When trying to determine the price of a gold bar, most people simply look at the gold price charts and make an estimation based on the gold bar’s weight.
This is a very inaccurate approach to determining how much a gold bar is worth since many factors come into play. The weight of the bar is important but it is not the only factor that determines the bar’s overall price as we’ll see below.
To know the actual worth of a gold bar, you need to also factor in the manufacturing, handling, storage and insurance costs as these will be passed on to the investor as premiums.
This means that before undertaking any gold investment adventure, you need to conduct a thorough research and get all the facts right to avoid making grave investment decisions.
One advantage of gold bars is that they are manufactured by licensed, reputable entities hence chances of running into risk are minimal.
Table of Contents
- 1 Why Should You Consider Investing in Gold Bars?
- 2 Economic Factors that Influence Price of a Gold Bar
- 3 Forces of Demand and Supply
- 4 Inflation
- 5 Policies of Central Banks
- 6 Change in Interest Rates
- 7 Quantitative Easing (QE)
- 8 Gold Reserves
- 9 Economic and Geopolitical Crises
- 10 Strength of the $
- 11 Industrial Demand
- 12 Central Bank Instability
- 13 Most Common Gold Bars and their Worth
- 14 The 400 oz gold bar
- 15 The kilo bar
- 16 How Much is the Largest Gold Bar in the World Worth?
- 17 Frequently Asked Questions-FAQs
- 18 What are the most common gold bar sizes?
- 19 How Much Is a 20kg Gold Bar Worth?
- 20 What is the price of 1 gram gold bar?
- 21 Conclusion
Why Should You Consider Investing in Gold Bars?
Why not? Gold has stood the test of time as a stable form of investment. It has enabled investors to safeguard their wealth for centuries and therefore investing in gold is indeed a wise decision.
Perhaps the most satisfying benefit of holding physical gold is that you get the chance to have total control over your wealth, unlike having your investments in a bank’s savings account.
As you might know, the future of the dollar is uncertain and therefore converting a portion of your wealth to gold will certainly protect you against future risks.
Gold will therefore enable you to crash-proof your retirement and give you some sense of security.
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Now, let’s dive in and explore the common factors that affect the price of a gold bar.
Economic Factors that Influence Price of a Gold Bar
Forces of Demand and Supply
Like any other commodity, the price of gold is determined by forces of demand and supply. If there’s high demand, gold prices will tend to rise rapidly and the opposite will happen if the demand wanes.
Inflation causes prices of stocks to increase hence most investors will prefer gold which comes at a lower opportunity cost. Unlike printed currency, gold value will remain relatively stable even in the face of political strife. This is so true if history is anything to rely on.
Policies of Central Banks
Central banks the world over implement policies that will either impact gold pricing positively or negatively. Below are some of them.
Change in Interest Rates
Central banks such as the Federal Reserve and many others can at times increase interest rates in an attempt to curb inflation. When interest rates increase, commercial banks will borrow less from the Federal Reserve (as the interest rate is not cost effective) and thus will not have a lot to lend to the general public. This will reduce money supply in the economy and decrease interest rates on investments such as treasury bonds, thereby encouraging investors to buy gold with a favorable opportunity cost. If the government decreases interest rates, the contrary will be the outcome.
Quantitative Easing (QE)
In QE, the Federal Reserve tries to increase the money held by commercial banks by buying securities. Thus, commercial banks will have more to lend to customers and the result will be an increase in money supply to the public. This will drive down interest rates, which will increase demand for gold as an alternative investment therefore leading to an increase in gold bar prices.
Ever wondered why central banks the world over hold reserves of gold? Well, they hold gold as a backup to printed currency. When central banks such as the Federal Reserve buy gold in large quantities for the reserves, they increase money supply while diminishing the quantities of gold available in the market. This will drive gold prices up.
Economic and Geopolitical Crises
During times of economic or political turmoil, investors will turn to gold in a bid to secure their wealth. The resulting increased demand for gold will then push gold prices up.
Strength of the $
The US dollar is the world’s reserve currency and is gold’s eternal rival in the investment arena. For instance, when the dollar is strong, the gold bar prices take a nosedive, and vice versa.
Industries also play a significant role in influencing the price of gold bar. Good examples of such industries are the jewelry and electronics industries where gold is used in large quantities. Increased industrial demand increases the price of gold.
Central Bank Instability
One of the roles of the Federal Reserve is to implement monetary policies aimed at stabilizing market prices and controlling inflation. At times, central banks will experience deficits due to poor monetary policies and thus most investors will turn to gold to protect their wealth. The resulting increase in demand will in turn increase the price of gold.
Most Common Gold Bars and their Worth
The following are the most common gold bars on the market and their worth.
Note: As earlier mentioned, these estimations may not be accurate as there are other premiums attached to the spot price.
The 400 oz gold bar
The 400 oz bar weighs 398.7138 troy ounces. The price per troy ounce of gold as of June 2023 is $ 1, 817. Therefore the current price of a 400 oz gold bar is 398.7138 troy ounces * $1, 817 which is equal to $ 724, 463.
The kilo bar
1 kilo bar weighs 32.1543 troy ounces. Thus, its current worth is 32.1543×1750 = $ 56, 270.03.
How Much is the Largest Gold Bar in the World Worth?
According to the Guinness Book of World Records, the largest gold bar is owned by Mitsubishi Materials Corporations. Its dimensions are 17.9 inches by 8.9 inches by 6.7 inches and weighs 551 pounds. Its current estimated worth is over $10 million. While its weight may seem too heavy, its size is too small to fit in a shoebox and therefore is less bulky and can be stored or transported easily.
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Frequently Asked Questions-FAQs
What are the most common gold bar sizes?
The most common gold bars are the 400 oz gold bars held by banks and the kilo bar, but there are also small denomination bars with some weighing as low as 10 grams. The size of a 400 oz bar is 7 x 4.38 x 3.25 inches while a kilo bar measures 3.15 inches x 1.58 inches x 0.71 inches.
How Much Is a 20kg Gold Bar Worth?
The current price of gold per kilo is $61, 373.11. Therefore the current worth of a 20kg gold bar is $61, 373.11 * 20kg which is equal to $ 1, 227, 462.20
What is the price of 1 gram gold bar?
Current price of 1 gram bar is $ 60.76. However this price is subject to fluctuations.
Knowing how much is a gold worth is crucial in making investments. You need to understand the things that influence the prices of gold bar and do research to find out the best deals available.
Another thing you need to consider is storing your investment in secure storage vault to avoid compromising on security.
In summary, the price of a gold bar is mainly affected by the following factors: forces of supply and demand, policies by central banks, economic and geopolitical concerns, strength of the dollar, industrial demand and the stability of the Federal Reserve.