Given that most people today use the metric system many investors may wonder why gold bars continue to be sold in troy ounces. Top gold dealers such as Sharps Pixley and others still sell their bars in troy ounces despite it being a rather antiquated measurement in 2022, but why?
Using troy ounces as the unit of measurement for gold and other precious metals dates back to the Middle Ages and a town called Troyes in the Grand Est region of northeastern France. English merchants and merchants from all over the world traded in Troyes from roughly the 9th century onwards meaning there needed to be a collective unit of measurement so the troy ounce was born. Flash forward 700 years and in 1527 the troy ounce was made the official measurement of gold and silver in England. Over time other European countries began to adopt the troy ounce and it soon became the internationally recognised measurement for trading precious metals.
The only exception is in East Asia where the People’s Bank of China, in particular, has long refused to use troy ounces as a unit of measurement instead adopting grams, which were used when they began to mint the Chinese Gold Panda coins in 2016.
Whilst a regular ounce is 28.35 grams a troy ounce is around 31.1 grams making it around 10% heavier than a typical ounce. The reason troy ounces are heavier is that gold and other precious metals are usually not 100% pure so the extra weight accounts for the impurity meaning you get all the precious metal you paid for.
Anyone thinking of investing in precious metals should have a thorough understanding of the troy to ounce to ensure that you know exactly what you’re buying and selling.