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In the information age, there are hundreds of factors affecting the price of gold in bullion stocks. Many Southeast Asian governments ban sales of pure gold bars and coins, including in the Philippines. Buyers can only acquire gold by purchasing jewelry and melting it down at home, but gold’s history in the global marketplace still makes it one of the most reliable investments.
Worldwide, there are thousands of people looking for the next bargain on the gold market—if you are one of them, browse the Oxford Gold Group website. Our market experts have provided countless articles about investments in gold, platinum, silver, and other precious metals that will suit your risk appetite. Below, you’ll learn how much an ounce of gold is worth and its average price around the globe.
Defining Gold Content: What Counts as an Investment?
The discovery of gold in 3100 BC represented a paradigm shift in history. All nationalities, kingdoms, and allegiances began measuring worth through scales and weights for gold’s authenticity and value. The western nations also began developing the Gold Standard, from which the concept of fiat currency emerged.
Today, gold comes in all shapes and sizes. A private buyer can acquire gold in the form of coins, bars, leaves, and jewelry. Many Americans are slowly gaining worldwide fame for the most creative uses for gold, even purchasing it for use in toilets, guns, and ice cream toppers.
Appraisers refer to a karat as the ratio of pure gold to other metals in a coin, bar, or piece of jewelry. Most gold items on display will have gone through several processes, including smelting, shaping, and polishing. If you’re thinking of selling a family heirloom or any gold item with an unclear record, it might surprise you to find out how much gold is inside it relative to other metals.
How to Look for Pure Gold
Many accessories come from companies that advertise pure gold content, such as Rolex watches, necklaces, and armbands. You might be able to extract some pure gold from these items if you decided to melt it and fashion it into bars and coins, but it is probably a vanishingly small amount relative to the presence of copper, silver, or palladium. Most buyers looking for pure gold investments avoid both pawnshops and the jewelry market.
A pure gold item should have a 24-karat refinement—that means its ratio of gold relative to other metals is 0.999 to 0.001. The 24-karat gold content is the purest level in the world, and only jewelers with training and equipment in precious metal hallmarking, assaying, and testing can certify this level your item has that caliber. Pure gold scratches and bends easily, so manufacturers of watches, wedding rings, and other accessories typically use an alloy of nickel, silver, or copper for tensile strength.
Pure Gold Ratings
The number of karats in a gold item determines its worth on the market. For example, there are 24-karat gold bars and coins from bullion exchanges that show assay cards or certificates of authenticity as part of the sale. Buying from the government or a private exchange ensures that your certificate has an approval stamp, mintmark, and purity rating, interpreted to roughly:
- 24 karat = Pure gold with no trace elements or other metals
- 22 karat = 91.7 % gold
- 18 karat = 75.0 % gold
- 14 karat = 58.3 % gold
- 12 karat = 50.0 % gold
- 10 karat = 41.7 % gold
Touchstone Method Testing for Gold Item Purity
Pure gold has a warm yellow color. It shouldn’t be reflective, unless a jeweler alloys it with rhodium, platinum, or cadmium. The gold will never rust and is highly resistant to all forms of acid damage, oxidation, and corrosion.
If you don’t have time to find a jeweler with a metal verification machine, testing the authenticity of a pure gold item is possible using nitric acid. You will need and a jasper stone or fine-grain dark schist, and aqua regia, a combination of one-part hydrochloric acid and four parts nitric acid. Only put items under the nitric acid test (or the Touchstone Method) if you are confident that there are no metal alloys involved.
- Brush your gold against the dark stone until it leaves a mark
- Place droplets of your aqua regia on that spot
- Watch what happens to the gold mark
The nitric acid will dissolve any metal that isn’t genuine gold. If your gold mark remains on the touchstone, you’ll know that your item measures at 18 karats of gold or higher.
How Much is Gold an Ounce?
When people think about the average prices of precious metals, they have a certain number in mind. Most gold sellers are adamant about this price level and think of it as similar to appliances, food, or furniture that only change with inflation. When it’s time to sell their nest egg in the form of a platinum, silver, or gold bar, they’re almost always surprised at the value of the bundle.
Gold’s asking price fluctuates considerably, and the per ounce price changes all the time. Analysts have different opinions about its expected movement, and many peg its fluctuations to the US dollar. When the currency weakens, demand for gold typically strengthens globally.
Is Gold a Reliable Investment?
Gold is one of the most versatile metals worldwide, with thousands of use cases in the civilian, military, and industrial markets. Is it a good investment, though?
Gold has More Uses than You Think
The demand for gold is surging as technology companies build more server farms, satellites, and sustainable energy platforms. Gold is one of the most common materials in microchips, which means it features in smart homes, self-driving cars, and aircraft on permanent autopilot. Financial analysts expect demand for gold to skyrocket over the next few decades, so yes, it is an excellent investment in the current climate.
Gold Is a Hedge
Unlike oil, plant matter, and chemicals inside batteries, gold is not a consumable item. It is not as vulnerable to changes in demand as perishable commodities and human consumption patterns have little effect on the amount of gold available in the world. Oil burns up the moment you step on the accelerator, and bodies digests plant matter, but gold remains through centuries of use.
Gold has stood through shifts in world powers and industrial revolutions. Prices on gold have appreciated over the past 6,000 years, making it one of the most dependable commodities in any uncertain market. It remains a reliable hedge mechanism.
What Affects the Average Price of Gold Today?
If you’re new to investing in precious metals, these factors have a slight effect on the still very stable average price of gold.
Supply and Demand
The laws of supply and demand almost always benefit gold investors. You can find many investment instruments for commodities that people will always need, such as lumber, base metals, and energy. However, none are as stable as gold.
Almost 30% of the world’s gold today comes from the Witwatersrand mines in South Africa. Geopolitical events might cause the supply of gold to dwindle, but the world sources its gold from many countries, including South Africa, Peru, and China.
A recent global pandemic meant record inflation levels worldwide, and even first-world countries were not exempt from this trend. Rising inflation typically sends investors into panic-buying stocks, hoping to protect their wealth from unstable commodity prices. Gold is the most popular hedge against inflation as the value of most local currencies does not affect its global value.
In 2010, the average interest rate in America was 3.2%. Ten years later it stood at a measly 0.9%. When interest rates decline, people earn lower returns on bank deposits and find it helpful to resort to hedges, like gold.
Here’s how the cycle works:
- Skilled professionals lose their jobs and tap into their life savings, reducing their capital rapidly and depleting bank funds.
- Banks feel that decline and interest rates fall even further, popularizing gold.
- If interest rates rise again, many people abandon gold, trading more lucrative time deposits and ETFs that continue the cycle.
We’ve seen the cycle clearly with the 2020 pandemic shifting these balances.
Indian Jewelry Market
India is home to about 18% of the global population, and gold is one of the most culturally significant metals in that country. Most Indians use it for wedding traditions (in 10 million Indian weddings annually), religious festivals, and as a status symbol. Overall, India is responsible for over 33% of the world’s gold consumption, which receives a considerable price boost during their festival season.
Many investors put pure gold stocks in the same league as government bonds. When the dollar declines in purchasing power, they use these two hedges as a foolproof method of keeping their wealth intact. It may even raise their investment value to unprecedented heights under the right conditions.
Investing in precious metals can be a lucrative and satisfying journey, so talk to the experts from Oxford Gold Group if you have any questions about gold, silver, palladium, or other precious metals. Call us today at 833-600-4653 to learn how to beat rising inflation and falling interest rates by diversifying your portfolio.