Due to the volatility in the stock market and uncertainty in the wider economy, some investors expect it. But not everyone knows how gold works as an investment, especially in terms of its trading value.
From buying gold coins to buying gold ETFs, there are several ways to do this. Depending on how you price may vary. Generally, these prices reflect the underlying commercial value of an ounce of gold.
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How much is gold worth?
If you want to buy gold, it’s worth understanding what you’re getting yourself into. Here we take a look at how much gold is currently worth, its historical value and its potential future value.
How much is gold worth now?
The spot price of gold, i.e. its trade price, is USD 1759.35 per ounce as of November 11, 2022, according to the World Gold Council. However, this spot price is not necessarily what you would pay if you bought gold now.
Bullion gold, like bars and coins, often trades at a premium to the spot price, especially if considered a collector’s item. For example, if you bought limited edition gold coins directly from the US Mint, you could pay around $2,500-$2,600 per ounce.
If you bought a gold ETF that is backed by physical gold, the share price may be much lower than the spot price per ounce, but that is because you are buying a pro-rated share of a gold mutual fund. The value of a gold ETF would still typically reflect the gold spot price, with some minor fluctuations, for example if the fund held some cash.
So, as an investor, you can focus more on the profit or loss percentage of your gold investment, based on your entry point.
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How much was gold worth a year ago?
A year ago, the gold spot price was $1,857.90 an ounce. Thus, the value of gold fell by about 5%. In early 2022, gold prices were on the rise, but since their peak in March, the price of gold has fallen by around 14%.
For some, these phrases emphasize that gold does not always rise during periods of inflation or other economic challenges.
“Contrary to popular opinion, gold is not an unexpected inflation or currency hedge. Last year showed this particularly well,” says Loreen Gilbert, CEO of WealthWise Financial Services.
Instead, he says, assets serve more of a diversification purpose.
How much is gold historically worth?
In the long run, gold has a high value. About 51 years ago, the United States abolished the gold standard, meaning the dollar was no longer backed by an equivalent amount of gold. Since that timeincreased significantly.
At the end of 1971, the spot price of gold was $43.48 an ounce. That’s significantly less than today’s prices, which peaked at over $2,000 an ounce in 2022, according to the World Gold Council.
Adjusted for inflation, gold has yielded about a 6-fold return since the end of the gold standard.
If you think gold makes sense for you, contact a professional to help you start diversifying your portfolio.
How much will gold be worth next year?
One way to estimate the predicted price of gold is to look at futures contracts. CME group data shows that December 2023 gold futures cost $1,854.90 as of November 11, 2022, more than 5% above current prices.
The future price of gold may depend on how people value the metal itself, for example for jewelry purposes, as well as investor demand for the asset.
“It’s probably a function of utilitarian need in the long run and speculation in the short run,” explains Gilbert.
If investor demand for gold increases because people want to diversify their portfolios, for example, it could push gold prices up. However, notes Gilbert, gold competes with other assets for diversification, such as other precious metals and now cryptocurrencies.
Overall, it is clear that gold prices are much higher than in the past, but there is no guarantee as to what will happen in the future.
can provide a source of portfolio diversification and potentially be used by those who wish to speculate on price movements, it is not always as simple as saying that gold prices will increase if inflation is high. Several factors can affect asset prices, so it’s important to consider the bigger picture and perhaps consult a trusted professional to decide if you want to buy gold.
Have more questions? Talk to a gold expert who can help you now.