Most people mass gold counts in grams. But the precious metals industry of many countries uses a different measure for this, the troy ounce. Another medium of its existence is the stock exchange. How did this measure come about? And what is the weight of a troy ounce of gold? Is it possible to estimate the weight of other bodies with this measure?
Troy ounce in grams - what is it, how much is it, what metals are measured, types of ounces
Ounces are used by different countries to estimate body weight. And the notion of the troy ounce is mostly used when indicating the weight of precious metals. On the exchange, this measure denotes the weight of only precious metals: gold, silver, palladium and platinum.
Sometimes it is used to estimate the weight of medical preparations and in the production of cosmetics (to estimate the proportions of the components used).
In 1 kilogram - 32.1507466 ozt.
An ounce of gold: value, what it means and where it is used
Why is the ounce of gold currently used to estimate mass (is it applicable to other precious metals)? Indirectly it simplifies the calculations for traders. One base lot on the exchange weighs 100 ozt, which is now about $150,000 to $160,000. One minimum asset to buy equals approximately $1.07 - $1.08. And with a leverage of 1:100 the purchase amount of one lot will be about $1,500.
The rate changes regularly, but the value of one troy ounce of gold always remains consistently high. In the 17th century, it could buy about 10 first-class outfits. It's about the same now. Gold is one of the most reliable assets for saving investor's money from devaluation. Analysts recommend investing exactly in XAU in case of economic instability.
TIP! Gold of 999 is conventionally used in stock trading. It is not used in jewelry production because pure gold is a soft metal with a green tint, which is not resistant to negative environmental effects.
How many grams in a troy ounce of silver
How much does it weigh? ounce of silver in grams? Many people mistakenly believe that this measure is different for different precious metals. How many grams are in one troy ounce of gold? The same as in silver. One ounce of silver is considered equal to 31.1035 grams.
However, the "ounce of silver" indicated on the coin does not mean that it weighs exactly 31 grams. It says how many grams precious metal of a notional 999 contained therein. But the composition of the coin necessarily includes impurities (tin, copper, bronze, lead) - they are necessary for protection against corrosion, mechanical effects.
Modern use of this unit of measurement for precious metals
OZT has been used since the 14th century. Today, operations with with precious metals on the exchange are also made with the indication of ounces to determine the size of the asset. Their designation:
And the precious metal coins issued by central banks are also valued precisely in ozt (more often in fractions).
Why it is important to distinguish between troy ounces and regular ounces
The names can be confused, but these measures have different meanings. The weight of a regular ounce is 28.35 grams. Using a simple mathematical formula, we can determine that the weight of the troy ounce is 9.7% more than the regular ounce. The difference may seem insignificant. But if we are talking about trades where the leveraged transaction amount could be as much as 1000 XAU, the difference would be 1kg of gold. And this is already a huge difference in the estimated value of the assets! On exchanges, the trader's income can be formed from the difference of only 0.5% buying/selling.
There are unscrupulous sellers who sell scrap precious metals, specifying its weight in ounces. If the buyer does not specify this nuance, he may overpay the same 9.7%.
How to track the value of a troy ounce of silver or gold
The value of precious metals is determined on the basis of supply/demand on the London Stock Exchange for the relevant asset. And this difference is constantly changing. The demand/supply is adjusted by bidders from different countries. Thus, the possible monopoly value adjustment factor is levelled out. A reference point is the current orders (buying and selling), the rate set earlier. The dynamics of changes are not considered.
Find out how much 1 oz. is worth now gold or 1 ounce of silverThe easiest way is on the website of the London Stock Exchange. Another option is to use the trading terminal of any of the popular Forex brokers (for example, Alpari). Here the rates are synchronized with the London Stock Exchange.
Participants determining its price at the auction bidding
Cost precious metals are determined by the largest participants of the London Stock Exchange. Before 2015 these were:
- Scotia Mocatta;
- Deutsche Bank;
Now there are 13 participants from different countries. Representatives of the Russian Federation are not among them (but they take an active part in exchange trading).
The price is corrected daily at 10:30 and 15:00 (GMT). Rate fixing in the traders' language is called "price fixing". It is set only for the London Stock Exchange, other brokers have the right to correct it according to their own algorithms.
What is price fixing
This is a temporary fixation of the value rate gold and silverThe exchange rate is set on the London Stock Exchange twice a day (working days when trades are held). All the brokers, traders and banks in the world are guided by the fixed rate. This price fixing also affects the value of precious metals on impersonal assets.
TIP! Before 2015, a different system called "London fixing" was used. At that time, fixation was performed once a day.
3 gold price fixing currencies
The XAU exchange rate for London Gold Fixing is fixed in 3 currencies:
- British pound.
Troy ounce in Russian banking practice
In Russia, it is not customary to use the ozt measure for domestic trade transactions. Banks value coins in grams, which is more usual for the Russian investor. Sberbank Internet-banking offers an investor to buy gold also in grams. Nevertheless, the Central Bank and brokers perform international trading operations using ozt.
Ratio of the commemorative coin "St. George the Victorious" with oz t
In 2006, the Central Bank issued a commemorative coin "Saint George the Victorious" made of gold with a face value of 50 rubles. The circulation is 10,000 copies, so almost every numismatist can buy it. Its specific weight is 7.78 grams, which corresponds to ¼ ozt.
At the beginning of 2021, a 200 ruble coin from the same series was introduced. It too is minted from gold and its weight is already 1 ozt. The circulation is not announced, investors expect that they will issue only 1,000 pieces.
The situation in other countries of the former CIS is similar. The mint of Kazakhstan issued a collection coin "Bars" of 999 proof, weighing 1 ozt with a declared value of 990000 KZT.
Why the troy ounce is still relevant and necessary
The unit of measurement remains relevant since ancient times, because it was approved for use on international trading floors. The main task is to unify the world prices of investment metals. Each country may use its own system of measures. But when they say "1 ounce of silver" and "1 troy ounce of gold", everyone understands the difference between the concepts, and what volume of asset we are talking about.
Formula for converting grams of gold or silver into troy ounces
To convert gold weight into ozt on your own, use the formula:
where X is the massXAU in grams, OZT is the number of troy ounces.
If it is necessary to know the specific weight of an ingot, for example, 585 p roba, the resulting value of troy ounces is multiplied by 0.585.
Formula for converting troy ounces into grams of gold and silver
To convert troy ounces to grams, a similar formula is used:
where OZT is the amount of ozt and X is the unit of weight (grams).
Calculator to convert to t oz
You can use online calculators to translate the weight. They are mostly available on the websites of stock exchanges. Also, this "tool" is integrated into the interface Metatrader 4 and 5 versions (the program through which the trader trades on the exchange). There are programs for PCs and cell phones, which integrate this calculator with the current rate of gold.
Historical chronicles the emergence of the troy ounce and its international significance
All historical sources consider the city of Troyes, the province of Champagne in France, which in the 14th century was a major trading center, as the place of appearance of this measure of weight. The term "troy ounce" was approved for use by the Count of Troyes - Thibault the Great.
At that time it made it easier to make settlements between merchants from different states.
It was used not only to estimate the weight of precious metals, but also of products (spices, grains). The concept of a "liquid" ounce, corresponding to a volume of 31, 103 ml, was also introduced (it is practically not used now).
Then the measure began to be actively used by bankers, jewelers and far beyond the borders of France. It was not legally approved, it became the gold standard for measurement much later at the initiative of traders and buyers.
INTERESTING! Troyes is located in the historic Champagne region, which is famous throughout the world for its wine production. And "champagne" was invented here. According to the legend it was possible to get it by chance: due to the local climate the grapes matured quickly. Therefore it had a lot of sugar and low acidity. This led to the fact that when the wines were aged they became sparkling (the fermentation process was started).
What other ounces there are
The term itself has its roots in ancient Rome. There it meant 1/12th of something: weight, length, volume, size. Because Rome was one of the key points of international trade, the "ounce" as a measure of weight became ubiquitous. It has always weighed about 30 grams (the Dutch metric ounce is an exception).
At present, only the usual (international) is used by those countries that adopt the English system of accounting, as well as the Troy system.
In the system of measures there is still a "liquid" ounce. There are two variations: American (29.51 ml) and English (28.41 ml), which, however, are now almost never used.
The use of the universal unit of measurement today and its designation on the exchange
The official designation of the troy ounce is ozt. The stock exchange simply uses the index "X". In other words, if an asset index is preceded by the symbol X, it means that it is counted in troy ounces (for example, XAU, XAG).
Also ounces indicate the weight of gold bullion and collectible coins, which makes them more accessible to foreign investors and numismatists.
Cost per ounce of gold in 2014-2015
The year 2013 among traders and participants of international trades was remembered by a sharp drop in the exchange rate of gold. Most analysts attribute this to the events in Cyprus (the financial crisis related to the country's debt obligations, which arose against the background of a significant tilt of the state economy in the offshore direction). And indirectly this is a consequence of the World Economic Crisis of 2008. Then in just 1 day. gold price fell by almost 28% (to $1,350 per ozt).
In 2014 there was a gradual steady growth of the exchange rate up to 1400 USD. July 2015 was marked by the fact that the exchange rate collapsed again to its 5-year low (up to 1080 USD), which was caused by the tightening of the US monetary policy (we are talking about an increase in the interest rate). But then, as expected, the exchange rate rapidly went up.
The coronavirus pandemic also had a significant impact on the price, as demand for XAU increased sharply (as the most stable asset for investors). July 2020: the exchange rate exceeded the 2,000 USD mark for the first time ever.
As of the beginning of 2021, the rate is 1700 USD.
INTEREST. The current forecast of analysts indicates that the XAU value schedule will gradually increase. Therefore, there is no need to sell gold assets until 2025 - 2027.
Variations in the cost of an ounce of gold including markups
The average consumer does not have access to buy 1 ounce of silver or gold. Trade in precious metals among individuals is generally prohibited by law in many countries. This does not apply to jewelry made of precious metals. When buying gold, its price will be considerably higher than the current exchange rate. After all, gold is added to its value:
- the work of a jeweler;
- the trade markup of the jewelry shop.
The final price is about 40% higher than the exchange price. The highest markup is in collectible coins, up to 1000%.
INTERESTING! The most expensive coin is now considered to be the florin of Edward III. It is known to exist of 3 such copies. Its estimated value for auctions is $6.8 million. But until today, none of the auction houses has offered it for sale.
Official currencies of the universal unit of weight of precious metals
The official currencies for precious metals are now the dollar, the euro and the pound sterling. Why are they used? Because the "gold standard" is not used now. Instead, a list of "International Reserve Currencies" is now approved. And it is the dollar, the euro and the pound sterling that occupy the main positions there (respectively 66.5%, 24.2%, 4.5% at the beginning of 2021, now there is a trend of gradual growth of the euro share).
Areas of application of the troy ounce other than the precious metals exchange
In addition to stock trading, the measure is used in the following areas:
- Jewelry industry. In many countries jewelry shops indicate the weight of items exclusively through ozt.
- Banking. When estimating the weight of bullion, its description, the weight is always indicated exactly by ozt (or fractional parts of it).
- Production of cosmetics and pharmacological products. Used to indicate the specific gravity of a component.
Video: the appearance of the troy ounce at the Champagne Fair
Measure in different countries
The meaning of ozt in different countries is close to the troy, but still different. Known variations:
So, understanding how to convert ounces of gold to grams, how much weighs 1 ounce of silver and why a coin of precious metal in grams may weigh more than the specified amount, you can safely make an assessment: whether it is profitable to buy this or that jewelry, whether to buy the proposed bank assets of precious metals.