Bookmark this page. You don't need to memorize every term below, you need to know that a plain definition exists for each one, and that any dealer who won't confirm these definitions in writing isn't the dealer for you. Each term links to its own page with a fuller explanation.
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What do spot price, premium, and spread mean?
Spot price is the market reference price for an ounce of metal, not what you pay for physical product. Premium is the amount added above spot for a specific coin or bar. Spread is the gap between what a dealer sells for and what it would buy back, where most hidden cost lives.
- Spot price
- The current market reference price for one troy ounce of a metal. It is not the price you pay to acquire physical metal, dealers add a premium above spot.
- Spot price, in plain English
- Premium
- The amount above spot charged for a specific physical product (a coin or bar), reflecting minting, distribution, insurance, and dealer margin.
- Premium, in plain English
- Spread
- The difference between the price at which a dealer sells a product to you and the price at which the dealer would buy it back. The spread is where most 'hidden' cost lives.
- Spread, in plain English
- Troy ounce
- The standard unit of weight for precious metals, about 31.1 grams, roughly 10% heavier than the kitchen (avoirdupois) ounce.
- Troy ounce, in plain English
- Melt value
- The value of a coin or bar's metal content alone, weight times fineness times spot price, ignoring any collectible or numismatic premium.
- Melt value, in plain English
- Ask price
- The price a dealer sells at, the number you pay. The gap between the ask and the buyback (bid) price is the spread you must overcome to break even.
- Ask price, in plain English
- Commission
- The salesperson's cut of a metals transaction, usually embedded invisibly in the premium rather than stated, and the force behind most pressure tactics.
- Commission, in plain English
- Gold-silver ratio
- The gold price per troy ounce divided by the silver price per troy ounce, showing their relative price rather than what either will do next.
- Gold-silver ratio, in plain English
- Liquidity
- How readily an asset can be sold for cash, including the available buyers, expected spread, settlement process, and time required to complete the sale.
- Liquidity, in plain English
What is the difference between bullion, premium coins, and IRA-eligible metals?
Bullion is valued mainly on metal content. Bullion coins like the American Gold Eagle sell close to intrinsic value plus a modest premium. Premium coins carry added numismatic value and wider spreads. IRA-eligible metals must meet specific IRS fineness and product requirements.
- Bullion
- Coins or bars valued primarily on their metal content rather than numismatic or collectible attributes.
- Bullion, in plain English
- Bullion coin
- A government-minted coin, American Gold Eagle, Canadian Maple Leaf, etc., sold close to its intrinsic metal value plus a modest premium.
- Bullion coin, in plain English
- Premium coin
- Coins whose price is driven substantially by numismatic, proof, or 'exclusive' collectible attributes in addition to metal content. Premiums and resale spreads are wider than bullion.
- Premium coin, in plain English
- IRA-eligible metals
- Bullion or coins meeting IRS fineness and product requirements to be held inside a self-directed precious-metals IRA. Gold generally .995 fine; silver .999; platinum and palladium .9995, with a documented exception for the American Gold Eagle.
- IRA-eligible metals, in plain English
- Proof coin
- A specially struck collector coin with a mirror-like finish, made in small quantities for display, priced far above its metal content and ill-suited to buyers who simply want metal.
- Proof coin, in plain English
- Numismatic coin
- A coin valued on rarity, condition, and collector demand rather than metal content, a specialist's market with wide spreads, distinct from bullion buying.
- Numismatic coin, in plain English
- Gold bar
- A rectangular cast or minted block of refined gold, typically carrying the lowest premium per ounce of any physical product, from one gram up to institutional 400-ounce bars.
- Gold bar, in plain English
- Round
- A privately minted, coin-shaped piece of silver or gold with no face value and no government guarantee, usually priced below sovereign coins, with slightly weaker resale recognition.
- Round, in plain English
- Karat
- The jewelry-scale measure of gold purity in twenty-fourths: 24 karat is pure gold, 22 karat is 91.67% gold. Bullion markets more often use decimal fineness.
- Karat, in plain English
- Fractional gold
- Coins containing less than one troy ounce, half, quarter, and tenth-ounce sizes, offering lower entry prices and finer divisibility at a higher premium per ounce.
- Fractional gold, in plain English
- Junk silver
- Pre-1965 U.S. dimes, quarters, and half dollars containing 90% silver, valued for metal content, not collectibility, despite the dismissive name.
- Junk silver, in plain English
- American Silver Eagle
- The U.S. Mint's one-ounce silver bullion coin, the most widely recognized and liquid silver coin in the world, carrying a higher premium than generic rounds.
- American Silver Eagle, in plain English
- Platinum
- A precious metal used mainly by industry, traded in coins and bars, with far less mined each year than gold.
- Platinum, in plain English
- Palladium
- A platinum-group metal used mainly in gasoline-engine catalytic converters, mined mostly in Russia and South Africa.
- Palladium, in plain English
- Graded coin
- A coin authenticated and condition-rated by an independent service like PCGS or NGC, sealed in a tamper-evident holder, priced heavily on grade, not metal.
- Graded coin, in plain English
- Face value
- The symbolic legal-tender denomination stamped on a sovereign coin, a $50 Gold Eagle holds an ounce of gold worth many times fifty dollars.
- Face value, in plain English
How do custodians, depositories, and storage types differ?
A custodian administers the IRA account and reporting; a depository physically holds the metal, they are separate firms working together. Storage can be segregated (your specific pieces, held separately) or commingled (pooled by product), and ownership can be allocated (specific metal) or unallocated (a claim on a pool).
- Custodian
- The regulated entity that administers a self-directed IRA, opening the account, processing funding, executing trades on your instruction, and handling IRS reporting. Metals in an IRA are legally held by the custodian on your behalf.
- Custodian, in plain English
- Depository
- An IRS-approved facility that holds physical metals for IRA and direct-storage clients under insurance and audit standards. A depository is not the custodian; the two work in tandem.
- Depository, in plain English
- Segregated storage
- Your specific bars or coins are held separately in your account's name at the depository, not commingled with other clients' holdings. Serialized items retain their serial numbers to you.
- Segregated storage, in plain English
- Commingled storage
- Metals of the same product and grade are stored together as a pool; you own a specific quantity but not specific serialized pieces. Typically less expensive than segregated.
- Commingled storage, in plain English
- Allocated
- You own specific physical metal identified and set aside for you at the depository. That structure supports treating it as client property, while the custody agreement, records, liens, control, and governing law determine the result in insolvency.
- Allocated, in plain English
- Unallocated
- You have a claim against a pool of metal held by an institution, not ownership of specific bars. Cheaper and more common in some banking contexts, but a creditor position, not physical ownership.
- Unallocated, in plain English
- Home storage
- Keeping physical metal at home, legitimate for metal you own personally, but prohibited for IRA metal, where it constitutes a taxable distribution under IRS rules.
- Home storage, in plain English
- Checkbook LLC
- An IRA-owned limited liability company whose bank account you control, promoted as a route to home storage of IRA metal, and a structure the IRS and tax courts have repeatedly challenged.
- Checkbook LLC, in plain English
- Depository insurance
- The all-risk insurance coverage a depository carries on stored metal, typically underwritten through specialty insurers and verified by audit, distinct from FDIC bank insurance.
- Depository insurance, in plain English
- Insured delivery
- Insured, discreet shipping of personally purchased metal to your door, the standard close of a direct purchase, with signature required and packaging that reveals nothing.
- Insured delivery, in plain English
- Storage fee
- An ongoing charge from a depository or custodian for holding or administering metal, distinct from the dealer commission embedded in the purchase transaction.
- Storage fee, in plain English
What do transfer, rollover, RMD, and direct purchase mean?
A transfer moves funds IRA-to-IRA between custodians; a rollover moves eligible employer-plan balances into an IRA, directly or within 60 days. An RMD is the IRS-required annual distribution from tax-deferred accounts. A direct purchase is buying metal outside a retirement account, in your own name.
- Transfer
- An IRA-to-IRA movement of funds between custodians; typically not a taxable event when done trustee-to-trustee and not subject to the one-per-12-months rollover limit.
- Transfer, in plain English
- Rollover
- Movement of eligible employer-plan balances, 401(k), 403(b), TSP, into an IRA. A direct rollover moves funds custodian-to-custodian; an indirect (60-day) rollover puts funds in your hands briefly and carries stricter timing and withholding rules.
- Rollover, in plain English
- RMD (Required Minimum Distribution)
- Annual distributions the IRS requires from most tax-deferred retirement accounts starting at a specified age. For metals IRAs, an RMD can generally be satisfied by in-kind distribution or by liquidating enough metal to distribute cash.
- RMD (Required Minimum Distribution), in plain English
- Direct purchase
- Buying physical metals outside a retirement account, in your own name, with delivery to you or storage at a depository under your direct ownership.
- Direct purchase, in plain English
- Self-directed IRA
- An IRA that permits alternative assets, including physical precious metals, held through a custodian that supports them. 'Self-directed' describes what the account may hold, not a loophole around IRS rules.
- Self-directed IRA, in plain English
- In-kind distribution
- Taking a distribution from an IRA in the asset itself, the actual coins or bars shipped to you, rather than in cash. The metal's fair market value at distribution is taxable.
- In-kind distribution, in plain English
- Contribution limits
- The annual caps the IRS sets on new IRA contributions, the reason most metals IRAs are funded by transfer or rollover of existing balances rather than yearly contributions.
- Contribution limits, in plain English
- 60-day rollover
- An indirect rollover in which a distribution is paid to you and you have 60 days to redeposit it into an IRA, carrying mandatory withholding, a hard deadline, and a one-per-12-months limit.
- 60-day rollover, in plain English
- Collectibles tax rate
- The federal long-term capital-gains rate that applies to physical precious metals held over a year, up to 28%, higher than the top rate on stocks.
- Collectibles tax rate, in plain English
- Capital gains on metals
- The taxable profit when you sell metal for more than you paid, short-term gains are taxed as ordinary income; long-term gains on physical metal face the 28% collectibles rate.
- Capital gains on metals, in plain English
- Early withdrawal penalty
- The 10% additional tax on IRA distributions taken before age 59½, on top of ordinary income tax on the amount withdrawn.
- Early withdrawal penalty, in plain English
- Roth gold IRA
- A Roth IRA holding physical metals, funded with after-tax money, with qualified withdrawals in retirement coming out entirely tax-free.
- Roth gold IRA, in plain English
- Beneficiary designation
- The instruction naming who receives an account or provider-held asset after death, subject to the account agreement, provider procedures, and governing law.
- Beneficiary designation, in plain English
- Joint tenancy (with right of survivorship)
- A form of co-ownership intended to pass an owner's interest to the surviving joint owner, when the records and governing state law create survivorship rights.
- Joint tenancy (with right of survivorship), in plain English
- Tenancy in common
- A form of co-ownership in which each owner holds a stated share that generally passes through that owner's estate rather than automatically to the other owner.
- Tenancy in common, in plain English
- Transfer-on-death (TOD) registration
- A statutory registration that directs certain registered assets to a named beneficiary at death; bullion generally has no comparable public registration system.
- Transfer-on-death (TOD) registration, in plain English
- Trust
- A legal arrangement in which a trustee holds and administers property for named beneficiaries; physical metal must be transferred and recorded as trust property.
- Trust, in plain English
What do fineness, assay, buyback, and written quote mean?
Fineness is the metal's purity, expressed as a decimal like .999. An assay documents a bar's verified weight and purity. Buyback is the price a dealer will pay to repurchase your product. A written quote itemizes product, spot, premium, shipping, total, and an expiration time, the starting point of any legitimate transaction.
- Fineness
- The purity of the metal, expressed as a decimal.999 fine silver is 99.9% pure silver. IRS fineness thresholds determine what qualifies for an IRA.
- Fineness, in plain English
- Assay
- The documented verification of a bar's weight and purity, typically issued by an accredited refiner and required for institutional-grade product.
- Assay, in plain English
- Buyback / bid
- The price at which a dealer will repurchase a product from you. A dealer's published, unconditional buyback policy is one of the strongest tests of transparency.
- Buyback / bid, in plain English
- Written quote
- An itemized, time-stamped document showing product, quantity, spot reference, premium, shipping or storage, total, and expiration. Every legitimate transaction begins with one.
- Written quote, in plain English
- Counterfeit
- A fake bar or coin, typically tungsten-filled or plated base metal, designed to pass as genuine. Protection comes from buying through established dealers who verify inventory.
- Counterfeit, in plain English
- LBMA
- The London Bullion Market Association, the global trade body whose Good Delivery list identifies refiners whose bars are accepted without question in the professional market.
- LBMA, in plain English
- Mint
- The facility that produces coins, sovereign mints like the U.S. Mint issue legal-tender coins backed by the state; private mints produce rounds and bars without that backing.
- Mint, in plain English
- Prohibited transaction
- Any deal between an IRA and its owner or other 'disqualified person', self-dealing that can cause the entire IRA to be treated as distributed and taxed.
- Prohibited transaction, in plain English
- Disqualified person
- A person or entity whose dealings with an IRA are restricted under prohibited-transaction rules, including the owner and certain family members and controlled entities.
- Disqualified person, in plain English
- Grading service
- An independent company, PCGS and NGC dominate, that authenticates coins, assigns condition grades on a 70-point scale, and seals them in tamper-evident holders.
- Grading service, in plain English
If a dealer uses a term you don't see here, ask them to define it, in writing, before you agree to anything.
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