# Why is it 100 oz and not one ounce?

Why is gold measured in USD / 100 oz and not 1 ounce (as reported everywhere else) on the Financial Times web site, http://markets.ft.com/research/markets/Commodities?

To clarify, http://www.goldpriceoz.com/gold-price-per-ounce/ says it is 1174 USD per ounce. But Financial Times says 1174 USD per 100 oz.

Why are they different?

• At least I can lift it. You ever try to lift a Silver contract? 5000oz = 312lbs. Commented Nov 7, 2014 at 17:30
• The electronic contracts are much easier to lift. :)
– dg99
Commented Nov 7, 2014 at 20:50
• The problem I have is that some websites say \$1174 for 1 ounce. (goldpriceoz.com/gold-price-per-ounce). But the FT says \$1174 for 100oz. Please can you tell me why?
– Kian
Commented Nov 7, 2014 at 21:24
• @fushsialatitude the price is still per ounce, but the contract is for 100 ounces. Commented Nov 7, 2014 at 21:38
• @NathanL so can you buy a fraction of the contract? (Thank you so much for your clarification by the way).
– Kian
Commented Nov 7, 2014 at 21:53

100 ounces is the size of one contract, but the quote is in dollars per ounce. See the spec on CME and NYSE Liffe. Thus, one futures contract is for 100 ounces of gold, at 100 * \$1174 = \$117,400.

Similarly, for crude oil on the CME, the contract size is 1,000 barrels, but it's quoted in dollars per barrel. I don't know why FT shows the contract size for gold, and not for crude oil.

The contract size and the amount per quote differ because the the contract size is going to be what makes sense to actually trade. 100 oz is a standard size for gold bars, and people don't want to take delivery of a single ounce. It's easier for people to talk about the price of an ounce of gold though, as opposed to an arbitrary amount like 100 oz, which is really more of a detail. You see similar things for options, where it's quoted as the price per underlying share, but a contract is 100 options. So if a call option trades at \$2.50, buying one contract costs \$250, and is for 100 shares.

Gold bars historically weighed 100oz. That was a common quantity for purchasers. It is still a common quantity for futures contracts (though the two comments below point out that central banks storing bullion have standardized on the 400oz bar more recently).

• Standard gold bars appear to be 400oz usmint.gov/about_the_mint/fun_facts/?action=fun_facts13 Commented Nov 7, 2014 at 20:10
• Wikipedia disagrees with that number.
– dg99
Commented Nov 7, 2014 at 20:53
• Wikipedia was referring to bullion storage. 100oz bars are still common and available and are used for delivery on futures contracts. Commented Nov 7, 2014 at 21:18

Futures and spot contracts for commodities (such as precious metals) are set by the exchanges on which they are traded, and

• some of those exchanges have existed for decades or centuries, and their rationales are lost to history,
• the exchanges are not remotely concerned with dealing in quantities that the average retail investor considers reasonable; they care about their customers -- large agricultural conglomerates, investment banks, governments -- who trade in enormous quantities.

Prices as reported on websites or TV news, on the other hand, are meant to be accessible to the average lay person. Does it really help you or me to know that 5000 head of live cattle to be delivered in January 2015 are now selling for X million US dollars? No, we prefer to know that ground chuck costs \$4.99 per lb at Walmart this week. Same thing with gold. Most people would prefer to know a unit price in terms of a weight of gold that they could actually afford.

• Thank you for your answer. What confuses me though is that the ft says \$1174 per ounce but websites like goldpriceoz.com/gold-price-per-ounce will say \$1174 per 100oz. Why is there this difference?
– Kian
Commented Nov 7, 2014 at 21:28
• Futures contracts are for delivery, if the contract is for 100 oz, the delivery is 100 oz. This isn't some history abnormality, it is the unit size that comex delivers in. Commented Nov 7, 2014 at 23:02
• Yes, but why the size of 100oz was picked is lost to history. And COMEX doesn't deliver anything; the clearing firms do the delivering.
– dg99
Commented Nov 7, 2014 at 23:55

Commodities traders like most humans like to talk using small whole numbers but love tradition even more. So, back after the U.S. left the gold standard they chose to quote in 100oz increments as it gave reasonable price in Pounds and Dollars and 100oz is an easy number to divide and multiply.

Perhaps if trading became common today the standard size would be larger as the price is higher and institutions tend to commonly buy larger quantities, but tradition is a powerful thing.

• The US left the gold standard long after 100oz was a standard traded quantity. Commented Nov 7, 2014 at 21:22
• 100oz was a standard traded quantity among many others and still is given bars are often 400oz. A standard size to trade against currency wasn't necessary until the gold standard was dropped at which point it was a reasonable size and a round number. Commented Nov 7, 2014 at 21:55
• "until the gold standard was dropped at which point..." It was already a reasonable size for delivery for industrial use. No one buys a quarter of a bar for delivery. Futures contracts reflect the size of delivered units. Commented Nov 7, 2014 at 22:57