The year 2020 caught the world by surprise. The entire world has felt the economic stress of the COVID-19 pandemic. Another part of the population watched as the value of gold increased by nearly 26%. That’s an attractive number, wouldn’t you agree?
If gold bars are not on your list, they should be. They are a great investment, serving as a strong hedge against the risk of rising prices. Before diving into what gold bars are worth, let’s get an understanding of what they are and the options available to you.
Gold Bars: What Are They?
Gold bars, as well as gold nuggets or bullions, are refined metallic gold-containing high purity levels. When gold is first mined, it doesn’t have the weight and shape it will have at purchase. Manufacturers are responsible for that.
Manufacturers must be approved by the London Bullion Market Association (LBMA). The approval states that the refiner’s working conditions meet specified criteria. London Bullion Market Association-accredited gold bars do have guarantees, ensuring the gold is 99.9% pure, high quality, and tradeable worldwide. There are many gold manufacturers to choose from when investing in gold. Here are some of the most trusted:
- Perth Mint
- PAMP Suisse
- Royal Canadian Mint
Does the manufacturer matter? Not necessarily. But it’s safest to choose an accredited refiner versus one that is not accredited or trustworthy. Also, if you plan to add your gold to an IRA in the future, be sure that the manufacturer is IRS-approved for IRAs.
Refiner’s produce gold bars in different shapes and sizes, ranging from one gram to as much as a kilo. They even imprint a serial number to identify the bar on its face and include a stamp indicating its exact weight. Don’t be fooled by the weight measurement. The ounce you know today does not equate to the ounce gold measures in. If gold weighs an ounce, it means a troy ounce. A troy ounce is equivalent to 31.1 grams versus 28.34 grams in a regular ounce. Can you believe one troy ounce of gold is similar to that of one slice of bread?
Since gold is manufactured in different shapes and sizes, three types of gold bars are available for purchase: cast, minted, and CombiBar.
Cast gold bars: Cast gold bars are unique. No two bars are the same due to the manufacturing process.
Minted gold bars: These are the most commonly sought-after gold bars. They are shiny, clean, and straight when crafted.
- CombiBar gold bars: These bars are smaller and more flexible. They are the newest on the market. You can purchase these in smaller quantities.
Consider storage for your gold bars. Keep them in a safe place, whether at your home in a safe or at a bank in a safety deposit box. If the quantity is large, you can consider off-site, third-party storage, which comes at a price.
Why You Should Consider Investing in Gold Bars
You want to invest your money but are unsure of the best method to select. Investments come with a level of uncertainty. Should you choose stocks, bonds, or what about precious metals? How about gold? One of the safest and most secure investment options is gold. For decades, it has had a high reputation in the investment world. It remains a top choice today.
By investing in gold, you reap the advantages. Overall, gold is a solid balance to an investment portfolio. It helps to account for and adjust the level of risk on return your portfolio carries.
Preserving Your Wealth
Gold can not simply be printed like a dollar. Because of this, its value does not deteriorate in the same manner. Have you heard the term mainstream asset before? Gold is exactly that, a mainstream asset. It comes with competitive returns, increasing the value in your pocket over time.
Gold as a Source of Return
Investments, such as stocks can quickly collapse in the market. Gold holds a strong track record of maintaining its value. It is not easily affected by the highs and lows of the market. You can consider gold as a haven.
Use gold to keep your investment portfolio diverse. Bonds and stocks may not cut it when reviewing your investment goals. Gold adds a balance to your portfolio. Similar to the value of the dollar, gold also tends to move in the opposite direction to the stock market. Simply adding no more than 5% - 10% can make a difference. Keep this in mind when building your portfolio.
The Value of Gold Bars: What Is It Worth?
The price of gold is fixed daily. It has a reverse relationship with the US dollar, meaning when the U.S. dollar value decreases, the value of gold increases.
There are a couple of factors to consider to determine the value of gold. This primarily includes supply and demand. Additional influences include:
- Inflation or deflation
- Interest rates
- Equity markets
- Risk aversion or appetite
The good news is that gold holds the same value in the U.S. as it will somewhere else in the world. The only difference is the form of currency used to purchase it in the exchange.
So how do you determine the worth of a gold bar? You apply the weight and fineness of your gold to the daily spot price. In 2021, it’s trading $1,700-$1,800 per ounce. They’re forecasted to trade up to $2,500 depending on variables such as crisis or no crisis.
Have you thought about tax implications should you decide to sell your gold? That’s not always at the forefront. Gold carries a favorable tax rate when traded through ETF or stock. With gold bars, your tax rate is your marginal tax rate up to 28% for long-term assets and your marginal rate for short-term assets.
Ways To Invest in Gold
If you’re past the stage of consideration and ready to invest in gold, congratulations! Now it's time to explore the options you can select from. Several options include jewelry, coins, bullion, futures, ETFs, mutual funds, stocks, etc. Do thorough research on each option to determine which best fits your investment planning goal.
Gold Bullion or Gold Coins
Imagine having gold bars or gold coins in your possession. They are emotionally satisfying to have, especially because you can physically see them. There are many online dealers you can purchase from and different purchasing options to choose from, such as per bar or in bulk. So how do you buy gold bars or gold coins? Approach a reputable dealer and pay the spot price. This is the price per ounce based on the market which can change daily.
Investing in gold futures means that you are going into a contract with a gold dealer. What does the contract do? It establishes a specific price that you, the investor, will pay on a future date. Where are the contracts sold? On the New York Mercantile Exchange, or NYMEX. What is the benefit to you? With gold futures, you are setting the price, the date and have the flexibility to pay for the investment installments. You can receive physical gold at the end or continue to exchange through the market.
If you prefer not to store gold on the premises, ETFs are an option you can consider. ETF stands for exchange-traded fund. It is similar to a mutual fund and is a more liquid option than the gold bullion. They are easily exchangeable for cash at the market price. ETFs either follow a process, tracking price changes of the gold or deal directly with gold companies.
Within your stock portfolio, you have the option of owning shares of mining stocks. This is an excellent alternative to owning gold, though remember that you are not physically purchasing gold bars, coins, etc. Mining stocks work as any other stock does as the price of gold rises, the mining company's profit increases along with your investment.
The Bottom Line
Gold bars in 2021 continue to hold their value. It is only anticipated to rise over the next five years. Consider investing in gold bars physically or digitally, diversifying your investment portfolio to balance any negative effects of the market. Your wallet and future retirement will thank you for it.
Are you interested in investing in gold but couldn’t upfront the cost? Options are available to you at Acre Gold.
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8 Things to Know Before You Invest in Gold | Investing 101 | US News