Gold has long been considered a valuable investment, partly because it maintains its value over the long term and acts as an effective hedge against inflation. When the cost of living rises, the price of gold tends to do the same.
As such, gold bars, also known as gold bullion, tend to be popular investment choices for those who can afford them. But how much is a gold bar worth, and should you buy gold for your investment portfolio? What are the pros and cons of buying gold bars? We’ll answer these questions and more in this article.
Table of Contents
What Is a Gold Bar?
A gold bar is simply gold that’s been formed into the shape of a bar. Gold bars come in many different sizes, but the following are among the most common:
- 1 gram
- 5 gram
- 10 gram
- 1 ounce
- 100 grams
- 1 kilogram
It’s important to note that gold is measured in “troy” ounces which is different than a traditional ounce or gram.
Troy ounces weigh less than a traditional ounce. This means that when you purchase an ounce of gold, you’re actually getting 0.91 “traditional” ounces.
The measurement for a troy ounce is written like this:
0.91 oz. t
The “t” indicates that it is a troy ounce. The troy-ounce measurement is used to weigh all precious metals, including platinum, silver, palladium, and more.
How big are the the standard gold bars you see people holding in the movies? They are known as “Gold Delivery” bars and they are 400 troy ounces.
Gold Purity
Understanding how gold purity works is essential when determining how much a gold bar or other gold item is worth. That’s because different gold products have different purity levels, which affects their value.
These purity levels are measured in what is called a “karat.” That’s why you’ll see a “k” next to a number on an item of gold.
For example, an item such as a gold bar is considered “pure” gold (it’s not 100% gold because it’s impossible to filter out all impurities, but it’s as close to that as possible), so it’s labeled as 24k gold.
However, most gold jewelry pieces are a combination of gold and other alloy metals such as silver.
For example, jewelry makers add other metals to gold jewelry to make jewelry pieces more durable. This is because pure gold is very soft and dents easily.
The following chart displays common karats of gold and how much gold they actually contain.
| Number of Karats | Parts of Gold | Purity |
|---|---|---|
| 10k | 10/24 | 41.7% |
| 14k | 14/24 | 58.3% |
| 18k | 18/24 | 75.0% |
| 22k | 22/24 | 91.7% |
| 24k | 24/24 | 99.9% |
Most jewelry pieces are labeled either 10k or 14k.
However, gold bars are almost always produced as 24k.
How Much Is a Gold Bar Worth?
The value of a gold bar depends mainly on the size of the bar and the market for gold at any given time.
As mentioned earlier, gold bars come in sizes ranging from one gram to one kilogram. However, spot prices (called such because gold prices change rapidly) for gold are listed for a single ounce.
As of this writing (June 14th, 2023), the price for an ounce of gold is $1947.38 USD. But, as you can see from the chart above, gold prices fluctuate all the time.
A “Good Delivery” bar, which is 400 troy ounces or 364 traditional ounces, is worth $708,846.32.
What factors determine the price of gold? Factors such as inflation, supply and demand, and the overall economic climate determine whether the price of gold changes.
And as the chart indicates, gold often holds somewhat steady in its value unless there is a glaring economic downturn or upswing.
Because gold prices tend to be more stable than other investment values, gold is a popular choice among many investors.
How to Buy a Gold Bar
While you probably won’t be buying a 400 oz. t. Good Delivery bar, you can get smaller ones very easily.
Before purchasing gold bars, make sure you know where to buy them without getting ripped off. Several dealers sell gold bars in the sizes mentioned above, including the following marketplaces.
Vaulted
Vaulted helps you buy gold and then stores it at the Royal Canadian Mint. However, you can also ask to have your gold bars from Vaulted delivered to your home or office.
You will pay a transaction fee and an annual maintenance fee when you buy your gold online through Vaulted. To learn more about Vaulted, check out our full Vaulted review.
👉 Get a quote from Vaulted today
American Precious Metals Exchange (APMEX)
American Precious Metals Exchange sells gold, silver, platinum, palladium, and more. The company partners with 18 different mints around the world, sells over 20,000 products, and has helped over 1.7 million customers.
You can receive next-day shipping if you’re eligible for the company’s QuickShip program.
👉 Get a quote from JM Bullion today
JM Bullion
Like APMEX, JM Bullion sells gold, silver, platinum, and other precious metals. This company has over 350,000 customer reviews and has sold over $9 billion in products.
Other features include free shipping on orders over $199 and an A+ BBB rating.
👉 Get a quote from JM Bullion today
Buy Gold and Silver Coins (BGASC)
Buy Gold and Silver Coins is a company that carries gold, silver, platinum, copper, and more. The company has an A+ rating with the BBB and ships most orders on the next business day after they were placed.
BGASC offers free shipping on orders over $199 and is known for having competitive prices.
Gold Bar Alternatives
There are downsides to owning physical gold. You need to find a way to store it safely, it’s less liquid than gold that can be traded on an exchange, and there are costs involved with shipping gold bars to and from a dealer.
Thankfully, there are more convenient ways to invest in gold besides buying gold bars, coins, and other physical items. Here are some of the other options available.
Gold IRAs
Some companies offer gold IRAs with varying account minimums, fees, and other features.
Investing in gold IRAs works a bit differently than investing in a traditional IRA. Check out this GoBankingRates article for more information on investing in Gold IRAs.
Futures
When you invest in gold futures, you agree to a contract to purchase a specified quantity of gold at a predetermined price on a specific date in the future.
To learn more about buying futures, check out this Investopedia article.
Mining Stocks
You can invest in gold by purchasing shares of stocks in gold and precious metal mining companies. Remember that owning a single mining stock is very risky, and you should never invest more money than you can afford to lose. It should also be considered a long-term holding.
New investors or investors on a tight budget will appreciate the ability to purchase fractional shares of mining stocks through an online stock broker.
Gold ETFs
An ETF (exchange-traded fund) operates similarly to a mutual fund and is made up of a variety of assets.
Gold ETFs are backed by physical gold. However, instead of owning physical gold, ETF shares allow you to own gold-backed assets.
Because gold tends to be less volatile, gold ETFs are often more stable in terms of value fluctuation as well. You can buy gold ETFs from most online brokers.
FAQs
Yes, there are fees for buying gold bars, similar to how you’ll pay fees when buying stock shares.
The “spot” price on gold bars is the amount of money an ounce of gold is valued at on any given day. You can expect to pay a percentage over the spot price of gold whenever you purchase gold from a company.
Your gold purchase may include sales tax, depending on your state and other factors. Most companies that sell gold do have website charts that will tell you if your gold purchase will include sales tax.
Many companies that sell gold also buy gold. Check out each website to find the terms and conditions of any gold buyback program.
Gold purchases are not “under the table.” Federal law does require gold dealers to keep records that identify each person that purchases gold from them.
Pros and Cons of Buying Gold Bars
There are some gold investors that, for their own reasons, want to own actual gold bars. They don’t mind trading some convenience and are willing to pay a slight premium to have the physical gold in their possession. And while there’s nothing wrong with that approach, there are advantages and disadvantages to owning gold bars. Let’s take a closer look at the pros and cons.
Pros
- More stable than other investment options
- You’ll own a physical commodity when you purchase gold bars
- Come in a variety of weights for nearly every budget
- Stands the test of time – gold will always have value
Cons
- Safely storing gold bars can be inconvenient
- There are fees to purchase and transport gold bars
- Sales tax may be applicable depending on which state you live in
Summary
As mentioned, while the price of gold varies, a one-ounce gold bar is currently worth nearly $2,000. But even if you’re drawn towards buying gold, you need to make sure it’s right for your portfolio.
Do you want to deal with having to store the gold, or would you rather own it in certificate form or as an ETF? And if you decide to sell, what is the most convenient way to do so? If you can sort these details out ahead of time, you’ll be more prepared to add gold to your portfolio.