What is a Troy Ounce?

by Jerry White

The jargon of the precious metals markets can be confusing to new investors. For example, what exactly is a troy ounce? Where did it come from?

Precious metals (gold, silver and all the platinum-group metals) are measured and priced in troy ounces (named for the fair town of Troyes in northern France in the Middle Ages), and large quantities are sometimes stated in metric tons. Historically, a troy ounce was 1/12th of a troy pound (a measure that is no longer used). A troy ounce is equal to 480 grains (sometimes used to define weights of coins when minted) and also equal to 20 pennyweights (still used by jewelers who buy gold). Thus, a pennyweight is 1/20th of a troy ounce.

By official definition, one troy ounce is equivalent to 31.1034768 grams. Since 1000 grams is one kilo, 1 kilo = 1000/31.1034768, or 32.1507466 troy ounces. Thus, there are 32.1507466 troy ounces in a kilo, and there are 32,150.7466 troy ounces in a metric ton (typically rounded in the trade to 32,150 troy ounces and used for describing large quantities, not for pricing).

How does a troy ounce compare to a more-familiar avoirdupois ounce and pound? As we all know, there are 16 avoirdupois ounces in a pound. Troy ounces are a bit heavier. There are 14.58333 troy ounces in an avoirdupois pound, which is useful to figure out how much a given quantity of gold or silver weighs in familiar terms. A 400-ounce gold bar weighs 400/14.58333, or 27.43 lbs. A 1000-ounce silver bar weighs 1000/14.58333, or 68.57 lbs., more than you would care to be carrying around with you.

We were amused at an error in a recent story about gold vending machines being introduced to the US. The writer, for a national wire service, noted how small a gram of gold was, "fingernail sized", at only 1/28th of an ounce of gold. While a gram is a gram, an ounce is not always an ounce. And in the case of gold, the writer was wrong about the ounce by more than 10%. In fact, as noted above, there are a bit over 31 grams in a troy ounce, not 28. If you wanted only 28 grams of gold in your ounce, you would be losing about $155 of gold.

While the writer may have shown his or her ignorance, Americans are interested in learning about precious metals, and many are buying gold and silver for the first time. Some are concerned about the erosion of their purchasing power as the Fed runs the dollar-printing presses and buys Treasury bonds. Some are concerned about a possible collapse of the US financial system in the face of sharply rising government debt. You may want to get beyond the market jargon like troy ounces and fineness and learn about gold as an investment.