Guide to Metals Commodity Market Key Terms

Learn the specific vocabulary of the metals commodity market

By Elise Matz

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Though the value of a government-backed currency may rise and fall, precious metals are thought to have staying power. But if you don't like the idea of stockpiling ingots of gold in your basement, you can always trade metals futures. Futures contracts, or agreements to buy a commodity at a fixed price, are traded on commodity exchanged around the world each day. If you decide to venture into physically purchasing precious metals, there are some key terms of which you should be aware before you buy.

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Bullion and bullion coin

Bullion is the bulk form of a precious metal; it may take the shape of an ingot, bar or plate. Industry standards dictate that bullion must be 99.5 percent pure. Bullion coin may be stamped with a value or image, but its worth is determined by the market price of the metal from which it is made.

I recommend: Monex Precious Metals sells bullion bars. Blanchard sells gold bullion coin.

Coin or coin of the realm

Coin is currency, issued for the purpose of trade. It is a stamped piece of metal with a standard value and fineness. Coin of the realm is currency issued and backed by a government and its value is legally regulated.

I recommend: CMI Gold & Silver offers a rundown of the difference between bullion and coin, and the benefits of investing in each.

Commodity Exchange, Inc. (COMEX)

Commodity Exchange, Inc. (COMEX) is a division of the New York Mercantile Exchange (NYMEX), the largest commodity futures exchange in the world. Massive amounts of commodities, including metals, are bought and sold on its floor during business hours, and even more are traded online overnight. NYMEX is regulated by the Commodity Futures Trading Commission.

I recommend: You can visit the NYMEX website to find out more about trading gold, silver, copper and aluminum.

Troy ounce

Heavier than a standard ounce of produce at the grocery store, a troy ounce is equal to 30.1 grams, 480 grains, or 20 pennyweights. It is the standard unit used to buy and sell metals on the commodity market.

I recommend: Lynn Coins & Sports Card Shop has a detailed definition of the troy ounce, its equivalencies, and useful conversions.

Precious metals

Precious metals include gold, silver and the platinum group: palladium, iridium, rhodium, osmium, ruthenium and platinum.

I recommend: You can get live and historical charts that follow the value of all precious metals at Kitco.

Fineness

Fineness refers to a precious metal's purity, measured in parts per thousand. You'll find an assay mark on many precious metals to guarantee fineness, set there by an assayer.

I recommend: Get the official definition of fineness, assay and many other metal commodity market terms at Platinum Today.