For decades, gold has been used as an investment to secure a better future for your family and increase your family’s financial security. Many people worldwide invest in gold bullion, gold jewelry, and gold coins.
Although many factors can affect gold’s price, such as the US dollar strength and world market conditions, it is still the best choice for investment. The official price of gold fluctuates daily so it is important to determine the worth of your investment.
Troy and Avoirdupois Measuring System
It is important to understand that gold can be measured in troy ounces, pounds, or in a kitchen one. These differences in measurement can make you a victim to fraud quickly.
Troy Measuring System
Troyes, a French trading town, gave the troy weight its name. This measurement unit was used by English traders for trading in the 9th Century. However, it became part of the British measuring system in 15th century. The following are the Troy weights:
- Pennyweight or 24 grain
- Troy ounces or 20 pennyweights
- Troy pound (12 troy ounces)
You will not use the avoirdupois method to measure products. Instead, the troy measurement system will be used to calculate the weight of precious metals and gemstones.
Remember that Americans don’t use the metric measurement system every day so converting between ounces or kilograms can be confusing.
Ounces Vs. Troy Ounces
Understanding different measurement concepts is a good place to start.
- Dry Ounces – These are used to measure daily sugar, cereals, and fruit weights. One pound contains 16 ounces, and one kilogram has 35.27.
- Liquid Ounces are used to measure liquid volume, particularly water and milk. One liter equals 33.8 US fluid Ounces.
- Troy Ounces – These are used to measure precious metals such as gold, silver and palladium. It weighs 31.1 grams, which is slightly more than the standard ounce.
- Troy Pound – A troy penny is equal to 12 troy troy ounces. When selling gold, it is often measured in 12 ounces instead of one troy pound by most traders.
|Measures||Troy weight||Avoirdupois weight|
|Grain||1 grain is equal to 0.0065 g||437.5 grains are equal to 28.35 g|
|15.43 grains are equal to 1 g|
|480 grains are equal to 1 troy ounce|
|Pennyweight||1 pennyweight is equal to 24 grains||Not used in the weight measurement system|
|1 pennyweight is equal to 1.55 g|
|20 pennyweights are equal to 480 grains|
|20 pennyweights are equal to 1 troy ounce|
|20 pennyweights are equal to 31.1 g|
|Gram||31.10 g is equal to 1 troy ounce||28.35 g is equal to 1 ounce|
|373.24 g is equal to 1 troy pound|
|Ounce||1 troy ounce is equal 31.10 g||1 ounce is equal to 28.35 g|
|12 troy ounces is equal to 1 troy pound||16 ounces is equivalent to 1 pound|
|Metric ton||1,000 kg is equal to 32,150.7 troy ounces||1 metric ton is equal to 2,204.6 pounds|
|Long ton is equal to 2,240 pounds|
|Short ton is equal to 2,000 pounds|
It can be confusing to convert between troy ounces or troy pounds. You will almost always find gold bullion measured in kilograms or ounces.
Another fact: A troy ounce weighs only 10% more than an ounce. A troy pound, on the other hand is much heavier than a pound.
Avoirdupois Measuring System
The avoirdupois one ounce is the smallest unit in the weight system. It is the official measurement system in the US. However, it can be found in Australia, New Zealand, the UK and other former colonies.
Avoirdupois is French for ‘goods of mass’. It derives its name from the AngloNorman French aveir des peis. It was used to denote goods that were sold wholesale and measured on large scales and steelyards.
Jewelers can still deceive their customers today by offering an ounce of gold rather than a troy-ounce. This fraud is easy to spot, as only professionals can detect such a small difference in weight.
You can convert avoirdupois to troy ounces quickly by multiplying it by 0.91. The best choice is to purchase precious metals with an engraved weight and purity, or government-minted products with a guaranteed troy ounce weight.
What does gold cost?
There are two ways to estimate the potential value of gold when you buy it.
Spot Gold Price
It is the price of one troy ounce gold on the international market. It is the price that is quoted on stock exchanges the most frequently.
The gold price can vary depending on the currency or dealer premium.
The spot price of gold is affected by many factors, including demand and supply. A greater stock exchange offer will result in a higher gold price.
You can’t purchase gold bars or coins at this price because it only applies to unprocessed precious stones.
Gold Future Price
The gold futures price is the physical delivery of gold in the future. These prices have an impact on:
- Spot gold price
- Fluctuations between supply and demand
- Transport costs
- Storage costs
- The owner receives a risk-free rate for gold return
The possibility of customers not paying the full amount makes this investment attractive. The agreement between seller and buyer includes the spot price of gold and its weight within the delivery period.
Factors that Affect Gold Futures Price
There are many factors that influence the gold price, and they change every second. A gold value can be affected by many other factors than supply and demand.
- Inflation When inflation rises, the gold value falls. The good news is that inflation and deflation are constantly changing so the gold price remains steady on average.
- Interest rates The relationship of gold and interest rates are inversely proportional. Higher interest rates lead to a decline in gold’s value as people sell more gold to make more. The demand for gold rises when interest rates drop.
- State reserves Every state has its own amount of gold. If the government purchases more gold than it sells its value increases and the supply of gold becomes insufficient.
- Correlation to other assets – Customers view gold as an object with great diversity in their portfolios due to its low negative correlation with other investments.
- Geopolitical Factors – During geopolitical crisis, the value and popularity of gold are usually in the ascendant, since gold acts as a secure investment.
What is a Pound of Gold Worth?
As I mentioned earlier, troy ounces are the only currency that can be traded in international gold trade. You can’t even use troy pounds anywhere for this purpose, not even the US.
Gold Troy Pound Value Per Day
|Currency||June 15, 2021.||June 26, 2021.|
Fortunately, it is not difficult to convert troy ounces to troy pounds if you prefer that way. Since one troy pound is equal 12 troy ounces, you can quickly recalculate the price of gold:
gold price per 1 troy ounce x 12 = gold price per 1 troy pound
Variations in the Gold Price Throughout The Decades
The price of gold was stable for decades in the past. However, today’s economic and political developments have resulted in gold value changing several times per day.
Gold Average Price In The 19th Century
For example, gold prices were stable and almost unchanged during the 19th century. Believe it or not, they fluctuated only from $18.93 to $18.98 during 45 years.
Gold Average Price In The 20th Century
The situation was entirely different in the 20th century. Gold prices slightly increased by 1976, when everything went crazy. Very soon, they tripled compared to 1976 and became even ten times higher during the 80s and 90s.
Gold Average Price In The 21st Century
As you can see, gold prices in the last ten years went up insanely, and no one knows what to expect in the future. We will see soon.
The value of gold will never change. It will always be a safe investment, regardless of how high or low its price may fluctuate. You can make smart investments in precious metals by learning the basics of the global market and the measurement system that you will need.