How Much Is a Pound of Gold Worth?

Gold is one of the most famous precious metals, used in various industries and valued in the form of coins, art, and jewelry. For decades, gold has been used as an investment to safeguard (and hopefully, increase) one’s finances. People worldwide invest in this precious metal to secure a better future for themselves and their families.

While gold rates are affected by factors such as the strength of the US dollar and global market conditions, gold has shown to be a more stable investment option than any other precious metal. It’s one reason why many people decide to add gold to their portfolios, especially during an economic crisis.

The official gold price changes every day, meaning the value of your gold coins or bars is constantly fluctuating.

Are you curious to know how much is a pound of gold worth today? Before we get down to the actual gold worth, it is essential to understand some crucial information about this precious metal’s value and factors that go into determining the price.

How Is Gold Priced?

Potential investors use two models to understand and estimate the potential gold value.

Gold Spot Price

The gold spot price is based on the price of one troy ounce of gold. It is the price for gold at any given moment on international markets. Spot price refers to the bid price you see or the price most usually quoted on the exchange market that traders and investors are willing to purchase.

In the US, gold is traded in COMEX – a primary exchange where the price is set at any given moment. Gold trades 24/7 worldwide, and some of the biggest exchanges include New York, London, and Shanghai.

Can You Buy Gold Bars or Coins at the Spot Price?

No, the spot price refers to unfabricated precious metals. Before investing, there are costs for forming gold into a bar, coin, or jewelry. One of those costs is the premium you pay to the manufacturer and the dealer who sells the product. They charge a premium for anyone who wants to buy gold bars or coins.

The spot price determines the current gold price for any transaction you make.

What Determines the Spot Price?

Many factors determine the gold spot price, but the biggest is the principle of supply and demand. When more people are trying to invest or buy gold, sellers may increase prices, causing potential buyers to bid more.

Various factors influence the supply and demand, such as the months with the most volume, investment opportunities, currency markets, inflation and deflation, monetary policy, geopolitics, and equity markets.

Are Gold Prices the Same Everywhere?

Gold is traded all over the world, mainly for investment purposes and industrial uses. An ounce of gold is the same in the US, the UK, and Japan, meaning the spot price is identical everywhere. The price may only vary based on the currency value and dealer premium.

Gold Futures Price

a gold trader checking the gold market through his tablet

The gold futures price serves as a foundation for the COMEX gold price. The price specifies the physical delivery of a specific gold amount on a particular date in the future. Numerous factors determine the gold price, including the spot price, changes in supply and demand, the transportation cost, storing the physical gold, and the risk-free rate of return for the gold’s holder.

Investing in gold futures is an attractive option because it gives investors a chance to trade without paying the full amount. Instead, the parties make an agreement, which includes the gold’s spot price and weight. The parties also agree on a delivery month for the future.

Do Other Factors Affect Gold Futures Prices?

Besides the law of supply and demand, a few other factors that influence how much is a pound of gold worth include:

  • Inflation
  • Interest rates
  • Government reserves
  • Correlation with other assets
  • Geopolitical factors

Gold prices react to inflation and deflation. When inflation increases, the gold value goes down; when inflation lasts for a longer time, precious metals act as hedging tools against the new conditions. When the currency value keeps changing, gold’s price remains stable.

Gold has an inverse relationship with interest rates. When the rates increase, most people sell off their gold to earn higher interest. When the rates decrease, people invest more in gold, which results in higher demand.

The government holds a certain amount of gold. When the government starts to buy more than it sells, the gold price increases as it results in an insufficient gold supply.

Investors see gold as a high diversification commodity in their portfolios because of the low negative correlation with other assets.

During geopolitical changes, gold typically performs well. In a time of crisis, many assets experience a negative impact; however, the price of gold usually goes up as it acts as a safe haven for funds.

How Often Does the Gold Price Change?

Gold price changes every few seconds and can go up and down based on breaking news, sudden supply and demand, and other factors. The price is updated constantly from 6 PM to 5:15 PM EST, Sunday to Friday.

How Much Is a Pound of Gold Worth?

In the US and almost anywhere in the world, gold is traded by the troy ounce, not by the pound. As of this writing, the gold price per ounce is $1,866. Since there are 12 troy ounces in a troy pound, gold is selling at approximately $22,392 per pound ($1,866 x 12).

Why Are Troy Ounces Important?

If you purchase one ounce of gold and place it on a scale, you will discover that it is around 10% heavier than one ounce of sugar. While the two measures are the same, precious metals have their own measurement unit, which is a bit complex to understand. The troy ounce is the standard measurement unit of gold and other precious metals, while the avoirdupois ounce serves to measure everything else.

What Is the Difference Between a Troy Ounce and an Avoirdupois Ounce?

A troy ounce is heavier than a regular ounce. The avoirdupois is the measurement unit that we use to weigh everything else other than gold. The scale in your home or the grocery store is in avoirdupois ounce.

A troy ounce is 31.1 grams, while a regular ounce is 28.35 grams. When it comes to smaller weights, you can’t even notice the difference, but when you are trading in larger gold quantities, every gram counts.

How Do You Convert an Avoirdupois Ounce into a Troy Ounce?

You can easily convert avoirdupois ounces to troy ounces by multiplying the amount in avoirdupois ounces by .91.

Buying Gold in Troy Ounces

All gold prices (spot and future) are calculated in troy ounces, not in pounds. One avoirdupois pound equals 14.5833 troy ounces, and 1 troy pound equals 12 troy ounces.

Having a universal measurement unit when trading with precious metals is what makes gold liquid. Traders can use the troy ounce system to buy and sell gold without any confusion or conversion standard.

Understanding the troy ounce system is one of the first steps in gold investing and diversifying your portfolio.

How to Invest in Gold

plant on the top numerous gold coins to describe gold investment

When it comes to investing in gold, you have a few options to consider.

Gold Bullion

Gold bullion comes in bars and coins, which are 99.5% pure. Investors and banks purchase and hold bullion coins and bars as a safe haven against market crisis and economic uncertainty.

Pros:

  • Backed by physical gold
  • Hedge against inflation
  • Some bars and coins are eligible for self-directed IRA
  • Stable value

Cons:

  • Significantly affected by the gold spot price

Gold Numismatic Coins

Numismatic gold coins are valuable for their rarity, history, and high value. Collectors enjoy looking for rare coins and learning about their history. Investors benefit greatly from increases in the value of their coins.

Pros:

  • Never worth less than the spot price
  • Possess value beyond bullion coins
  • Will never be worth zero
  • Have collector’s value
  • Appreciate much faster than bullion coins

Cons:

  • Not eligible for self-directed IRA
  • Investment knowledge learning curve
  • More expensive than bullion

Gold ETFs

An ETF, or a gold exchange-traded fund, is a marketable security that controls the gold index. ETFs are traded in the same way as stocks, with daily sales and purchases. With a gold exchange-traded fund, shareholders don’t own the physical gold but are entitled to certain profits.

Pros:

  • Backed by physical ETF
  • No physical storage
  • Quicker transaction

Cons:

  • Must report purchases to the IRS
  • Unredeemable for physical gold

How to Invest Wisely in Gold

Knowing how much is a pound of gold worth, the difference between a pound and a troy ounce, and how the gold market works can help you invest wisely in precious metals. No matter how much the gold price fluctuates, the yellow metal will always hold a certain value in investment portfolios.

If you’re looking for investment assistance, don’t look further than the Oxford Gold Group. We are experts at helping people improve their financial stability through smart investments. Whether you’re interested in gold or other precious metals such as silver, palladium, or platinum, you can count on us to increase your likelihood of getting a return. Contact us today at 833-600-4653 to talk about your financial future.

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