The World’s largest gold bar is on display in Japan at the Toi Gold Museum . It was manufactured by the Mitsubishi Materials Corporation, and went on display at the museum in 2005. The Toi Gold Bar weighs a massive 250kg, or some 8037.686 troy ounces. At today’s current spot price of $1610.30 USD per troy ounce, the Toi Gold Bar is worth some $12.9 million dollars (USD). That is one massive currency hedge!
The standard gold bar held and traded internationally by central banks and bullion dealers is the Good Delivery bar with a 400 oz. nominal weight (from Wikipedia). Its current value at $1610 USD per troy ounce is $644,000 dollars (USD). When countries store gold reserves, they are using the 400 oz. Bar.
For individual investors, gold producers also forge 1kg gold bars, the equivalent of 32.15074656 troy ounces. At today’s post price of $1610 USD per troy ounce, a 1kg gold bar is valued at $51,772 dollars (USD). Gold bars are also available in 500 and 100 gram denominations. For the average investor buying large gold bars really doesn’t make much sense. Alternatives such as precious metals funds, gold bullion ETFs, and single troy ounce gold coins, make investing in gold much more practical.
Is Gold A Good Investment?
When times are uncertain, it’s no surprise to see the Gold Bugs making a comeback. Many investors do not consider gold bullion as a suitable investment, especially as it does not produce income. However since the Financial Crisis of 2008 and 2009, and continuing global economic instability, the price of gold has been increasing in price and held its ground. I’ve been one of those investors who haven’t jumped on the gold bullion wave, but looking back I sure wish I did!
Back in July 1999 gold was trading around $256 USD per troy ounce. By September 2011, gold had reached a peak of $1892 USD per troy ounce, a 640% increase in 12 years, or 53% average annual return. Today, gold is valued at $1613 USD per troy ounce. For the ten year period ending June 2012, gold has increased from $325 to $1613 per troy ounce, an increase of $1288 dollars (USD) or 396% return. Although gold does not pay you any dividends or interest, simply holding the metal over the last 10 years would have netted you a 39% average annual return. A ten year chart of gold tells the whole story.
Is it Too Late to Jump Onboard?
It’s easy to look back in the rear view mirror. Although gold has been a great investment over the last decade, there is no guarantee it will continue to be. During strong bull markets, gold tends to lose its lustre, and usually makes its comeback during market downturns and uncertain economic times.
Those uncertain economic times look poised to continue, as G7 nations deal with massive deficits. In Europe countries such as Ireland, Greece, and Spain have teetered on the verge of default, yet they have been bailed out by wealthier nations. Europe and the G7 countries continue to pass the “hot potato” of debt from one nation to the next, print more money, or issue new sovereign bonds to band-aid the problem. But as David Trahair pointed out in his recent book Crushing Debt, it is unlikely that the government and sovereign debt will ever be repaid.
In light of this economic uncertainty, gold may hold its value, and it could well be a hedge if there actually is a sovereign default. Will gold soar to new highs as it has over the last decade? That really is the million dollar question. 😉
This post was written on behalf of Gold Made Simple, and is not intended as an endorsement or recommendation to buy gold, and is provided for educational and entertainment purposes only.