Gold and silver bars are thin, rectangle-shaped pieces of metal that are produced by private minting companies all around the world. These mints charge a small premium over spot price for fabricating raw gold and silver into neat, stackable bars.
When a mint fabricates a gold or silver bar, they will stamp their company name or logo onto the bar, along with the weight and purity. These indications help investors determine exactly what amount of metal is contained within the bar.
Most mints produce gold and silver bars with fairly similar dimensions, but each mint’s sizing will be slightly different, so you can usually only stack bars that have been produced by a single mint.
Gold and silver bars (along with rounds) carry the lowest premium over spot, so they are favorites of investors who are primarily interested in accumulating as much metal for their dollar as possible.
Common metric weights for gold bars range from 1g to 1kg, while common English weights for gold bars range from 1 oz to 10 oz. Lesser and greater bar weights certainly exist (such as Good Delivery bars which weigh ~400 oz and are primarily held by central banks and investment trusts), but these ranges contain the most common gold bar weights available to individual investors.
Advantages of Bars:
Easily stored and transported, as you can stack bars which were produced by the same mint.
Carry the lowest premium over spot price for both gold and silver.
Disadvantages of Bars:
Generic bars produced by normal mints do not offer any sort of “collectability” factor.
The largest bars (10 oz gold bars or 100 oz silver bars) may be harder to trade in event of a crisis than smaller bars.
Spot Prices of Gold and Silver
There are many factors that go into the spot prices of gold and silver. Though they are different metals, spot prices for gold and silver tend to parallel each other. It is very unlikely for the price of gold to go in one direction and for silver to go in another. When it comes down to it tend to flow in the same direction across the entire precious metals market, which also includes platinum and palladium.
Usage of Gold and Silver
Industrial usage is one of the driving factors behind the pricing of any commodity, and precious metals are no exception. Silver and gold are both used to create many more items than most people can even imagine. From car parts to computer parts, precious metals play a role.
Outside of industrial usage, jewelry has some of the biggest influence in how the market prices gold and silver. When there is significant demand for metals, the price is going to rise. If there is little demand, prices are likely to remain flat or fall.
Investment
Whether you are an individual or an entire government, gold and silver serve as one of the premier forms of investment. There is no way it can be artificially produced, which ensures its rarity and inherent value. Understanding this, you will realize that those entities with larger buying power will play a sizable role in the pricing of metals. If an individual purchases gold or silver, the market won’t realize. If an entire government buys gold or silver, like India or China, the market will be impacted.
Reasons for Price Movements
Aside from usage and general large buys, the prices of gold and silver tend to move with influence from current news and world events. If there is worry about the stability of a currency, gold and silver will generally see an uptick in spot prices. If the United States Dollar (USD) strengthens for extended periods of time, you should expect to see a downtick in the prices of precious metals. When currency becomes weak, metals become stronger, and vice versa.
Beyond currency movements, general economic news also affects the price of gold and silver. If the Fed (United States) makes an announcement in regards to any sort of government policy (be it interest rates, general economic outlooks, etc.), gold and silver usually react in one way or another. Gold and silver frequently play off of expected future events. Of course, this is true for almost any form of investment, and prices can certainly be reactive as well.
In the end, there are almost infinite factors that come into play when discussing spot price of gold and silver and how it is determined. Supply and demand define the prices for all commodities, with ETFs and other similar vehicles setting the bar for the price of physical gold and silver. The prices of gold and silver are literally changing by the second, and with a bit of research, you might even be able to predict the next
