Gold investing is at an all-time high, but how much does a gold bar cost on average? That’s not an easy question to answer, but as more investors choose to buy gold as a hedge against inflation, it might be more relevant than ever. You have primarily two options for investing in gold—official gold coins or a range of gold bars or bullion.
Gold bars seem to be a favored investment vehicle for today’s gold investors, with the added value of being sold as close to the melt value as possible. New investors want to know how much it costs to invest in a gold bar, but this is only one of the factors to consider if you plan to build a nest egg of this precious commodity.
For example, a novice gold investor will frequently see the term “melt value.” This term refers to the precious metal content of a gold piece, so melt value determines how much gold would be left if you were to melt down your bar or coin. If you are trying to decide whether to move into gold, there are a few other crucial things you should know about gold bars that have nothing to do with the price.
Gold Coins vs. Gold Bars
Deciding on the best gold investment vehicle is largely a personal choice based on funding and planning, and comparing coins and bars is helpful in this endeavor. Let’s look at each option, including some of the benefits that you might find reflected in the pricing details.
Gold Coins
The collectability of gold coins is normally the main attraction for investors beyond the melt value. Coins represent an investment in the gold itself but also harness the artistic nature of the piece as part of an even more valuable collection. This feature affects the premium that you pay for the gold coin; the more collectible the coin, the higher the price.
“Premium” is common gold investment terminology describing the amount a buyer will pay above the spot value of the gold weight in the coin or bar. For example, gold coins have a higher premium when they include intricate details or artistic qualities that may push up minting costs. Gold coins also typically come with a bigger premium than gold bars.
The advantage for gold investors starting with gold coins is that they represent smaller ounce sizes than bars. It is more affordable to build a collection this way if you do not have lots of cash to throw around. A few other benefits and drawbacks of gold coin investing include:
- Greater control. The owner will have physical control of their investment vehicle. Unlike stocks and bonds that are non-tangible investments, you can see and touch gold coins whenever you want a reminder that you are in control of your wealth portfolio. They are easy to liquidate.
- Quicker Growth. Collectible gold coins have an excellent chance of growing in value quickly, either in the collector avenue or in the spot value of the gold content. If you purchase a gold coin that becomes highly collectible, the value could grow exponentially. If the price of gold increases, then you will still see an increase whether or not the coin is a collectible.
- More Complexities. On the flip side, gold coins are often more challenging to secure than gold bars and demand a higher premium. The cost of minting, design, distribution, and even the marketing costs are all tacked onto the price of gold coins.
- Less Flexibility. Gold coins do not offer the purchasing flexibility of gold bars. For example, as coins usually weigh an ounce, you would need to purchase ten separate coins to invest in ten ounces. Each coin also comes with a higher premium on it, so a savvy investor might go for more cost-effective gold bars instead.
Gold Bars
As a “purer” form of gold investing, gold bars are the top choice for investors who want nothing to do with collectability or artisanal value. Gold bar investors value the gold itself, especially as a way to safeguard their wealth against a fluctuating economy. A few notable characteristics include:
- Purity. Gold bars are 999.9 pure gold at 24K.
- Flexibility. Bars come in different weights, allowing the investor myriad investing options.
- Frugal. The larger the gold bar, the lower the premium on it. Gold investment dollars can go directly to building wealth instead of paying for obscure future value.
- Compact. Gold bars are easy to store, neatly stacked, and taking up minimal space. A single bar might be ten ounces, which takes far less storage space compared to ten one-ounce coins.
- Solidity. A downside is that larger gold bars may be harder to sell in parts. For example, selling only 1oz of a 100oz bar would mean having to put the entire bar on sale before repurchasing the other 99 ounces separately. It is not only inconvenient but incurs additional premium charges.
Oxford Gold Group’s experts agree that the benefits of investing in gold bars far exceed the few drawbacks. Bars are highly tradable around the globe and present an excellent way to diversify any healthy portfolio, but how much does a gold bar cost?
Counting The Cost of Gold
The price of a gold bar varies with market fluctuations in the same way as premiums on gold coins rise and fall with certain qualities. Gold investors will need to take several features into account before purchasing their next gold bar, including:
Manufacturer
Gold bar manufacturers set their own premium, so where the investor shops matters. The premium for a gold bar varies, from a few decimal percentage points over the spot price to an exorbitant nine percent in the ever-fluctuating market.
Raw Material Production Costs
The world only produces about 2500 metric tons of gold per year, and the production costs rise with inflation. Producers pay higher costs for fuel, labor prices increase, and many other uncontrollable factors bump up the gold production price. The changes inflate premiums, which gold buyers absorb.
Supply and Demand Factors
Another factor that will affect the cost of gold bullion is basic supply and demand. High demand and limited supplies push the price of gold higher, and this constantly changes with social, political, technological, and economic influences.
Industry Demand
Investors are not the only buyers scrambling for gold; industries also play a role. The jewelry and technology industries are massive consumers of gold, and investors compete with them for the gold supply.
The Golden Rule
Like all experts, Oxford Gold Group hesitates to make careless predictions on the future of gold, but its historical resilience should provide some confidence for potential investors. Pandemics, economic uncertainty, and political turmoil will likely keep gold prices on the upswing. For the current climate, analysts have predicted a whopping 20% increase in the value of gold, with conservative forecasts at a 9% increase.
Most financial analysts agree that the global uncertainty will push gold up over the next five years, especially with national economists predicting higher inflation than consumers are used to over the next three years. Inflationary pressures are perhaps the biggest factors to watch as investors hedge gold against other investments that will feel the pinch.
The rule with gold is to be patient but also to understand the general market trends as you enter the race. If demand for gold continues to grow as expected, now is the perfect time to secure that golden egg before values start skyrocketing. Whether it is purchasing a gold coin or a gold bar, diversifying a portfolio is always prudent.
History confirms gold’s value over and over. Costs for gold fluctuate, but these levels almost always rise overall. While it is impossible to say for certain how much a bar of gold will cost today or tomorrow, it is very likely the price you pay today will be less than what you would pay tomorrow. At the start of the last quarter in 2018, a Troy ounce of gold was $1201, and by the third quarter in 2021, it was $1746.
What will gold be worth a year from now? Certainly more than if a new gold investor takes the plunge today.
The Best Deals On Gold Bars Are Easy To Find
If the first question a novice investor asks is how much a gold bar costs, the next question should be about how and where to find the best deals. Reputable resources like ours help investors learn as much as possible about gold trading and the global markets so that the decision is easier. Gold investments are a great idea, and the journey is easier with an insightful partner like Oxford Gold Group.
The Oxford Gold Group team helps investors explore the possibilities for gold investing and find the ideal gold investment vehicles for their unique portfolio goals. If you want to reach your financial goals through gold investing, why not give us a call at 833-600-GOLD for expert advice on using this tangible asset to build generational wealth?
