But what is exactly a troy ounce of gold? And what’s the difference between a troy ounce and a regular ounce? In this blog post, we give you a little history on the troy ounce, how it’s different to the standard ounce, and how to calculate how many ounces of gold you should be buying.
A troy ounce is different from a standard ounce. A standard ounce is 28.35 grams, whereas a troy ounce, as mentioned above, is 31.103 grams. We always use standard ounces (called avoirdupois), except in the world of precious metals. With precious metals such as gold and silver, you’ll either hear troy ounces or grams, with the default unit being troy ounces.
Troy ounces have been the official unit since the 16th century, and are used to reference the gold price; nowadays, most gold coins and bars are weighed in troy ounces. As you might imagine, a troy ounce is a bit heaver than the avoirdupois one (exactly 2.75 grams!).
It’s hard to pinpoint exactly when the troy ounce was first taken or invented, but most people point to a place in France called Troyes. At the time (16th century), gold was part of the global market and there was a global standard which made it easier for merchants of all countries to buy and sell gold.
What’s interesting is that a troy ounce is exactly one-twelfth of a troy pound, which is exactly how much bronze Roman bars weigh; this means it’s likely the French took that measurement from the Roman empire. In 1527, England adopted the troy ounce, and the US followed in the 19th century. The value of money used to be fixed with silver, which meant that one pound contained one troy pound of silver.
Today, it is still recognised as the standard weighted average of all precious metals. One of the reasons is because the LBMA (London Bullion Market Association) has all its measurements set up in troy ounces and switching to grams would cause certain technical difficulties. Today, mining companies sell large gold and silver bars that can weigh up to 1,000 troy ounces, that’s 31.10 kg!
We’ve covered the topic of deciding how much gold to buy on the Minted gold blog before because it’s good to have a gold plan before buying a new asset: How Much Gold Should I Own?. Investment experts usually recommend holding at least 10% of your portfolio in gold, which is a good place to start: you just need to work your way backwards and calculate how much of your total savings you need to put into gold. If you are still very new to gold, you may prefer starting small and working your way up – which is totally fine too! Here is a step by step process if you are still new to gold investing.
If you’re very new to gold, it’s worth spending a little time learning about our favourite precious metal and the advantages of investing in it. Some of the main benefits of investing in bullion gold are the following:It protects you against inflationIt’s an asset that tends to increase when the stock market prices decreaseYou can touch, feel and store itIt holds the same buying power it had centuries ago
If you’re keen on learning more, we recommend reading the following articles from the Minted blog:
Once you’ve learnt about gold, you’ll have a better idea of how much you think you need to buy. With many gold dealers, you may have to commit a certain amount and sign a long-term contact with unknown fees. The good news is that with Minted, you can get started for as little as £30 per month!
The best way to buy gold is through an online dealer. It’s usually cheaper, easier and you’ll have access to the best rates. Online gold dealers will also offer to store and insure your gold for you. Having said that, it’s important to pick a dealer that is legitimate and regulated by all the right institutions. At Minted, for example, we are regulated by the Financial Conduct Authority, our refinery is on the Good Delivery List and we have high ratings on Trustpilot.
You’ll also want to decide how to store your gold. If you are a newbie, it’s best to let the dealer store and insure your gold for you. You can choose to get your gold delivered down the road, but be aware that you will need to have the right equipment in place such as a safe, burglar alarms and secure locks.
If gold is part of your long term investment strategy (which is usually the best), the easiest way to invest is to buy a small amount every month. This tactic is called pound cost averaging, and it works well because it makes it easier to integrate your gold investment strategy into your budget and control impulse purchasing decisions.
Many gold dealers will ask you to commit to at least £100 per month if you want to buy through a monthly purchase plan. The good news is that with Minted, you can start for as little as £30 per month, and your insurance and storage is free for 1 year up to 200 grams (or 6.43 troy ounces!). Whenever you want to feel and touch your gold, you can get it delivered and only pay shipping fees (other dealers will also charge you “fabrication fees”).
You should now know how many grams are in a troy ounce, why it’s called a troy ounce and the difference between a troy and an avoirdupois ounce. Whenever you look up the price of gold, you’ll usually have the price of both which makes it easy to calculate and compare the two. And when you’re ready to buy gold… we’ll be right here for you!