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When it comes to selling jewelry, bullion bars, or coins, there are no rules engraved in stone. Much of what takes place between buyers and sellers is conditional, and deals are made on the fly. But that doesn’t eliminate the need to know the terminology of precious metals.
Think of it this way – you wouldn’t join a discussion about a sport if you didn’t know the players, teams, and rules, would you? Likewise, learning “metalspeak” (a nifty term made…on the fly!) can help you walk into the store with the confidence that you’ll make the sale you’ve always wanted.
Without any further delay, it’s worth taking a deeper look at some of the words and phrases a buyer might use. The ones mentioned in this post aren’t too abstract or scientific. While some may seem a bit wordy, they’re fairly straightforward in meaning, and you can be sure to hear them getting tossed by connoisseurs of gold and silver (and other metals).
Arbitrage – For those looking to buy gold and silver, this refers to the simultaneous buying and selling of a commodity (in this case, precious metals) in various markets to take advantage of price differentials.
Assay – An assay is an analysis used by gold refining companies to determine a metal’s purity. It can also determine the alloy content in a metal as well.
Backwardation – A scenario where prices for future deliveries are lower than than the spot price (see “Spot Price” below for more info).
Base Metal – Base metal, also known as pot metal, is name for a mixture of non-precious metals. It’s commonly found as a base for gold-filled and gold-plated coverings.
Central Device – The term “central device” might sound misleading, as if it were for some machine. However, it simply refers to the primary design featured on both sides of a coin.
Comex – This is one of the world’s largest commodities futures exchanges where people trade gold and silver. Located in New York City, Comex is a division of the New York Mercantile Exchange.
Die – It sounds grave, but “die” in the precious metal world is an engraved metal object used to stamp or strike the design seen on a coin.
Fineness – There are several measurements involved with the assessment of precious metals. Fineness measures the purity of a metal using a unit of parts per thousand. For example, a gold bar measuring in at .995 parts per thousand means it contains 995 parts gold and 5 parts of a different metal. Or to simplify even further, the bar is 99.5% gold.
Futures Contract – A futures contract is an agreement created through an organized exchange to take or make a delivery of a commodity or financial good (in this case gold or silver) at a future date.
Good Delivery – The basic standards/specification that a bar of gold, silver, or any precious metal has to meet for buyers to consider it acceptable for delivery at an exchange.
Hedge – A transaction designed to reduce the impact of adverse changes in the value of assets (precious metals).
Liquidity – This refers to something that you can easily convert into cash if necessary. In terms of precious metals, it depends greatly on the spot price in a given market.
Mint – This term actually refers to the origin of coins and bars – it’s where they are manufactured.
Modern Issues – These are the current coins in circulation that are available to either investors or collectors.
Numismatics – Here’s a wordy term that has a pretty simple meaning. It’s the study of coins, currency, and medallic art. Nothing more, nothing less.
Obverse – This refers to a coin’s front side. Typically, the obverse side of a coin features the image of one or more people (usually some notable figure).
Planchet – Ever wonder how they stamp coins or medallions? It’s made possible by means of a planchet, the tool that makes an imprint on objects made with precious metals.
Restrike – Although it’s name might imply something else, the term “restrike” simply refers to the reproduction and issuing of a coin that went out of circulation at a previous time.
Spot Market – We’ve mentioned this term a few times above. This is a market where the delivery and payment of an item have to take place within two business days of a transaction date. Values and guidelines for selling items are unique to spot markets when compared to others.
Vermeil – It’s a fancy French word that refers to the gold plating found on objects made with other metals (i.e. gold plating on silver jewelry).
You might have reached this point wondering why it even matters whether you know precious metal terminology or not. Why can’t you rely on those making you an offer to explain everything? You can certainly do that, but you’ll probably find a lot things going over your head.
For example, you’ve probably found yourself in a room where two or more individuals speak a language you don’t understand. Wasn’t it frustrating? You can’t tell if they’re making fun of you or plotting against you in some way. If only you could put them on subtitles!
A buyer of precious metals who speaks in terms you don’t understand may frustrate you as well. It’s not that they’re out to deceive you – they’re just using words and phrases that come with the job. So if you want to be on the same wavelength as them, it’s wise for you to learn the lingo they use on a daily basis.
If you’re about to sell gold or silver items, do your best to learn some of the terms mentioned in this post. It really will go a long way. You won’t have to walk into a buyer’s office with that sense of mystery or confusion as to what will take place. You might not become a walking dictionary, but your knowledge of the lingo associated with precious metals will make it easier to understand what a buyer tells you. And that can help you gain more out of a deal than what you expect!
Looking for more info regarding the buying and selling of precious metals? Give us a call so we can further explain the process.
