Apr 052015

Purity refers to the amount (by weight) of pure gold or silver an object has. The most common way of describing purity is by Carats (Karat in the US). Carats are just the purity expressed in units of 24, such that 100% equals 24 carat and 50% equals 12 carat.

Carats are used primarily in the jewellery industry. For bullion, the industry uses either percentages or fineness (fine being another word for pure). The table below shows the most common purities.

Percentage Fineness Carat
99.99% 9999 24
99.50% 9950
99.90% 9990
91.66% 9166 22
75.00% 750 on jewellery 18
58.33% 585 on jewellery 14

In the wholesale investment precious metal markets, physical gold is traded in bars of approximately 400oz with a purity of 99.5% or more and these are often referred to generically as “nine nine five” bars. For silver, the market trades in 1000oz bars of 99.9% purity, also called “three nines” bars. The reason wholesale gold is traded at 99.5% is because it is much cheaper to refine to this purity than 99.99% (or “four nines”), which requires additional processing (see here for the refining process).

In retail markets, customers usually prefer coins and small bars with a purity of 99.99%, notwithstanding the additional cost. However, the 22 carat American Eagle and South African Krugerrand gold coins are very popular.

Silver is usually only sold as 99.9%, although “four nines” silver coins are available. Investment platinum is mostly sold at a purity of 99.95%.

Purities greater than 99.99% are generally only useful in certain industrial/scientific equipment and processes where the small impurities control the electrical and mechanical properties of the metals.

There are international standards on determining the purity of a product. For example, Australian Standard 3515.4-2007 says that for something to be called 99.99% the minimum purity has to be 99.9875%.

Apr 042015

The diagram and text below gives an overview of the key processes involved in the refining of gold and silver. Please note that this is highly simplified and does not detail the many sub-processes involved within each key process, the chemical inputs involved in each process, as well how the waste outputs from each process are handled.

Refining Process

Gold Refining

Gold mines process ore using various techniques to produce an alloy composed primarily of gold and silver, which is called a dore bar. The composition of dore can vary significantly between mines, but generally the gold dore bars the Perth Mint processes are composed of between 70-80% gold and 10-15% silver.

Dore bars are first weighed and melted to ensure the metal is homogenous, that is, that there are no pockets of high or low purity within the bar. A sample is taken from this melted dore and assayed to determine the exact amount of gold and silver present.

The miner then receives an outturn, which is a statement indicating the weight of the dore bar, the percentage of gold and silver in the bar, and from these two, a calculated amount of pure gold and silver. Miners will then either sell this pure gold and silver for cash, or request a loco swap. The dore bar then becomes the property of the refiner.

The dore bar first goes through a chlorine refining process, also known as the Miller process. This involves bubbling chlorine gas through the molten dore metal in which the silver (and most other metals) react with the chlorine to form silver chloride as a slag on top. This process produces gold to a purity of 99.5%, which is usually cast directly into odd weight 400oz bars used in the wholesale markets.

The key output of the chlorine refining process is silver chloride, which enters a silver leaching process to remove the base metals. The silver chloride is then reduced to metallic silver and is then refined by electrolysis.

If there is demand in the market for a higher purity gold, then the 99.5% pure gold from the chlorine refining process is cast into anodes to be used in the electrolytic refining process, also known as the Wohlwill process. The anodes are placed into a bath of hydrochloric acid and an electric current is passed through it, which causes the gold to dissolve and then deposit on a cathode at purity of 99.99%.

The resulting cathodes are melted, granulated and the then granules are used to measure out exact weights of gold for casting into bar sizes from kilo (32.15 ounces) down to half ounce.

Silver Refining

The composition of silver dore bars the Perth Mint processes are composed of around 90% silver and 10% gold. As with gold dore, the silver dore is weighed, melted, assayed and outturned.

The electrolytic silver refining process is similar to gold, except that the silver anodes are dissolved in a bath of nitric acid. The resulting cathodes are 99.9% pure silver. As with small gold bar production, these cathodes are melted, granulated and cast into retail sized bars (most common being 100oz or kilo).

Apr 032015

The precious metals industry uses the troy ounce as its basic unit of measure, even in countries who have adopted the metric system. A troy ounce is heavier than the more common avoirdupois ounce.

While there is a difference between a troy ounce and an ounce, the  precious metals industry often uses “ounce” and the abbreviation “oz” rather than “troy ounce” and “ozt”. As a result, when you see “ounce” and “oz” used in the context of precious metals, assume the reference is to troy ounces.

When referring to large quantities (such as annual mine production), the industry often uses metric tonnes as the unit of measure as it produces smaller and more manageable numbers. For example: 80,376,867 troy ounces equals 2,500 tonnes. Some prefer to use “millions of ounces” (abbreviated to “moz”) to avoid confusion as to whether the “ton” referred to is a metric ton, Imperial (long) ton or US (short) ton. For silver, traders can use the Indian unit of measure Lakh (or Lac) which refers to 100,000. For example, a trade for 1,000,000oz would be referred to as 10 Lakh.

Precious metal weights are usually only recorded to three decimal places of accuracy, or to one thousandths of an ounce. An exception to this is a gold London Good Delivery Bar, which is rounded down to the nearest 0.025 of a troy ounce (silver London Good Delivery Bars are rounded down to the nearest 0.100 of a troy ounce).

The tables below list conversion rates between a troy ounce and other common units of mass, with abbreviations in brackets.


1 troy ounce (ozt) = 480 grains 1 grain (gr) = 0.00208333 troy ounces
1 troy ounce (ozt) = 1.097142794 ounces 1 ounce (oz) = 0.91145839 troy ounces
1 troy ounce (ozt) = 20 pennyweights 1 pennyweight (dwt) = 0.05 troy ounces
1 troy ounce (ozt) = 0.0685714246 pounds 1 pound (lb) = 14.58333418 troy ounces
1 troy ounce (ozt) = 0.00003061224 tons (Imperial) 1 ton Imperial (t) = 32666.67189333 troy ounces
1 troy ounce (ozt) = 0.0000342857123 tons (US) 1 ton US (t) = 29166.66835590 troy ounces



1 troy ounce (ozt) = 31.1034768 grams 1 gram (g) = 0.032150746568628 troy ounces
1 troy ounce (ozt) = 0.0311034768 kilograms 1 kilogram (kg) = 32.150746568628 troy ounces
1 troy ounce (ozt) = 0.0000311034768 tons 1 ton (t) = 32150.746568628 troy ounces



1 troy ounce (ozt) = 0.375 toal 1 tola = 2.66666667 troy ounces
1 troy ounce (ozt) = 0.83099941 tael 1 tael = 1.20337029 troy ounces
1 troy ounce (ozt) = 0.08333333 troy pounds 1 troy pound = 12 troy ounces
Apr 022015


Below is the text of a 1976 Australian Government press release announcing the removal of restrictions on the ownership and trading of gold in Australia. The attachment to the press release provides a history of gold controls in Australia.


EMGARBO 6.00pm



The Treasurer, Mr Phillip Lynch, said today that Commonwealth restrictions on the freedom of Australian residents to own, buy and sell gold in Australia had been removed.

He added that current restrictions on the purchase of gold coins had also been removed.

Australian residents could now export and import gold subject to normal exchange control and customs procedures.

Mr Lynch pointed out that legislation existed in some States to regulate gold buying and some dealings in gold.

The Treasurer was commenting on the effect of the suspension of Part IV of the Banking Act 1959-1974 by His Excellency the Administrator in Council on 30 January.

In terms of this part of the Banking Act, gold, apart from wrought gold and gold coins to a limited extent, had to be delivered to the Reserve Bank of Australia within one month of its coming into a person’s possession.

The legislation had restricted the sale of gold in Australia only to the Reserve Bank or a person authorised by the bank.

It had also prohibited the export of gold without the Reserve Bank’s permission.

Mr Lynch said the reasons for these restrictions on gold dealings by Australians no longer existed.

The role of gold in the international monetary system had declined substantially in recent years.

Similar restraints were not placed by the Commonwealth on dealings in silver, precious stones or other like forms of investment.

He noted that several other developed countries, including the United States and Japan, had removed restrictions on the private ownership of, and dealings in, gold.

A number of European countries also had no restrictions on gold holdings.

The Treasurer also pointed out that the Industries Assistance Commission, in its report on the “Production of Gold” dated 5 Jun 1975, had expressed doubts that the continued existence of the restrictions on gold transactions in Australia served any useful purpose.

Submissions received from the Gold Producers’ Association (GPA) had pressed for removal of restrictions on gold marketing in Australia.

The Association welcomed the Government’s decision to suspect Part IV of the Banking Act.

The Reserve Bank had been holding discussions with the GPA, the Banks and gold refiners to ensure that the marketing of Australia’s gold was not disrupted.

The Treasurer said that gold producers, for the time being, would still be able to take their gold to banks or to refiners as they had done in the past.

However, if they wished they could now also sell their gold in other ways.

The industry would, in future, have greater flexibility in the disposal and marketing of its output.

Mr Lynch mentioned that investment in gold was not risk free and it involved significant costs such as storage, insurance and assaying.

An outline of the history of gold controls in Australia is attached.

30 Jan 1976



Australia, like most countries was on the Gold Standard before the First World War. Currency notes were circulated alongside, and were freely convertible into, gold coins. There were no restrictions on the import or export of gold. Legislation existed in some States to protect gold miners and to regulate the buying and smelting of gold.

The War disrupted the operations of the Gold Standard because of the physical difficulties of shipping gold and the special problems involved in financing the War effort. In 1915 Australia followed the United Kingdom in leaving the Gold Standard. Gold exports except with the Treasurer’s consent were prohibited until Australia returned to the Gold Standard along with the UK in 1925.

In 1929 falling export prices and the cessation of long-term borrowing abroad called for special measures to conserve Australia’s overseas funds. The Commonwealth Bank Act in 1929 provided for the Bank (of which the Reserve Bank of Australia is the legal successor) to requisition all Australian gold in return for Australian notes. Formal action was never taken under this legislation but it marked the beginning of the end of holding of gold by banks and the public in Australia. In fact, there were no Commonwealth restrictions on the ownership and sale of gold between 1925 and 1939. Banks voluntarily accepted deposits with the Commonwealth Bank in return for their gold.

The outbreak of World War II again called for special Commonwealth gold controls. In 1939 regulations under the Defence Act provided for the acquisition by the Commonwealth Bank of newly won and other gold; regulations under the Customs Act prohibited the export of gold from Australia without authority.

After the war these controls were continued in the Banking Act and with some modifications were exercised by the Reserve Bank until today.

Until 1931 new-mined gold was added to the Commonwealth Bank’s stocks. The Bank made gold available to meet domestic industrial demand; exports were strictly controlled. The effect was to centralise gold in the Commonwealth Bank’s hands as part of Australia’s international liquidity.

In 1951 a premium over the official IMF price for gold emerged in world markets. Arrangements were made for Australian producers to obtain this premium for gold sold overseas. The Gold Producers’ Association was formed specifically for this purpose. In practice the Commonwealth Bank allowed the Association to repurchase the gold for sale overseas provided the foreign exchange earnings were returned to Australia and thus added to our international reserves. The Bank continued to retain sufficient gold to meet domestic demand.

In the 1960’s the gold premium rose markedly. For a time the major countries (not including Australia) sold gold to the free market to keep the price down. This was abandoned in 1968 when the major central banks agreed (Washington Agreement) not to add gold to their official reserves by way of purchases from the private markets. Australia was not a party to the Agreement but co-operated in it. Hence, the Reserve Bank held Australia’s gold reserves virtually constant and although the legislation required newly-won gold to be delivered to it, in practice the Bank returned it to the producers. Gold producers were permitted to export gold and sell to domestic industrial users. These arrangements continued until the suspension of Part IV.


One effect of suspension is that gold producers (and the Reserve Bank) are freed from the requirement to pass newly-mined gold bank and forth between them.

More importantly suspension widens the market for sales of gold by the producers. Hitherto, they have been free to meet export demands but have been limited domestically to sales for professional and trade purposes. Now, so far as Commonwealth Law is concerned, they may sell to any person within or outside Australia. Concurrently of course, the previous Commonwealth restrictions on who may buy, hold and deal in gold are withdrawn. Although imports were not controlled, imported gold was subject to delivery to the Reserve Bank. Gold may now be imported free of this control.

Restrictions on the holdings of gold coins also have been withdrawn. Hitherto holdings of coins with an aggregate gold content of more than $50 required the prior consent of the Reserve Bank. The Bank administered their provision so as to enable genuine collectors to improve their collections and to permit dealers to meet the needs of genuine collectors.

While the Commonwealth restrictions have been removed there is still legislation in some States dealing with gold. Essentially legislation in Victoria, South Australia and Western Australia requires gold buyers or gold smelters in those States to hold a State licence. Certain classes of industrial users of gold are exempted from the licensing provisions. It will, of course be up to individuals wishing to buy gold to comply with State legislation.


The Reserve Bank has been in touch with the main parties concerned with the handling of Australian gold to ensure a smooth transition to the new situation. These parties are the representatives of the producers themselves (the GPA), the four refiners (including the Perth Mint which is the major refiner) and the Australian banks who have handled the transmission of much of the gold from mine to refiner.

In practice, newly-won gold hitherto has been sent by the producers to the refiners either direct or through one of the Banks. The refiner paid the producer the official price less assay and refining costs; the refiner received the official price for the gold from the Reserve Bank. Similarly, the Reserve Bank informed the Gold Producers’ Association of the gold available for sale and recouped from the Association the official price. The GPA then sold the gold domestically or overseas at the ruling market price and passed the premium over the official price back to the original producers.

In future, the steps involving the Reserve Bank will be omitted, and, as a technicality, the refiners and banks will not be agents of the Reserve Bank in this connection. Otherwise, there will be no essential change in the handling of newly-won gold because of suspension of Part IV. Eventually, of course, the greater freedom in gold trading may lead to new practices.

20 January 1976


Apr 012015

The table below lists some key chemical properties of the four precious metals. The information has been sourced from the website Environmental Chemistry and further chemical information on each metal can be found by clicking the link in the first row of the table.

The symbols Au, Ag, Pt and Pd are commonly used in the industry as shorthand references and form the basis of the currency codes for the precious metals.

A review of the table shows that gold and silver are very similar to each other. Platinum and palladium are likewise similar. Generally, compared to platinum and palladium, gold and silver have a lower melting and boiling point, are better conductors, softer, more reflective, and more abundant.

Property Gold Silver Platinum Palladium
Latin Name Aurum Argentum Platinum Palladium
Symbol Au Ag Pt Pd
Atomic Number 79 47 78 46
Atomic Mass 196.9665 107.8682 195.08 106.42
Melting Point (°C) 1064.58 961 1772 1552
Boiling Point (°C) 2807 2163 3827 2964
Density (gram per cubic centimeter) 19.32 10.50 24.45 12.02
Melting Point (°F) 1948.24 1762 3222 2826
Boiling Point (°F) 5058 3925 6921 5367
Density (punds per cubic inch) 0.697 0.379 0.883 0.434
Electrical Conductivity (106/cm Ω) 0.452 0.630 0.0966 0.095
Thermal Conductivity (W/cmK) 3.170 4.290 0.716 0.718
Hardness (vickers MNm-2) 216 251 549 461
Optical Reflectivity 95% 97% 73% 72%
Abundance in Earth’s crust (parts per billion) 11 70 1 0.6
Abundance in seawater (parts per trillion) 10 2.4 0.27 0.068

The amount of gold extracted from the Earth’s crust is around 5.5 billion ounces. Some esimate the amount of gold in the the Earth’s oceans at around 25 billion ounces. However, there is no need to worry about the price of gold declining from a sudden surge in supply – at current prices it is not economic to extract gold from seawater. For example, below one part per million the Perth Mint struggles to recover gold economically from its waste water.