How Much is a Gold Bar Worth? 5 Factors to Consider
Gold is currently worth $1,570 USD per ounce. Analysts are predicting that it could be worth as much as $2,000 USD per ounce by the time Donald Trump runs for re-election later this year. That means there’s a lot of upside left, but the price speculation surrounding gold begs the question, how much is a gold bar really worth?
That obviously depends on a number of factors. Obviously investors who own a larger gold bar will have more value, but smaller gold bars or even coins can be purchased and they’d be worth much less. But besides the actual amount of gold being purchased, there other factors to consider. What about the current political climate? What about coronavirus? How about the state of the economy or the job market in America?
These are just some of the risk factors worth evaluating for investors who intend to get into gold or other commodities as a way of hedging against economic downturns or any of the potential risks described above.
By the end of this blog post, you’ll know exactly what a gold bar is worth and the major factors that affect its price.
How The Size of a Gold Bar Affects Price
According to the United States Mint, a standard gold bar measures 7 x 3 5/8 x 1 ¾ inches. Internationally accredited standards dictate that this standard size must weigh between 350 ounces and 430 ounces. At the standard size the Mint suggests, a gold bar should weigh about 25 pounds or 400 ounces. If the gold price is currently listed at $1,570 USD, that means 400 ounces of gold, or a standard gold bar, is worth $628,000.
That’s clearly out of the price range of the average investor, so anybody daydreaming about taking home the entire wheel barrels filled with gold bars home is going to have to figure out how to become the next Jeff Bezos or Warren Buffet. Stacking standard sized gold bars isn’t easy, but that doesn’t mean the average investor can’t get in the game for much less. It just means most will only own a fraction of a gold bar, or a much smaller non-standard size.
The Internationally Recommended Weight of a Gold Bar
The London Bullion Market offers an internationally recommended weight for a gold bar. Many nations around the world subscribe to the standard. By this standard, the size or dimensions for of a gold bar are much less important. That said, the LBM still has a recommended size. The top surface of a gold bar should be 10 x 3 1/5 inches, while the bottom surface measures 9 3/10 inches x 2 1/5 inches. Each gold bar should be 1 ½ inches thick to meet the LBM standard.
The above recommended size and weight is collectively referred to as London Good Delivery. There are 55 manufacturers that produce roughly 150,000 gold bars per year that meet this standard. Each of these gold bars contains 99.5% gold. Believe it or not, it’s estimated that central banks around the world own 2.5 million of these gold bars. That’s nearly 20 years of global gold bar production all in the hands of just one sector of the finance industry. Perhaps that’s part of the reason why gold bars are so valuable. If you don’t work for a central bank or run one, you don’t have access to nearly as much gold as the world’s supply would lead you to believe.
Different Sizes of Gold Bars
So we’ve established that the average investor probably isn’t buying a full standard sized gold bar for their investment portfolio. $628,000 is a big leap for most investors after all, even those that are serious about commodities and know a lot about them.
The good news is there are different, smaller sizes available for those that want to get in the gold game, yet still want more than just coins or a piece of jewelry.
A Gold Bar That Weighs 5 Grams
International Finance conglomerate, Credit Swiss Group, manufactures the 5 gram PAMP gold bar. PAMP stands for Produits Artistiques et Métaux Précieux (aka artistic precious metals products). These bars have been made in Switzerland since 1979. The .9999 fineness of the gold makes it eligible for investing in an IRA. The 5 gram bar measures 14 mm x 23.3 mm. For those that don’t want to go big with the 5 gram bar, there is also a 2.5 gram and one gram bar available. The 2.5 gram bar measures 13.1 mm x 22.1 mm. The one gram bar measures 8.6mm x 14.5mm.
How Gold Bar Providers Influence Price
Credit Suisse Group is far from the only game in town when it comes to producing gold. What investors should know though is that not every gold provider melts the gold into bars. It shouldn’t really matter what shape the gold comes in as it refers to price, but some gold refineries like to distinguish themselves from the competition by providing ingots or coins.
John Matthey is one of those providers. Like Credit Suisse, John Matthey’s gold comes in .9999 fineness but instead of providing bars, the organization produces ingots. What’s good about this is it reduces the cost of producing the gold to investors. The company just prints a serial number on it, casts the gold in a unique design and sells it to the investor. No need to take the extra step of turning it into a bar.
Perth Mint gold bars might be perfect for the investor who wants to buy varying amounts of gold. The organization sells gold in a quantity as small as half an ounce for those that want full gold bars, but those gold bars also come in much smaller quantities including 5, 10 and 20 grams. Perth Mint are packaged in a tamperproof display and the bars have a hopping kangaroo printed on them.
Another great option for investors who want smaller quantities of gold would be the Valcambi Gold CambiBar. They offer a 50 gram gold bar that can be split up into 50 equal pieces. The entire 50 gram bar is the size of a credit card and could fit into a wallet.
How do these providers influence price? At the end of the day they can only charge with the market demands but the fact that they offered different quantities allows investors to get into gold without spending a fortune.
How Coronavirus Affects Gold Price
The gold price has been steadily increasing in the wake of the coronavirus that infected residents in Wuhan, China and has since spread to affect tens of thousands of people across the world. Around 2% of those infected have died and that is certainly causing concern for those living in fear of a potential pandemic.
That being said the majority of cases appear to be under control and most Gold investing experts expect the price of the commodity to drop as coronavirus fears calmed down and investors get back to point money into the market.
For those that managed to capitalize off the price of gold during this time, now might be the time to cash out from a short-term investment. For the long term with the U.S. presidential election coming up later this year, it might be a good idea to hold onto some gold.
The 2020 .U.S. Presidential Election
Despite all the controversy surrounding President Donald Trump and the impeachment proceedings that the world is been watching for months now, he’s got as good a chance as anyone else to win the 2020 election. Markets generally don’t like uncertainty, and another win for Trump might be four more years of making swift, big, bold and unpredictable decisions that force other leaders around the world to react.
More uncertainly generally means a higher gold price, but only time will tell what’s really going to happen for sure.
Now that investors are aware of many of the factors that influence the decision to buy and sell gold, perhaps it’s time to take the plunge. Consider what provider is best for your needs, whether you’re investing for the short term or the long-term and whether you can stomach all of the craziness going on in today’s world.
If you can’t, a long-term bet on gold might be the best one you can make.