Metals Investing Glossary E-H

Glossary Sections:   A-D  |  E-H  |  I-N  |  O-R  |  S-Z




Exchange for Physical – a mechanism allowing investors to open or close futures contracts through the physical market when the associated futures market is closed. A dealer will deal in the over-the-counter market, replacing the position with a futures market position on the opening of the exchange.

European Option

An option that can only be exercised on the date of expiry.

Exchange Options (1)

An option offered by an exchange, that is a standard contract and subject to the rules and regulations of the governing exchange.

Exchange Options (2)

An “exotic” option which allows the holder to exchange one underlying asset for another.

Executive Order 6102

Franklin D. Roosevelt’s now infamous Executive Order 6102 – Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government.

Exercising an Option

Where an option purchaser holds the writer/seller of an option to the agreed contract.

Exotic Options

A term referring to a more sophisticated option strategy with additional features over basic contracts.

Expiry Date

The date on which a derivative product expires or ceases to exist. Exchange products have set expiry dates, whilst OTC expiry dates are variable and agreed between the principals.


Face value

The legal monetary value stamped on a coin – also known as the symbolic face value.

Fiat Money

Money with no intrinsic value, declared by a government to be legal tender. The term derives from the Latin fiat (“let it become”, “let it be done”, “it shall be”).


The open area or background area in a coin’s design.


The purity of a precious metal as measured in 1,000 parts of the alloy. For example a gold bar of .995 fineness will contain 995 parts gold and 5 parts of another metal or metals.

Fine Ounce

A troy ounce of 99.5% pure (.995 fineness) gold

Fine Weight

The weight of a coin, ingot, or bar’s precious metal content, ie the item’s gross weight minus the weight of any alloying metals.


The London gold fixing takes place twice daily and sets a price at which all known orders to buy and sell gold on a spot basis (at the time of the fix) can be settled. The fix is used as a benchmark for spot transactions.

Forward Transaction

A purchase or sale for delivery and payment at an agreed date in the future. Much like a futures contract, with the major exception being forward transactions are not subject to the same standard procedures and regulations of a commodities futures exchange.

Futures Contract

An agreement made within an organized exchange taking or making delivery of a specific commodity or instrument at a set future date.


Gold Eagles

US minted gold bullion coins available in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations with a $5, $10, $25 and $50 face value. Each of the four sizes has a fineness of .9167, containing 91.67% gold (or 22 karat). The remaining metals are 3% silver, and 5.33% copper. Eagles are also available in silver and platinum.

Gold-backed Bonds

Debt raised through capital markets and issued with a gold option alternative as a means to enhance the value/attraction of the investment.

Gold Bug

A sometimes fanatical gold investor, frequently bullish on gold contrary to market sentiment. Gold Bugs tend to support a return to a gold-backed monetary system (a gold standard) away from the existing Fiat system.

Gold Fix (London)

A twice-daily setting of the price of gold by five members of The London Gold Market Fixing Ltd, which takes place on the premises of N M Rothschild & Sons. The Gold Fix is officially a price for settling contracts between members of the London bullion market, but it is also used for setting prices of gold bullion and gold-related contracts and products across the world.

Gold Loan

A financing mechanism in which gold is borrowed from a bullion bank and sold into the market to raise cash. This cash normally finances a gold mining operation, with the metal being repaid over an agreed period of time. Interest payable on the loan is paid either in dollars or gold depending on counter-party agreement.

Gold Standard

A monetary system based on the convertibility of paper money and base coinage into gold. As of 2013 no country uses a gold standard as the basis of its monetary system, with all national currencies now being fiat.

Good Delivery Bars

May also be referred to as large bars, good delivery bars are ingots that conform to London Good Delivery standard. Basic specifications include: a minimum fineness of 995.0 parts per thousand fine gold, bars should carry marks showing serial number, refiner’s hallmark, fineness and year of manufacture; and gold content will be in the 350–430 troy ounces range (11–13 kg)

Grading Service

Numismatic coins are graded for quality, with PCGS and NGC being the two major grading services in the United States. Coins are graded using letters and numbers to reflect overall quality, the worst being BS-1 (or Basal State 1) and the best MS-70 (Mint State 70). Graded coins are usually encapsulated in protective plastic, with a certificate, a procedure known as slabbing.


The earliest known weight unit for gold. Since the international yard and pound agreement of 1 July 1959, the grain or troy grain measure has been precisely defined in the International System of Units as being 64.79891 milligrams. One troy ounce contains 480 grains.


A basic unit of weight of the metric system. 31.1035 grams are equal to one troy ounce. One gram is 0.0353 oz. There are 1000g in a kilogram (kg) and 1000kg in a metric ton.



Hallmarks are a guarantee of certain purity or fineness of a precious metal as determined by formal metal (assay) testing. Marks or stamps on precious metals identifying the producer are often called hallmarks, but are actually Trademarks, Maker’s Marks or Responsibility Marks.


A transaction with intent of protecting any existing or anticipated market exposure from unexpected and adverse price movements.

History-dependent Options

Options where the outcome at expiry depends on the price performance of the underlying throughout the whole life of the option.

History-independent Options

Options where the outcome at expiry is based solely on the price of the underlying at the expiration date. Standard European and American options are history-independent options.