What is a Troy Ounce?

Investors and traders often refer to prices per troy ounce when buying or selling gold and silver. But what is a troy ounce? A troy ounce is a unit of measurement commonly used in the precious metals industry to weigh items like gold, silver, and other precious metals. The term "troy" comes from the city of Troyes in France, where the troy weight system was believed to have originated in the Middle Ages.

It is important to note that the troy ounce is different from the avoirdupois ounce commonly used in the United States for everyday items. Understanding the concept of a troy ounce is essential for anyone involved in the precious metals market to accurately calculate prices and weights of their investments.

What is a Troy Ounce? Why is it Important?

A troy ounce is an ancient unit of measurement used for the weight of precious metals. A troy ounce converts to 31.1034768 grams or about 0.06857 pounds. When you are looking to invest in gold, silver or another precious metal, you will see most offerings denominated in troy ounces.

The precious metals market uses the troy-ounce system for standardization. When all offerings are denominated in the same unit, buyers and sellers alike aren't slowed down, confused or misled by complicated unit conversions.

Precious metals are traded all over the globe, so this standardization helps simplify the market.

History of the Troy Ounce

Although the origins of the troy ounce are somewhat debated, some historians believe that the Romans were the first to standardize their monetary system, using bronze bars that could be broken down into 12 pieces called uncia or ounce, with each piece weighing approximately 31.1 grams.

The Troy system, named after the French city of Troyes, played a pivotal role in standardizing weights and measures in the Middle Ages. Troyes was a bustling business hub that attracted merchants from all corners of Europe and Britain. These merchants used a system where 480 grains of barley were equivalent to one troy ounce, and 12 troy ounces made up one troy pound.

As Europe's economic importance grew during the 10th century, standardized monetary weight systems were essential for conducting business. Some speculate that the troy system developed by the merchants of Troyes was modeled after the weights developed by their Roman ancestors.

Before the adoption of the metric system, King Henry II of England adjusted the British coinage system to better reflect the French troy system. The system underwent periodic adjustments, but troy weights, as we know them today, were first used in England during the 15th century.

Prior to the troy system, the British used an Anglo-Norman French system known as the avoirdupois system. The term avoirdupois means goods of weight and was used to measure precious and non-precious metal goods.

By 1527, the troy ounce had become the official standard measurement for gold and silver in Britain, with the U.S. following suit in 1828.

The troy system is still in use today but only in the trade of precious metals. Its origins may be debated, but its role in the standardization of weights and measures during the Middle Ages is undeniable.

Troy Ounce vs. Avoirdupois Ounce

A troy ounce is not the same thing as an avoirdupois ounce used in the context of everyday items like food or liquids. A troy ounce is about 10% heavier than an avoirdupois ounce.

An avoirdupois ounce weighs in at about 28.34952 grams compared to 31.1035 grams for a troy ounce. You probably won't have to convert between the two units because the best precious metals platforms use troy ounces or grams, and grocery stores or recipes use avoirdupois ounces.

When investing in precious metals like gold or silver, it can still be important to know the difference between a troy ounce and an avoirdupois ounce, as the weight difference will affect the price. For example, the price of gold is typically quoted in troy ounces, so if you are buying or selling gold, you will need to keep this in mind. The same goes for silver.

Uses of Troy Ounce Today

The troy ounce is still relevant and widely used today for a variety of purposes, including:

• Valuation of Precious Metals: Precious metals such as gold, silver, platinum, and palladium are often bought and sold based on their weight in troy ounces, making this unit of measurement crucial for determining the value of these commodities accurately.
• Diamond Trade: Apart from the precious metals industry, the troy ounce is also commonly used in the diamond trade for weighing larger diamonds that are priced based on their weight in carats.
• Jewelry Manufacturing: Additionally, the troy ounce is utilized in the manufacturing of jewelry, where the weight of precious metals is an important factor in determining the quality and cost of the finished pieces.
• Measuring Cooking Ingredients: In the culinary world, the troy ounce is used for measuring small quantities of ingredients in recipes, particularly in professional kitchens where precision is key.

Best Online Precious Metals Dealers

When it comes to precious metals dealers, a few clear frontrunners emerge. Some of the best include Advantage Gold, American Hartford Gold, and Priority Gold. All these platforms offer direct delivery purchases as well as precious metals IRAs.

Are Precious Metals a Good Investment Right Now?

Global demand for gold rose to its highest of the decade, mostly driven by central banks buying boatloads of gold. Despite the rising demand, supply has only moved sideways in recent years. Supply and demand, combined with a large influx of investors looking for a safe haven investment, dictates that gold could be a fantastic investment right now.

While precious metals can provide a level of stability and security to a diversified portfolio, it's important to carefully consider current market conditions and seek professional advice before making any investment decisions.

Frequently Asked Questions