Gold comes in many different forms. Pure gold becomes diluted into 10k gold, 14k gold and 18k gold varieties. It's transformed from raw ore into usable material and then again into bars of gold and intricate jewelry. Tracking the value of the gold itself throughout the different iterations of items is tricky but still doable. The key to identifying how much gold you actually have is knowing which unit to use. Learn more about the troy ounce and what units of measurement are commonly used to track gold quantities.
Depending on the current form of the metal, gold may be measured in either grams or ounces. As a general rule, however, gold and other precious metals like silver are measured in troy ounces. A troy ounce has more weight than an imperial ounce ” the standard ounce used for most other applications ” and is roughly 10% heavier. An imperial ounce is 28.35 grams, and a troy ounce is equivalent to 31.103 grams .
In gold markets and general discussions about gold, you may hear people talking about ounces, but be careful ” this is almost always informal shorthand for troy ounces.
Pro Tip: Be careful about karats and carats as well. The potential confusion between troy ounces and imperial ounces isn't the only potential conflict you need to be aware of when you're starting to invest in or purchase fine materials. The concentration of gold is measured in 'karats.' Each karat represents 1/24 unit of gold, so an 18k gold item is actually 18/24 gold, or 75% gold.
However, the unit 'carat' measures the size of a diamond . A carat is equivalent to 200 milligrams and is measured to the hundredths place. Both terms sound identical in spoken conversations and are easy to confuse even in written discourse. While this isn't necessarily problematic when discussing gold bullion, it can be confusing when you're talking about fine jewelry.
Like almost any unit of measurement, troy ounces originated when traders and wealth holders needed a universal standard for determining how much gold they had. However, it's not clear where the troy ounce actually came from.
Many historical sources assume the name came from Troyes, a global trade market located in France in the Middle Ages . In this town, merchants purchased and sold international goods, so they needed a standard unit of measurement to make trading easier.
Other historians relate troy ounces to troy pounds. Troy pounds were used in Ancient Rome to weigh out and apportion bronze bars, and a troy ounce is exactly one-twelfth of a troy pound. It is impossible to know which historical guess is right or whether Troyes took inspiration from Ancient Rome. What we do know is that troy units made their way to England by the 15th century, and the United States accepted this unit as the standard by the early to mid-19th century.
The troy ounce, as a set measurement, has remained stable throughout history. There were some regional variants, such as the Holland troy and the Paris troy, but the standard soon became the British Imperial System. Unlike other units of measurement, which have been developed and even modified over time, the troy ounce has not changed.
Its existence as an international standard of gold weight has continued to facilitate international trade throughout regime changes, language barriers and even the continual refinement of measuring technologies.
A troy ounce is equivalent to roughly 1.09 imperial ounces or 31.1 grams. However, you may also need to frame a troy ounce in other, smaller units. The troy weight family includes troy pounds (the largest unit), troy ounces, pennyweights and grains. A single troy ounce is also equal to 480 grains (64.8 milligrams) or 20 pennyweights.
Grains have been a long-established unit of measurement since the Bronze Age, and they're useful for describing increasingly fine masses of gold that may otherwise get lost as long decimals. However, grains and pennyweights are rarely used as units of measurement, and the troy pound has been completely abolished in Britain and largely fallen into disuse in the United States.
It is very uncommon to find pure, solid gold. Even fine gold bullion is accepted as 99.9% gold, giving each troy ounce of gold a standard 31.1034768 grams. Because of this seemingly small disparity, government and private mints add 0.01 or 0.02 extra grams of gold to bullion. When you're operating with fine gold bullion, these numbers stay relatively steady.
However, bullion and coins can be made with slightly different grades ” or concentrations ” of gold. Coins can be mixed with silver and copper to add better shaping and wear resistance, but it comes at the cost of diluting the metal. You can measure the weight of an object by its purity level to determine the amount of genuine gold it contains.
While the history of the troy ounce (and the other units in the troy family) is fascinating, the most important takeaway is to know that 'ounces,' when they're describing gold, platinum and silver, aren't typical ounces. Instead, they're roughly 31.103 grams. It's crucial to consider gold in terms of troy ounces instead of converting it or confusing it with other units.
While the difference between 28 grams and 31 grams may seem insignificant in other contexts, confusing the two can be very costly when ordering gold or buying and selling funds based in gold. Above all else, it's important to remain consistent and aware of the wording professional and trade sources use so that you can successfully buy, sell and hold gold assets.
1. Investopedia. 'Troy Ounce,' https://www.investopedia.com/terms/t/troyounce.asp. Accessed September 10, 2020.
2. Gemological Institute of America Inc. 'Diamond Carat Weight Measures a Diamond's Apparent Size,' https://4cs.gia.edu/en-us/diamond-carat-weight/. Accessed September 10, 2020.
3. Medium. 'What Is a Troy Ounce and Where Did It Originate?' https://medium.com/@metalscom/what-is-a-troy-ounce-and-where-did-it-originate-e3de04dec4c4. Accessed September 14, 2020.