What Is a Troy Ounce?
A Troy ounce is a unit of weight based on the troy system of weights and measures. It is most commonly used for weighing precious metals. It is different from metric or Imperial weights and dates back to the middle ages. According to the Royal Mint, one troy ounce is equal to 31.1034768 grams. The troy ounce is the only measure of the troy weighting system that is still used in modern times. It is used in the international pricing of precious metals such as gold, silver, and platinum. The Troy system was adopted by the U.S. Mint for the regulation of coinage in 1828.
When buying or selling precious metals such as gold, silver, or platinum, they are usually quoted and purchased by their weight. In the UK, before adopting the metric system, they used a system called the avoirdupois system. It is still used today to some extent. The name comes from Anglo-Norman French and means ‘goods of weight’. It is based on pounds and ounces with 16 ounces to a pound. However, in medieval times when traders were bartering for goods, all precious metals were weighed using the troy system, not the avoirdupois system. The troy system uses pounds and ounces, so it is similar, but there is one big difference. An avoirdupois ounce equals 28.35 grams, whereas a troy ounce weighs 31.10 grams. This means one troy ounce is equivalent to approximately 1.09714 avoirdupois ounces. The troy system is still used today, especially when weighing precious metals. (Source: royalmint.com)
Troy Ounce History
Opinions differ as to exactly when and where the Troy weight system was born. However, a commonly held explanation is that its name is derived from Troyes, a trade market in France. Merchants came from all over the world to buy and sell goods. So, a standardized weight system eventually evolved for conducting business and standardized trade. It is believed that the system of measuring gold, silver, and gemstones was first used in that region. As a result, the Troy system of weights and measures took its name from the city of Troyes. Later, many places in Europe came up with their own version of the troy ounce. But the French troy is believed to be the system most closely related to the one still in use today.
The troy system was in widespread use as the basis of several European monetary systems by the end of the 12th century. It reached Britain under King Henry II. French-born King Henry II of England adjusted the British coinage system to be more reflective of the French troy system. Troy weights as we know them today were first used in England in the 1400s. By 1527, the troy ounce became the official standard measurement for gold and silver in Britain. The U.S. eventually followed suit in 1828. (Source: jmbullion.com)
Other theories
Some historians believe the troy ounce had its origins in Roman times. Romans standardized their monetary system using bronze bars that could be broken down into 12 pieces called “uncia” or ounce. Each piece weighed approximately 31.1 grams. As Europe’s economic importance grew from the 10th century onward, merchants came from all over the world to buy and sell goods there. It was, therefore, necessary to develop a new standardized monetary weight system to make doing business much easier. Some believe the merchants of Troyes modeled this new monetary system using the same weights as their Roman ancestors. (Source: investopedia.com)
Troy Ounce vs. Standard Ounce
The avoirdupois ounce is simply referred to as ounce (oz). It is still commonly used in the US to measure foods and other items, except precious metals. It is the equivalent of 28.349 grams or 437.5 grains. A troy ounce is a little heavier, weighing in at 31.1 grams. The difference (2.751) amounts to almost 10%, which can have a substantial impact, particularly on large quantities.
When the price of gold is quoted in ounces, the ounce referred to is a troy ounce, not a standard ounce. A troy ounce is heavier than a standard ounce. For example, there are 14.6 troy ounces compared to 16 standard ounces in one pound. Also, a troy pound should not be confused with a standard pound. A troy pound is lighter as it is made up of 12 troy ounces.
- Avoirdupois ounce – is generally abbreviated as “oz,” is also known as the avoirdupois ounce. It measures approximately 28.35 grams or 1/16th of a pound. It is customarily used in the United States for measuring the weight of food and postal items. The “AVP” or “AVDP” ounce also differs from the fluid ounce.
- Fluid ounce – Represents a unit of volume of approximately 29.6 milliliters. Fluid ounces are more commonly associated with drinks, motor oil, paint, among other things that slosh about.
- Troy ounce – And then there’s the troy ounce. A troy ounce weighs approximately 31.103 grams and is significantly heavier than an avoirdupois ounce—or simply ounce.
- Troy pound – The troy ounce is heavier than the avoirdupois ounce. However, the troy pound is lighter than the avoirdupois pound. This is because only 12 troy ounces make up a troy pound
Troy Ounce Confusion
- Troy ounce is not the same as an imperial or avoirdupois ounce.
- A troy pound is similarly non-standard. It comprises 12 troy ounces – not the traditional 16 ounces to an imperial pound.
- 1 kg is 32.1507466 troy ounces – Which is deceptively close to the g to the conversion factor of 31.1034768.
Another source of regular confusion and error is people dividing a kg price by 31.1034768 and hoping to get the price per troy ounce. The result, though attractively close to the right answer, is always wrong. In fact, they should multiply the per kilogram price by the kg per troy ounce figure (0.0311034768) to arrive at the correct conversion from a per kilogram price to a per troy ounce price. By the same reasoning, the price of gold should be divided by kg per troy ounce figure (0.0311034768) to arrive at the correct conversion to a per kilogram price. (Source: bullionvault.com)
Up Next: What Is a Multinomial Distribution?
A Multinomial distribution is the data set from a multinomial experiment. It is an extension of binomial distribution in that it has more than two possible outcomes.
A multinomial distribution is a type of probability distribution. It is the result when calculating the outcomes of experiments involving two or more variables. A binomial distribution is a special type of multinomial distribution in which there are only two possible outcomes. The most common are experiments where the result is true or false, heads or tails.
In finance, analysts use multinomial distributions to estimate the probability of a given set of outcomes occurring. For example, the likelihood that a company will increase its sales for the quarter when its competition reports lower than expected earnings.
