Buying Bullion

Your One Ounce Gold Eagle Weighs More Than One Ounce

Put one on a scale and it reads 33.93 grams. A troy ounce is 31.1035 grams. Nothing is wrong with the coin, the scale or the ounce you paid for.

We get this call through customer support every so often. Somebody buys a one-ounce American Gold Eagle, puts it on a jewelry scale and gets a reading around 33.9 grams. Then they look up the weight of a troy ounce and find 31.1035 grams. Now they think they are holding a fake, or that somebody sold them a coin with a few extra grams of who knows what in it.

The coin can be real, the scale can be accurate and the reverse inscription stating “1 OZ. FINE GOLD” can still be completely true. Those facts fit together perfectly. Once you understand why, one of the world’s best-known bullion coins starts making a lot more sense.

01 / The Scale Is Not LyingThe Eagle carries its gold plus a little armor

The American Gold Eagle is a 22-karat coin. It is 91.67 percent gold, 3 percent silver and the balance copper. The U.S. Mint publishes those specifications alongside the coin’s weight, diameter and face value.

Here is the part that trips people up. The coin is not 31.1035 grams of total metal diluted to 91.67 percent gold. Its total weight is set high enough that the gold portion alone equals one full troy ounce. The copper and silver are additional mass, not substitutes for part of the promised ounce.

02 / Two LanguagesKarat and fineness say the same thing

Karat is a fraction out of 24. Pure gold is 24 karat, so 22 karat is 22 parts out of 24, or 91.67 percent. Fineness expresses the same idea as a decimal, which is why the Eagle is also described as .9167 fine. Jewelers grew up speaking karat. Bullion desks grew up speaking fineness. Each has its place, and neither is more accurate than the other.

What matters is that purity is a ratio and content is a quantity. A ratio by itself does not tell you how much gold you own. A four-gram 22-karat wedding band and a 22-karat Gold Eagle have the same purity and wildly different gold content. Hint: the Eagle is not the four-gram one.

Purity tells you what fraction of the coin is gold. Gross weight tells you how large the coin is. Only the two together tell you how much gold it contains.

03 / Why the Alloy ExistsPure gold is a soft metal with a hard life

Twenty-four-karat gold can dent if you look at it funny. That is a bit of an exaggeration, but drop a .9999 fine coin on a tile floor and you may leave a mark on the rim. Historically, gold coins had to survive handling, counting, bagging, shipping and storage, so mints hardened them with alloy metals such as copper.

The Gold Eagle follows that centuries-old 22-karat tradition. Congress wrote the standard into the law that created the coin in 1985. The copper also helps explain why an Eagle looks warmer and slightly rosier than a Gold Buffalo or Canadian Maple Leaf sitting next to it. A Krugerrand goes further in the same direction because its alloy is copper without the added silver, giving it a distinctly red-orange tone.

04 / The ComparisonSame ounce, different gross weights

Every full-size coin in this table contains one troy ounce of gold. The sovereign is included as a smaller historical comparison because it uses the same 22-karat standard.

The Buffalo and Maple weigh almost exactly one troy ounce because there is very little alloy in them. The gold content is effectively the same as the Eagle’s. The Eagle simply carries a few additional grams of copper and silver around it.

One footnote worth knowing for retirement accounts: gold bullion generally must meet a minimum fineness standard, but specific U.S. gold coins are separately permitted. That is why the 22-karat Gold Eagle can be IRA eligible even though it falls below .995 fine. The coins still must be held by the IRA’s trustee or custodian rather than taken into personal possession.

05 / The Expensive PartThree ways this misunderstanding costs money

The kitchen-scale panic. Somebody weighs a genuine Eagle, sees 33.9 grams against an expected 31.1 grams and assumes the coin is wrong. That can lead to a perfectly genuine coin being scratched, filed or otherwise damaged during an improvised test. The opposite mistake is worse. If you believe a real Gold Eagle should weigh 31.1 grams, a counterfeit built to that incorrect target can pass your weight test while the genuine coin fails it.

Selling it to the wrong counter. A buyer who treats the Eagle as ordinary 22-karat scrap may apply the same refining haircut used for jewelry. But an Eagle is a recognizable sovereign bullion coin with an active resale market. A bullion buyer should price it as a coin, not merely as metal headed for a refinery.

Comparing premiums against the wrong denominator. Price per gross gram is a poor way to compare coins with different purities. If an Eagle and a Buffalo cost the same, dividing each price by total coin weight makes the Eagle appear about 8 percent cheaper per gram. It is not. Those extra grams are copper and silver, not additional gold.

06 / Your Own CoinUse the specifications as a first screen

Weight alone cannot authenticate a Gold Eagle. Weight, diameter and design details are more useful when checked together because many cheaper substitute metals cannot match all of them at once. For a one-ounce Gold Eagle, the basic specifications are:

• Gross weight: 33.931 grams, or 1.0909 troy ounces
• Fine gold content: one troy ounce
• Diameter: 32.70 mm, or 1.287 inches
• Edge and face value: reeded edge and $50 denomination

A coin that hits the expected weight but is too wide is telling you something. So is a coin that matches the diameter but comes up light. Check the specifications as a set, not one at a time. Passing those checks does not prove authenticity, but failing one is a reason to stop and have the coin tested by a dealer with proper equipment.

Everything else is simply the coin doing what it was designed to do. The U.S. Mint promised one troy ounce of gold and delivered exactly that, then included a couple of additional grams of copper and silver so the coin could survive years in a tube, a safe, an inheritance and a resale without looking like it lost a fight.

The scale is telling the truth. So are the markings. Both at the same time.

The content of this article is distributed for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. The information, opinions and views contained herein have not been tailored to the investment objectives of any one individual, are current only as of the date hereof and may be subject to change at any time without prior notice. PIMBEX Metals LLC does not have any obligation to provide revised opinions in the event of changed circumstances. All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.