Troy Ounce Explained
Learn what a troy ounce is and why precious metals use a different ounce from everyday goods.
The troy ounce is the standard ounce used for gold, silver and several other precious metals. Confusing it with the ordinary ounce can lead to incorrect price calculations.
Troy versus ordinary ounces
One troy ounce equals approximately 31.1035 grams. One ordinary avoirdupois ounce is approximately 28.35 grams. Because the units are different, prices quoted per troy ounce should not be converted using an ordinary-ounce figure.
A troy pound is also different from an avoirdupois pound, so it is safest to work in grams or troy ounces when comparing precious metals.
Where the unit appears
Large market quotations, many bullion coins and many bars are described in troy ounces. Fractional coins may contain one-half, one-quarter or one-tenth of a troy ounce of gold.
Some jewelry markets use grams instead, which is why a converter is useful when comparing bullion and jewelry.
Practical calculation
To estimate a raw metal value, convert the item to troy ounces, multiply by the current price per troy ounce, then adjust for purity. Retail premiums, dealer spreads and other costs still need to be considered.
Key takeaway
The best gold decisions usually come from understanding the product, the price components, the risks, the seller or custodian, and the purpose the gold serves in your plan. Compare multiple sources and verify important details independently.