There are several terms that are rarely used in daily life but are very common in the world of gold investment.
For those of you who are new to gold investment, it is beneficial to first learn and understand some of the commonly used terms in gold investment.
In addition to expanding your knowledge, these terms will frequently appear in news and articles related to gold investment.
To help you get familiar, here are some key terms in gold investment:
Commodity Exchange (COMEX)
Just like everyday goods that have markets for buying and selling, gold also has its marketplace. Commodity Exchange, known as COMEX, is an international commodities exchange based in New York.
One of the commodities traded on COMEX is gold. COMEX is often used as a benchmark for investors to determine the market price of gold.
In addition to gold, COMEX also trades other precious metals such as silver, aluminum, and copper.
Other well-known commodities exchanges include the Tokyo Commodity Exchange (TOCOM) and the London Metal Exchange (LME).
Gold Bar / Ingots
You might not be familiar with this term in gold investment. Gold bars, also known as ingots, are commonly referred to in jewelry stores.
Similarly, “ingots” is another term used in gold investment that might be less familiar. Ingots are locally used terms for gold bars.
Typically, ingots are made from melting old gold jewelry into a single bar form.
The purity of ingots can be challenging to determine accurately compared to bullion or standard gold bars.
Ingots are not always bar-shaped; they can also be irregular chunks or round like pebbles.
Karat
This term is quite familiar for those involved in gold investment. Karat is a scale used to measure the purity of gold in percentage terms.
The highest gold purity is 24 karats. The higher the karat, the more expensive the gold will be. Thus, gold with a 99% karat rating is considered pure.
The formula to calculate karat is x = 24 x (Mg/Mm). Karat is often abbreviated as kt or ct.
Gold in Dinar, Dirham, Mayam
You may have heard of dinar, dirham, and mayam. But do you know the differences among these terms?
All three are terms for specific gold measurements. Dinar is a gold coin with a purity of 22 karats and weighs 4.25 grams.
Mayam refers to a gold unit where 1 mayam = 3.33 grams of pure gold or 24 karats.
Unlike the above terms, dirham is used for pure silver coins weighing 2.975 grams.
Dinar and dirham are Arabic terms commonly used in that region, while mayam is a term used in Aceh, often in the context of marriage dowries.
Pool Account
A pool account refers to storing your gold assets at a store or transaction platform for buying and selling gold.
For example, if you buy digital gold from Treasury and keep it in your Treasury account for future transactions, Treasury becomes your pool account.
Troy Ounce
In Indonesia, grams are commonly used to measure gold weight. However, the term troy ounce is more familiar internationally in gold investment.
1 troy ounce is equivalent to 31.1 grams of gold in Indonesia. This measurement is used for bullion or coins with 24 karat purity.
Bullion
Bullion is a term exclusively used in gold investment. It refers to gold coins or bars with pure gold content.
The term bullion is generally used to describe investment assets that are bought and sold by investors. Bullion can also refer to other precious metals like silver and platinum.
Buyback
You may have heard the term buyback in gold investment. Buyback is the price applied when selling back your gold assets to a dealer.
Buyback is also known as the resale price. Typically, the buyback price is lower than the purchase price due to supply and demand dynamics.
There are also some hidden costs that sellers and buyers must bear, influenced by gold purity, transaction fees, seller profits, and the condition of the offered precious metal.
Spread
Spread is the difference between the buying and selling (buyback) price of gold. The spread is determined by economic conditions, inflation rates, and the exchange rate of the rupiah against the US dollar.
Each gold dealer has a different spread. The spread is one of the factors that determines the risk associated with your chosen gold investment.
A low spread reduces the investment risk and protects against drastic value declines.
Treasury is one of the digital gold providers with a low spread, around IDR 40,000, minimizing investment risk.
These terms are among the most frequently used in gold investment. However, there are many other terms to learn to deepen your understanding of the investment world.
Keep following Treasury’s educational articles to enlighten your gold investment journey. Investing in gold with Treasury is easy, secure, and helps achieve financial freedom in the future!
