Gold is a popular investment choice because of its stability and low volatility. Its prices are one of the most complex commodities because, unlike other assets, the gold market is flooded with various sizes of gold bars.
This makes it difficult to choose if you are a first-time investor.
But how much does a gold bar cost? It is a common new investor query. That is why we are here to help by breaking down the pricing analysis according to sizes and other influencing factors.
Hopefully, you will be a pro at calculating the costs alongside tax regulations by the time you are done. So, without further ado, let’s get started!
The Cost of the Popular Sizes of Gold Bars
These bars come in various sizes in the marketplaces, including- 1g, 5g, 10g, 1kg, 1oz, 10oz, 400oz, etc. Among them, 400oz bar (12.5kg or 25 pounds) and 1kg bar are the most common.
| Weight of the Gold Bar | Cost Price (Dollar) |
| 1oz | 1896.36 |
| 10oz | 19,970.67 |
| 400oz | 658,285 |
| 1g | 76.95 |
| 5g | 330.39 |
| 10g | 653.08 |
| 1kg | 64306.14 |
[source: Gold price, LBMA]
We already know that the cost price depends directly on the spot price. The spot price fluctuates at every moment, even at this very second. It also differs from supplier to supplier. Hopefully, you can get a clear idea about the pricing of gold bars.
Understanding the Cost Calculation
We need to understand two different things clearly to understand the cost calculation. They are
Spot Price
The current rate at which gold can be bought and sold at a specific time is the spot price of gold. However, it only acts as a benchmark, not the actual value for buying and selling gold.
Higher the demand, the higher the price. The spot price is generally expressed as per ounce or gram.
Weight
The weight itself is self-explanatory; gold is purchased or sold in many different units of weight – the most popular units are the ounce, gram, pound, and kilo.
At this stage, the cost price of a gold bar = the current spot price * weight of the bar. So, if the spot price of a gold bar is 10 dollars per gram, and the weight of the bar is 10 grams, the bar’s cost price is $100.
Pricing Analysis (Previous 5 Years)
Back in 2017, the gold price per ounce was $1200.14, and it shifted to $1717.57 in 2021; most importantly, the price is $1896.36 now. Therefore, the price increases 43% between 2017 to 2021. Let us show the clear picture in this infographic
Therefore, the price of the gold bar was rising satisfactorily for a rolling period. If we go back to 1970, the price was 34.95$. But the rate of increase wasn’t that satisfactory until the 2000s. It skyrocketed after the year 2000, and we can see the spike now.
Factors Influencing the Gold Price
The process of understanding the factors can be a little tiresome. However, even inexperienced investors may recognize the link between standard stock market data and the resulting shift in trading prices. But, because gold is effectively money, it has some other influences, including –
- Inflation is prevalent throughout the world, particularly in the United States;it implies a growing money supply
- The ‘indirect price’ of other commodities’ manufacturing costs
- Real interest rates
- The printing of money and dealing in gold by the central bank
- Imbalances in trade and growth
Influencing factors can also include psychology, speculation, and market manipulation. The cost of mining gold from the earth’s crust is high since much of it is alloyed with other metals, making pure gold extraction difficult (and expensive).
As a result, gold production is very susceptible to market prices. Less gold on the market means higher prices.
Market History and Tax
Gold prices have climbed 83.73% in the last 10 years, from roughly $664 per ounce to around $1,220 per ounce (whether in gold coins, gold bars, or gold bullion). The gold price per ounce reached $1,825 at the peak of the last market, an increase of 174.85%.
Usually, you are saved from paying taxes when buying gold. Unless you buy worth more than 12,000 pounds at a time which is when you are charged 2% tax for that transaction.
So, it might be possible to sell some before the tax year-end and some afterward to spread your profit and avoid incurring tax.
Conclusion
Gold is a wonderful investment to add to your portfolio, whether you’re a seasoned investor or a novice. Everyone starts with the basics, like how to invest in gold or how much does a gold bar costs, so there is nothing to worry about.
Compared to other major financial assets, gold has a good yield. This is because gold’s intrinsic worth is unaffected by short-term market volatility.
Hello, I’m a specialist in cost estimation. My name is Daniel and I have been in this field for 3 years. I estimate the cost, materials, and time needed to render a service or manufacture a product. It usually involves in-depth research and calculations, but with years of practice, I have become an expert cost estimator.