Foundation · Module F1
Before you trade it, understand what it actually is.
What you'll learn
Where to start
This one starts with a bar.
Specifically, a 400 troy ounce bar of gold sitting in a vault somewhere under London or New York. That bar exists to a precise specification that almost no retail trader can name — yet every gold trade you'll ever place is ultimately a claim on something like it.
Understanding that specification is where this Academy starts.
The unit
Gold is measured in troy ounces — not the standard ounces used to weigh anything else.
One troy ounce is 31.1035 grams. A standard (avoirdupois) ounce is 28.35 grams. The difference is roughly 10% — enough to matter when you're pricing a metal worth over $2,000 per unit.
The troy ounce traces back to Roman monetary units and was formalised through medieval European trade. When the global gold market standardised in the 20th century, it kept the troy ounce. The unit on your trading platform today is older than every currency it prices against.
In practice
When XAU/USD is quoted at 2,350 — that's per troy ounce. When a GC futures contract represents 100 oz of gold — those are 100 troy ounces. The unit is everywhere in gold markets. It is never the standard ounce.
The standard
The London Bullion Market Association — the LBMA — sets the global benchmark for physical gold trading. Their Good Delivery standard defines exactly what a tradeable gold bar must be.
LBMA Good Delivery — key specifications
A bar that meets this spec is a Good Delivery bar. One that doesn't isn't tradeable on the professional market.
995 fine. That's where the name 2nines5 comes from — two nines, then a five. The minimum purity standard that makes gold tradeable at the institutional level.
Why does this matter to a retail trader who will never touch a physical bar? Because every gold price you trade is anchored to it. The LBMA Gold Price — the twice-daily benchmark that underpins global gold pricing — is set in terms of Good Delivery bars. The CME COMEX futures contract that GC and MGC settle against specifies 995 minimum purity. Your XAU/USD spread on a forex broker is derived from the same price.
The 995 standard is the foundation underneath everything in this market. Which is why this site is built on it.
The history that matters
Gold has been used as money for most of recorded human history. It has not been official money for most of your lifetime. Understanding the transition explains why gold trades the way it does today.
Two eras of gold
Bar widths reflect real elapsed time. The gold market you trade has existed for less than 60 years — every chart, strategy, and pattern you'll study was developed inside that right-hand segment.
Four moments shaped that divide.
The classical gold standard — pre-1914
Most major currencies were directly pegged to gold. A British pound was a fixed weight of gold. An American dollar was a fixed weight of gold. Exchange rates between currencies were essentially fixed because both sides of the equation were anchored to the same thing. Gold didn't have a "price" — it was the reference point everything else priced against.
Bretton Woods — 1944 to 1971
After World War II, the US dollar became the world's reserve currency, pegged to gold at $35 per troy ounce. Other currencies pegged to the dollar. Gold still anchored the system — but only the US government was obliged to exchange dollars for gold at the fixed rate. For most countries, the dollar had become the new gold.
Nixon closes the gold window — 15 August 1971
President Nixon ended the US dollar's convertibility to gold. The Bretton Woods system collapsed. Gold was no longer money. It became a freely traded asset — and had to find its own price on the open market for the first time in modern history.
Gold ownership restored — 1974
American citizens had been legally banned from owning gold since FDR's executive order in 1933. From 31 December 1974, private gold ownership became legal again in the US. Combined with the end of Bretton Woods, this opened the gold market to retail participation for the first time in decades.
The gold price as we know it — floating, volatile, traded around the clock — has only existed since 1971. Everything on this site operates in that post-1971 world.
But gold's monetary history never fully left. The reason gold responds to interest rates, central bank policy, currency stress, and geopolitical risk differently from oil, copper, or wheat — is because it spent centuries as money. That behaviour is baked in. We'll come back to it in detail in F4.
The chain
Your XAU/USD trade on MetaTrader or your GC contract on NinjaTrader sits at the end of a long chain.
At the other end of that chain is a physical bar — 400 troy ounces, 995 fine, sitting in an LBMA-approved vault in London or a CME-approved vault in New York. The price you trade was set by buyers and sellers who are ultimately dealing in, or hedging against, that bar.
You won't take delivery of it. That's not how retail trading works — and the mechanics are covered in F2 and the path modules. But knowing the chain exists matters. Gold isn't like a currency pair where both sides are paper. One side — the gold side — has a physical anchor.
That anchor affects how gold prices, how it responds to supply and demand, and why it behaves differently from equities or bonds in a crisis. The 995 bar in the vault is always in the background.
Carry this into F2