Precious Metals: Your Terminology Guide

Investing in precious metals can be a protection against inflation and an unstable economy. With so much financial uncertainty in the world, it is wise to diversify your investments. A solid investment portfolio should certainly include a variety of metals such as gold, silver, platinum or palladium. However, you must remember that investing is a risk and requires careful thought. When investing in metal, you need to have a complete understanding of the bullion market to ensure you profit from your investments. Below is a list of terms you will frequently see when investing in precious metals. Understanding these terms will help you make a well-informed decision and more importantly, help you avoid any extreme loss of profit.

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Ask: Ask is the price which a dealer sells precious metals.

AU: AU is the chemical symbol for gold.

Bullion: Bullion is the term for precious metals in bulk form. You will often hear the word bullion used when describing the metal in bar form or a large mass of bars and coins.

Canadian Maple Leafs: These modern bullion coins are minted by the Royal Canadian Mint. This is the official bullion gold coin of Canada and is popular with companies that offer international currency.

Commemoratives: Coins that are minted to celebrate events, themes, places or people are called commemoratives.

Face Value: Face value is the amount of money that is stamped on a coin. It is the legal monetary value of the coin.

Fineness: Fineness is used as a way to describe the purity of a metal. It is measured in 1,000 parts of an alloy, which is a mixture of two or more metals. You will often see gold with a 0.995 percent fineness. This is telling the customer that the gold bar contains 995 parts that are gold and five parts of another metal.

Gold Eagles: Gold Eagles are one of the more popular forms of modern gold coins.

Karat: Karat describes the fineness or purity of gold. Pure gold is 24 karats.

Liquidity: Liquidity is an investing term that describes the quality of an item converted into cash. The more money the item can receive, the higher liquidity it possesses.

Numismatic Coins: The values of numismatic coins are based upon their rarity, dates and condition rather than their type of metal.

PCGS: PCGS is an acronym for the Professional Coin Grading Service. They determine the value of your bullion. There are three other well-known grading services, which are NGC, ANACS and ICG.

Platinum Eagles: Platinum Eagles are a type of platinum coin that the U.S. treasury prints.

Spot Price: The spot price is the price quoted for immediate payment on the metal. This means the price of the metal, when you decide to buy, will be your price regardless if the market rises or falls.

Troy: A troy is the unit of weight for metal. One troy ounce equals 31.1035 grams.

Uncirculated: A coin that has a monetary value but is not used for money is known as uncirculated coins. These are designed more as commemorative coins or for investing purposes.