for which it can be spent or exchanged, as opposed to its collector or precious metal value.

Futures contracts:  An agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the contract can be sold before the settlement date. Futures contracts are standardized and are traded on 'margin' on futures exchanges, such as the COMEX division of NYMEX, the CBOT, or the TOCOM.

GDP (purchasing power parity): the gross domestic product (GDP) or value of all final goods and services produced within a nation in a given year. A nation's GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States.

GDP Methodology: GDP dollar estimates for countries are reported both on an official exchange rate (OER) and a purchasing power parity (PPP) basis. Both measures contain information that is useful to the reader. The PPP method involves the use of standardized international dollar price weights, which are applied to the quantities of final goods and services produced in a given economy. The data derived from the PPP method probably provides the best available starting point for comparisons of economic strength and well-being between countries. In contrast, the currency exchange rate method involves a variety of international and domestic financial forces that may not capture the value of domestic output. Furthermore, exchange rates may suddenly go up or down by 10% or more because of market forces or official fiat whereas real output has remained unchanged.

Gold Certificates: Gold Certificates are a method of holding gold without taking delivery. Issued by individual banks, they confirm an individual's ownership while the bank promises to hold the metal on the client's behalf.

Gold Standard: a monetary system based on convertibility into gold; paper money backed and interchangeable with gold.

Karat: unit of fineness, scaled from one to 24. 24 karat gold (or pure gold) has at least 999 parts pure gold per thousand; 18-karat has 750 parts pure gold and 250 parts alloy, etc.

Kilo Bar: a bar weighing one kilogram -approximately 32.1507 troy ounces.

Legal Tender:coins, dollar bills or other currency issued by a government as official money.

Liquidity: the quality possessed by a financial instrument of being readily convertible into cash without significant loss of value.

Medium of Exchange: anything that people agree has a certain value.

Gold Mining:   .

Mint: a place where coins, bars, rounds or tokens are manufactured; either for a country under government authority, or by a private institution.

Numismatics: the study and collecting of things that are used as money, including coins, tokens, paper bills and medals.  The study of numismatics, as it applies to coins, is often in the research of the production and use of the coins to determine their rarity.

Numismatic Coins: coins that are valued for their rarity, condition and beauty beyond the intrinsic value of their gold content. Generally, premiums for numismatic coins are higher than for bullion coins.

Obverse: the front (or "heads") side of a coin.  It usually has the date, mint mark and main design.

OTC: Over-The Counter, or a principals' contract. The over-the-counter gold market trades on a 24-hour per day continuous basis and accounts for the bulk of global gold trading. Most OTC trades are settled using gold stored in London, irrespective of the country where the deal is actually transacted.

Planchet: the blank piece of metal on which a coin design is stamped.

Proof: a specially produced coin made from highly polished planchets and dies and often struck more than once to accent the design, for marketing purposes.  Proof coins receive the highest quality strike possible and can be distinguished by their sharpness of detail and brilliant, mirror-like surface.

Reverse: the back (or "tails") side of a coin.

Spot Price: the price for spot delivery which in the gold market is two days from the trade date.

Spread:  The difference between Bid (the price a buyer is prepared to pay for gold) and Ask (the price at which a seller offers to sell) prices.

Troy Ounce: the standard weight in which gold is quoted in the international market, which is 31.1035 grams.  One (1) troy ounce is equal to 1.097 avoirdupois (ordinary U.S.) ounces. Named after the old French city of Troyes, where there was an annual trading fair in mediaeval days and where this was a unit of weight. 

Uncirculated: the term "uncirculated" may have three different meanings when applied to a coin.

First, it can refer to the particular manufacturing process by which a coin is made.

Second, it can be used as a grade when referring to a coin's degree of preservation and quality of the strike.

Or third, "uncirculated" can point to the fact that a coin has not been used in everyday commerce.


United States Mint

World Gold Council

Central Intelligence Agency: World Fact Book division of WebFinance, Inc.