We all know that a tiny piece of gold jewelry is costly. But what about a brick of gold? How much is a brick of gold worth?
A standard brick of gold also called a Good Delivery gold bar, is worth approximately $750,000. This standard gold brick typically weighs 27.4 lbs. or 400 ounces. However, there are different kinds of gold bricks, and they all differ in weight. This means that the price of gold brick varies.
Read on to learn more about the cost of gold bricks and factors that influence what they are worth.
How Much Is a Brick of Gold Worth?
A standard gold brick, also called Good Delivery gold bar, costs about $750,000. This weighs roughly 27.4 lbs. or 400 ounces. But there are various types of gold bricks, and they all differ in weight. This means that the price of gold bricks varies.
Each gold brick can’t cost the same. You may see gold bricks of the same weight and size, but this doesn’t necessarily mean that they cost the same as well. Also, the value of gold bricks changes daily. It all depends on the gold spot price and all other factors affecting it.
Gold is measured in terms of troy ounces. Troy ounce is a unit of measurement that weighs approximately a tenth more than a standard ounce. One troy ounce is equivalent to 31.1034768 grams.
A Good Delivery gold brick is what a standard gold brick is called. Its weight typically ranges between 350 and 430 troy ounces. As for its purity, it can’t be lower than 99.5% gold.
To maintain the purity of gold bricks, they must be kept in gold bullion vaults. These gold bricks are traded globally by bullion dealers and central banks. They are rarely sold to the general public.
A Good Delivery gold brick, which weighs between 350 and 430 troy ounces, is worth about $750,000.
Factors Influencing How Much a Brick of Gold is Worth
There are several factors affecting the value of gold bricks. These include the following:
- Spot Price of Gold
- Purity and Weight
- Melt Value of Gold Bricks
- Brand of Gold Bricks
- Value of Gold Bricks Versus Coins
Let’s tackle each one of these factors:
1. Spot Price of Gold
The spot price of gold indicates the dollar value of pure gold per troy ounce.
We all know that a gold brick is a piece of precious metal. Therefore, it makes sense that the ongoing price of gold determines its value.
Earlier, I mentioned that the price of a gold brick varies daily. To be more exact, the spot price of gold varies every minute as soon as the market opens until it closes. Once the final value of gold per troy ounce is computed, you will then determine the value of a gold brick for that specific day.
2. Purity and Weight
To know the purity and weight of a gold brick, the details are typically stamped on it.
Most of the time, gold bricks are either 0.999 or 0.9999 pure, but some brands have 0.995 purity. In case you come across a gold brick with a purity that is nowhere near these figures, the chances are that it is not real gold. Be aware that alloy metals such as bronze and copper resemble gold in appearance.
To reiterate, gold bricks don’t weigh the same. They may be similar in appearance, but their weight may differ from about a gram to a kilogram. This is also a factor to consider in pricing gold bricks.
3. Melt Value of Gold Bricks
Let’s do some simple computation here:
For instance, you have already obtained details about the gold’s spot price and purity. If you have a gold brick, determine its weight in troy ounces. Then, multiply it by the purity. The result is the total pure-gold weight of your gold brick. Multiply it then by the spot price of gold.
If you have a gold brick that weighs 10 grams, that is equivalent to 0.321507 troy ounces. If the gold spot price is $1250 and the purity is 0.9999, the computation should be:
[0.321507 troy ounces x 0.9999 purity] x $1250 = $401.84
The cost above the melt value that the gold brick might sell for is called the premium. This should be deducted from the total. Therefore, using this example, the value of pure gold in your 10-gram gold brick can be about $350.
The price added to the gold brick’s melt value is called the premium. Its computation depends on several factors.
In most cases, the production and demand cost are two main factors why a gold brick may sell above the spot price. Premiums may differ, and the factors influencing it include the gold brick’s condition, manufacturer, and weight. The premium may be indicated as a percentage or as a dollar value.
In general, as the weight of the gold brick increases, the premium decreases.
What’s the Best Value of Gold Bricks to Buy?
The price of gold decreases if you buy in bulk. In terms of gold bricks, if you compute the price per gram in terms of gold bricks, you will discover that larger gold bricks have better value than small ones. The truth is, any gold brick that weighs below an ounce is definitely not of great value, mainly because of the high cost of production.
If you have noticed, new small gold bricks are beautifully manufactured. Some are even encapsulated in plastic covers and have certifications. The cost of all these is, of course, included in the computation. On the contrary, you can buy a similar size gold bullion coin at a lower premium. Why? Because it is loosely sold.
A Kilo of Gold Brick Has the Best Value
Buying a kilo of gold brick is the most recommended one. The problem is, only a few people can afford to buy that much or invest in gold at once. At the same time, buying a kilo of gold brick or more limits flexibility. Once you pay a large amount of money for a gold brick, you can’t liquidate just a portion of it. Instead, you have to sell the entire brick.
Considering quantity discounts is an alternative approach to buying gold bricks. A kilo of gold brick definitely offers the best value. But you might also want to check out the discounts offered for modest-sized gold bricks.
So, instead of buying a kilo of gold brick, you might be able to find 10 bars weighing 100 grams each. You might find this more costly than if you buy a kilo of a gold brick. But still, you will get it at a discount. More importantly, you don’t have to sell them all at once.
Again, how much is a brick of gold worth? A standard gold brick is worth about $750,000. A gold brick typically weighs 27.4 lbs. or 400 ounces. However, there are different sizes of gold bricks, so each size is worth a different amount.
5. Brand of Gold Bricks
You might be wondering if the brand has an impact on the value of a gold brick. The answer is yes.
Some brands offer gold bricks at slightly lower rates. Swiss brands are typically more expensive than most brands. But if you are seriously looking into investing in gold, you must master the skill of finding high-quality gold bricks with the cheapest rates.
6. Value of Gold Bricks Versus Coins
You should consider two kinds of physical gold if you are looking into gold as an investment. These are gold bricks and gold coins.
It is important to note that a gold brick or gold coin that features at least 22 carats in purity is not subject to value-added tax (VAT). If you have noticed, you pay VAT when you buy a piece of gold jewelry because, in most cases, a piece of jewelry has less than 22 carats. Therefore, this might not be an effective way of investing in gold.
In general, a gold bar or brick is more attractive to investors than gold coins. But that is not the case all the time. Some investors will buy gold coins at a slightly higher price. This usually happens when investors are getting Sovereign or British coins.
British gold coins are not subject to capital gains tax. They may be attractive to potential buyers mainly because of their modest size. But we are not talking about a huge difference here.
However, it is still possible that there is a big difference between the value of a gold coin and a gold brick. This is if we talk about an old gold coin such as a Victorian gold Sovereign. Its gold content is not only the basis of its value.
There are other factors to consider, such as the coin’s desirability, scarcity, and age. In which case, the gold coin may be worth more than a gold brick. But this is not a general occurrence.
The Impact of Tax on the Value of Gold Bricks
I mentioned that old coins might be exempt from capital gains tax. Unfortunately, gold bricks will never be exempt from it. Therefore, tax can have a great impact on the value of your gold brick.
Apparently, if you decide to sell your gold brick at a rate lower than your buying rate, then capital gains tax will not affect the value of your gold brick. Also, if the value of your gold brick has risen but is nonetheless lower than the annual capital gains tax threshold, then tax will not apply.
In some cases, investors opt to sell gold bricks before and after the tax year. They spread their profits over a couple of years. It ensures that gains are lower than annual allowances and, therefore, means that tax is not applicable. This strengthens the fact that buying several medium-sized gold bricks is not a bad idea at all.
Based on our discussion, it is apparent that the underlying gold price impacts the value of gold bricks. But timing is also a factor and can remarkably affect the value of your gold brick.
The law of supply and demand and the general market sentiment are two factors that can greatly influence the value of gold bricks. Suffice it to say that the market condition has something to do with the premium or discount imputed to the spot price.
For instance, if the price of gold increases, the demand for gold rises, and the sellers decrease. In which case, premiums may increase to reflect the increasing demand. At the same time, the amount paid to buy back gold bricks also rises.
On the contrary, prices of gold also experience a downside period. If there are fewer buyers, they will offer gold bricks at slightly lower premiums.
The Drivers That Determine Gold Rates
For added information, here are several fundamental drivers that influence the computation of gold rates. They are the following:
- The price movement of and the demand for other commodities
- Impact of the increasing money supply on both U.S. and global inflation
- Twin deficits caused by imbalances of trade and growth against the U.S.
- Various activities of the Central Bank, including gold sales, gold purchases, and money printing
- Real interest rates influenced the culmination of financial repression in the U.S.
Conclusion – How Much Is a Brick of Gold Worth?
A standard gold brick or bar is worth about $750,000. This weighs roughly 27.4 lbs. or 400 ounces. But there are various types of gold bricks, and they all differ in weight. This means that the price of gold bricks will vary.
If you are considering buying a gold brick, do it when the market is quiet, as it indicates low rates. Then, sell your gold brick when the market is bullish.