One question that we hear quite frequently, especially from investors who are just starting out is: “How much is a gold bar worth?” To help you better understand the answer to this question, we’ll be going over all of the factors associated with determining the value of any gold bar.
Before we start, it is important to know that not all gold bars are worth the same amount of money. Even gold bars that weigh the same and are the same size may not be equal in value. Another thing you should know is that the pricing for gold changes every day that markets are open in conjunction with the gold spot price.
Current Gold Spot Price
One of the most important factors that goes into determining how much a gold bar is worth is the current spot price of gold. After all, a gold bar is just a piece of metal, so it would make sense that the going rate for the metal it’s made of would have some say in its value. The gold spot price will tell you what the dollar value is for one troy ounce of pure gold on the market.
One thing to keep in mind is that the gold spot price changes every day when the market is opened, as well as after hours in Asian markets. Once you know what the spot price of gold is, you can then follow the steps below to determine what a gold bar is worth.
Gold Bar Weight & Purity
Once you know what the current price of gold is, you will then need to know what the weight and purity of the bar are. The weight and purity will have been stamped onto it somewhere by the manufacturer, either on the front or back. Most bars are either .999 or .9999 pure, though some brands may produce them in as little as .995 purity. If you are looking at a gold bar that is not stamped with this information, it may not be real gold. Some common alloy metals that appear similar to gold are copper and bronze.
The weight of gold bars will vary dramatically from 1 gram up to 1 kilogram to 400 troy ounces.
Gold Bar Melt Value
Once you have all of the information above, you will then take the weight of the bar and multiply it by the purity. This will give you the total pure-gold weight of the bar. After that you will multiply that number by the spot price of gold.
- [weight (in troy ounces) x gold purity] x spot price = gold bar value
As an example of this formula, we will use the 10 Gram PAMP Suisse Gold Bar. To calculate the value of this bar we will be using a hypothetical spot price to simplify the process. Let’s say that gold spot price is $1,000 USD. In this case, we would multiply the weight (10 grams or 0.321507 troy ounces) by the purity which for this bar is .9999. The formula would be as follows:
- [0.321507 x .9999] x $1,000 = $321.47
In this example the value of the pure gold inside of the 10 Gram PAMP Suisse Gold Bar would be $321.47. This does not include the premium, which is the price above the melt value that it might sell for.
Over-Spot Premiums
As the word implies, a “premium” is a price added onto a gold product’s melt value. Many gold bars can sell for a premium over spot price for a lot of different factors. Most commonly, demand and production costs are the biggest reasons for a gold bar selling for more than spot price. Premiums can differ depending on the weight, condition or manufacturer. It is normally shown as either a percentage or dollar value. A premium will decrease as the weight of the gold increases.
