Every word on this site, explained
Gold has a vocabulary, and almost nobody is taught it. Here is every money word this site uses, what it means in ordinary language, and why it matters if you are thinking about buying. You do not need to know anything before you start.
These are not in alphabetical order. They are in the order that builds on itself, so if you read from the top, no word arrives before the one it depends on. Each entry says what the thing is first, then why it matters.
- interest
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The extra money a bank adds to your savings for leaving them there. Leave 100 dollars for a year at 3 percent and you end up with 103.
Why it mattersGold never does this. A gold coin is the same coin next year. So the more your savings would have grown, the more you give up by holding gold instead.
- inflation
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Prices going up over time, so the same money buys less. If a loaf cost 2 dollars last year and 2.10 this year, that is inflation of 5 percent.
Why it mattersIt is the reason growing your savings is not the same as getting richer. If savings grow 3 percent while prices rise 5 percent, you can buy less than before.
- purchasing power
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How much your money can actually buy. Not the number on the note, the shopping it does.
Why it mattersIt is the only measure that matters over long periods. People buy gold hoping it holds its shopping power when money does not.
Put another wayAn ounce of gold bought a good suit a century ago. It still does. The dollar price changed enormously; the suit did not.
- real rate
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What your savings really earn once rising prices have taken their cut. Savings paying 3 percent while prices rise 5 percent leave you 2 percent worse off, so the real rate is minus 2 percent.
Why it mattersThis is the price of holding gold. When savings genuinely grow, gold costs you that growth. When savings quietly lose value, gold costs you nothing to hold, and more people want it.
- bond
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A loan you make, usually to a government or a large company, written down as a piece of paper you can sell to someone else. They pay you a set amount each year and give your money back on an agreed date.
Why it mattersBonds are the main thing people hold instead of gold when they want to be careful with money. What bonds pay decides how attractive gold looks beside them.
- yield
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What a loan pays you each year, as a percentage of what you paid for it. A bond bought for 100 dollars that pays 4 dollars a year yields 4 percent.
Why it mattersIt is the number savers compare against everything else. When it is high, careful money goes into bonds. When it is low, some of that money looks for somewhere else to sit, and gold is one of the places it goes.
- Treasury bond
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A loan to the United States government. Considered the safest place in the world to park money, because a government that prints its own money can always pay it back.
Why it mattersIt is the yardstick. Every other way of holding money, gold included, is judged against what a Treasury bond pays for taking almost no risk.
- TIPS
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A loan to the United States government whose payments rise with prices, so what you get back keeps its shopping power. The name stands for Treasury Inflation-Protected Securities.
Why it mattersWhat TIPS pay is the cleanest reading available of what savings really earn after rising prices, because rising prices are already taken out of it. It is the number this site uses for that condition.
- Federal Reserve
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The central bank of the United States. It decides the interest rate that ripples through to every savings account, loan and mortgage in the country, and it publishes the figures this site reads.
Why it mattersWhen it pushes rates up, holding gold costs more. When it pushes them down, holding gold costs less. It is the single biggest hand on what savings really earn, and so on the cost of holding gold.
- central bank
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A country's official bank, the one that issues its money and looks after the national savings. Every country has one.
Why it mattersTogether they are the largest gold buyers on earth. When many of them buy at once, that is steady demand that does not care about the price, and it does not reverse quickly.
- reserves
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The pile of foreign money and gold a country keeps for emergencies, the way a household keeps savings for a broken furnace.
Why it mattersA country moving part of its pile out of foreign money and into gold is a decision taken over years, not days. It is the slowest and most stubborn kind of demand.
- troy ounce
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The unit gold is weighed and priced in. About 31 grams, a little heavier than the ounce used for food. A one ounce coin fits in your palm and is surprisingly heavy.
Why it mattersEvery price on this site, and everywhere else, is the price of one of these.
- bullion
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Gold bought for the metal itself, as plain coins or bars, rather than as jewelry or something collectable.
Why it mattersIt is what this site measures. Jewellery and collector coins carry charges for craft and rarity that have nothing to do with the price of gold.
- spot price
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The price of gold for immediate delivery, agreed between very large buyers and sellers. It is the headline number quoted on the news.
Why it mattersIt is not what you pay. It is the starting point, before the cost of turning metal into a coin you can hold and getting it to your door.
- dealer
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A shop that sells gold coins and bars to the public and usually buys them back.
Why it mattersWhat dealers charge above the headline gold price is the part of your cost you can actually shop around for. It is why this site tracks the same products across several of them.
- mint
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The factory that strikes coins. Some are run by governments, like the United States Mint, and some are private.
Why it mattersWhen mints cannot keep up with orders, coins become scarce and the extra charged over the metal price jumps, even though the price of gold itself has not moved.
- refinery
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A factory that melts raw or scrap gold and casts it into bars of a guaranteed purity.
Why it mattersThere are only a handful that the market trusts, most of them in Switzerland. When they shut, as they did in March 2020, metal cannot get to where it is needed and prices in different places come apart.
- futures
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An agreement to buy or sell gold at a fixed price on a set date in the future. Most people who sign one never touch any metal; they close the deal for cash before the date arrives.
Why it mattersFar more gold is traded this way than exists as coins and bars. It means the headline price is set mostly by people making bets, not by people buying metal, and those bets can move it fast.
- gold ETF
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A share you can buy through an ordinary investment account that tracks the gold price. The name stands for exchange-traded fund. A vault somewhere holds real bars behind it, but you own a share, not a coin.
Why it mattersIt is how large investors move in and out of gold in seconds. Money flooding into these funds is a sign that professional money wants gold now, and it shows up in the price quickly.
- positioning
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A weekly count, published by a United States regulator, of how many professional traders are betting the gold price will rise versus how many are betting it will fall.
Why it mattersWhen almost everyone is already betting on a rise, there is nobody left to buy, and small pieces of bad news can knock the price down hard. Crowded bets are fragile bets.
Put another wayA boat is stable with people spread across it. When everyone crowds to one side, it does not take much to tip.
- volatility
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How jumpy a price has been. A calm price drifts a little each day. A jumpy one swings several percent in both directions.
Why it mattersJumpy prices are expensive to buy into, because the day you happen to buy matters far more. Calm periods have historically been kinder entry points for someone buying once.
- dollar index
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One number showing whether the United States dollar is strong or weak against a basket of other big currencies, such as the euro and the yen.
Why it mattersGold is priced in dollars worldwide. When the dollar strengthens, the same ounce costs more in every other currency, so buyers outside America can afford less of it, and demand cools.
- safe haven
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Somewhere people move money when they are frightened, accepting little or no growth in exchange for not losing it.
Why it mattersIt explains why gold can rise on bad news that has nothing to do with gold. Fear itself is a source of demand.
- median
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The middle value. Line up every result from smallest to largest and take the one in the middle. Half came out above it, half below.
Why it mattersIt describes a typical outcome better than an average does, because one freak year cannot drag it around. When this site says what usually followed a reading, this is the number it means.
Put another wayNine people earn 30,000 and one earns 3 million. The average says 327,000, which describes nobody. The median says 30,000, which describes nine of them.
- percentile
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Where today sits among every day that came before it, on a scale of 0 to 100. A reading in the 20th percentile means only 20 percent of past days were lower.
Why it mattersIt is how the whole score works. The Barometer never asks whether a number is high in the abstract. It asks how today compares with every trading day since 1971.
- correlation
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How closely two things move together, from 1 (they move in step) through 0 (no relationship at all) to minus 1 (one goes up exactly when the other goes down).
Why it mattersIt is how we check whether a condition genuinely relates to the gold price, and how we can show you when a relationship stopped working, as one did after 2022.
- drawdown
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The worst drop along the way. If you bought at 100, watched it fall to 75, and it later recovered, the drawdown was 25 percent.
Why it mattersIt is the number that tells you what you would have had to sit through. Two paths can end at the same place while one of them is far harder to hold.
- backtest
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Rerunning a method over the past to see what it would have said at the time. Done honestly, it uses only what was actually known on each day, never anything published later.
Why it mattersIt is the only way to check a method before trusting it. It is also easy to cheat at, which is why this site says plainly that it used only same-day information.
- reconstructed history
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History rebuilt after the fact: we run today's formula on the data each past day actually had. It shows what the instrument would have read, not what anyone read at the time.
Why it mattersThe instrument is from 2026 and the record starts in 1971. Saying which readings are rebuilt, and how, is the difference between a record and a story.
- regime change
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When a relationship that held for years simply stops holding, and the old rule no longer describes what happens.
Why it mattersOne of the conditions here did exactly that after 2022. Saying so, with the dates and the numbers, matters more than pretending the rule still works.
- supply and demand
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How much of something there is to sell, against how many people want it. More buyers than metal pushes the price up. More metal than buyers pushes it down.
Why it mattersIt is the engine under every condition on this site. Each of the seven is really a way of asking whether more people are about to want gold, or fewer.
- liquidity
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How easily something can be sold for cash without shifting its price. Gold coins are easy to sell. A house is not.
Why it mattersIt is one of gold's real advantages, and it has limits worth knowing. Selling one coin is simple. Selling a hundred in a week is not.
- spread
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The gap between what a dealer will sell to you for and what the same dealer will buy back from you for.
Why it mattersIt is the cost of changing your mind. Buy and sell the same coin on the same day and you lose this gap, even if the gold price never moved.
- opportunity cost
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What you give up by choosing one thing over another. Money in gold is money not in a savings account.
Why it mattersIt is the honest way to think about holding gold. The question is never just whether gold will rise, but whether it will do better than the safe alternative you passed up.
- portfolio
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Everything you own that is meant to grow or hold value, counted together. Savings, a pension, shares, property, gold.
Why it mattersGold is almost never held on its own. What matters is the share of the whole it takes up, which is a question this site does not answer for you.
- allocation
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What share of everything you own sits in one thing. Putting a tenth of your savings into gold is a 10 percent allocation.
Why it mattersHow much to hold is a personal decision that depends on your age, your income and your nerves. This site measures conditions and deliberately does not tell you this number.
- gold IRA
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An American retirement account that is allowed to hold gold instead of only shares and bonds. The metal must sit with an approved storage company, not in your house.
Why it mattersThe rules bring costs and restrictions that buying a coin does not. Anything measured on this site is about the metal and its price, not about this kind of account.
- custodian
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A company legally responsible for holding something on your behalf, and for proving it is still there.
Why it mattersIf you do not hold the metal yourself, someone else does, and who that is becomes part of what you are trusting.
- hedge
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Something you hold because it tends to do well exactly when the rest of what you own does badly.
Why it mattersIt is the usual reason given for owning gold. It is also a claim worth checking rather than repeating, which is what the history on this site is for.
A word we have not explained
If you hit something on this site that is not here, that is our mistake, not yours. Write to hello@thegoldbarometer.com and we will add it.