Troy Ounce vs. Ounce

Anybody buying and selling gold, silver, or any precious metal needs to be familiar with the Troy system of weights and measures. This system of measurement is different than the avoirdupois system of measuring weight that is most common in the United States. Although both systems of weights and measures use the “ounce,” they are significantly different and can cost you a substantial amount of money if you don’t understand them.

Avoirdupois Weight

Although most people don’t realize it, the United States is standardized on the avoirdupois (abbreviated: avdp) system for measuring weight. It is used to weigh almost everything in the United States except gemstones, precious metals, and pharmaceutical drugs. The system is based on one pound containing sixteen avoirdupois ounces or 7,200 grains which is equal to 453.59 grams. The avoirdupois ounce contains 437.5 grains (28.3495 grams).

The avoirdupois weight system was first used in the thirteenth century and standardized by the international wool trade. However, some slight variances across the different countries of Europe did exist. The system was updated in 1959 when the International Avoirdupois Pound was created and standardized. Most historians believed that it gained wide acceptance because it had three equal subdivisions for converting pounds into ounces: one half, one quarter, 1/8, and 1/16.

History of the Troy Ounce

The Troy units of weights and measure originated in fifteenth-century England. In 1527, the Troy ounce was made the official unit of measure for the trade of gold and silver in London. Historians believe it was indirectly derived from the Roman monetary system. It was used across Europe but had some slight differences between countries. For example, the Holland Troy ounce was slightly different than the Paris Troy ounce.

The Troy system of weight is based upon the grain, pennyweight (24 grains), troy ounce (20 pennyweights), and troy pound (12 troy ounces). The grain is the same unit of measure used in the avoirdupois unit of weight system. Additionally, the Troy ounce is the same as the British Imperial Troy ounce.

In 1959, the International Yard and Pound Agreement standardized that one Troy ounce (oz t) equals exactly 31.1034768 grams. It also equals 1.09714286 avoirdupois ounces, or a ratio of exactly 192/175, or about 10% larger.

Converting Grams to Troy Ounces

It is important to know how to convert grams to Troy ounces since all precious metals, such as gold and silver, are priced per Troy ounce. For example, in 2016 China began selling 30 g Silver Panda bullion coins composed of 99.9% pure silver. However, other countries such as the United States, sell silver bullion coins that are of full troy ounce (31.1034 g.) of 99.9% silver.

All other things being equal, the Chinese Silver Panda has 1.1034 g less silver than other compatible bullion coins. This is a reduction in weight of 3.5%. In other words, the Chinese silver panda has only 0.964522 Troy ounces of pure silver. If the spot price of silver is $16 per Troy ounce, the United States American Silver Eagle contains $16 worth of silver. However, the Chinese Silver Panda has only $15.43 worth of silver. This is a major consideration when purchasing silver coins from different countries.

Purchasing Precious Metals

Whenever purchasing precious metals, you need to be an educated consumer to avoid getting ripped off. This can range from paying too much for the gold or silver you're purchasing to purchasing counterfeit precious metal bars that contain little to no precious metal. Precious metals and rare coins can be used to diversify your investment portfolio. However, you should consult with a trusted financial advisor before making any investment decisions.