The price of gold – how many dollars per gram, and what does it depend on?

Investing in gold is not just for the rich, as a wide range of precious metals dealers have made it possible to acquire gold as bullion or as investment coinage in various weights. Buying gold is a good way to diversify your investment portfolio and hedge against inflation and fluctuations in the financial markets. This article will reveal what determines the price of gold and how gold is valued.

How is the price of gold determined?

Though gold is traded on many exchanges around the world, the London bullion market has played the most important role in determining the price of gold per gram since the foundation of the London Gold Market – the first such market in the world – in the 19th century. Since 1987, the London Bullion Market Association (LBMA) has been responsible for determining the price of gold in real time. It publishes the current of gold twice per day, at exactly 10:30 and 15:00 GMT.

The LBMA determines prices using a complex process and accounting numerous factors. The 13 banking entities accredited by the LBMA also participate in the process. These are: China Construction Bank, Bank of Communications, HSBC Bank USA NA, Morgan Stanley, Goldman Sachs International, JP Morgan, Standard Chartered, The Toronto Dominion Bank, ICBC Standard Bank, Societe Generale, The Bank of Nova Scotia – ScotiaMocatta, Bank of China, and UBS.

What does the price of gold depend on?

The price of gold is largely determined by its fineness. As pure gold is very soft and malleable, it is often mixed with other metals to make it harder. Fineness indicates the gold content of the given alloy. Gold finenesses are divided as follows:

999 – gold content of 99.9%

960 – gold content of 96.0%

750 – gold content of 75.0%

585 – gold content of 58.5%

500 – gold content of 50.0%

375 – gold content of 37.5%

333 – gold content of 33.3%

The gold content of an alloy is also measured in karats. For example, 24 karat gold corresponds to a fineness of 999. On the other hand, 8 karat gold corresponds to the lowest fineness, 333. It is not difficult to guess that the higher the fineness, the higher the price per gram, and vice-versa. As a point of reference, jewelry such as engagement rings and earrings is made of 14 karat gold, with a fineness of 585, whereas the most popular and desirable bullion coins, such as the Vienna Philharmonic, the Australian Kangaroo, and the Canadian Maple Leaf are struck from 999 fineness gold.

The price per gram of gold also depends on other factors which every investor should be aware of. Where the purchase is made is very important, as is choosing a reliable precious metals dealer among the many offers on the market. Most importantly, there are no big discounts in the precious metals industry. Any ‘cheap gold’ deals are simply fraud. When deciding to buy gold and invest in gold, it’s best to find a local dealer who has been active in the market for years and who not only sells gold but also offers advice on what to invest in and which bullion coins will appreciate over time. In addition, a good dealer can teach you how to verify gold coins and how to start building your investment portfolio.

The price of gold also depends on other factors. The price per gram of gold is influenced by the US dollar exchange rate and by inflation, the state of the global economy, demand (especially in the Asian market), supply, and monetary policy. The market price of gold increases more often than it decreases.  The price of gold often increases in the case of political instability or a weak global economy.

It’s worth noting that prices are also determined for scrap gold. This price depends on the current quote for gold. Any non-metallic elements should be removed before selling gold jewelry. On the other hand, coin prices depend on the condition of the coin.

When deciding to buy gold in the form of bullion bars or bullion coins, it is worth following the principle of divided purchases. This allows you to both protect yourself from losing a large sum of money and familiarize yourself with the average purchase price. If a precious metal dealer offers free shipping, it’s better to buy 1-2 ounces of gold the first time around and then purchase again after receiving the goods and making sure everything checks out, as it won’t cost you anything extra. Putting money in gold is a good way to save, as gold coins last hundreds of years, whereas paper money only lasts an average of 27 years. However, it’s easy to pay too much, that’s why it’s better to resist the impulse and wait for a good price.

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