Don't bars of gold and silver get your juices pumping? Ha! Who hasn't dreamed of owning a boatload of them. They are compact, heavy, pretty, and worth a ton of money. Nice!
First we will discuss value, then cautions. Please read both.
Value - Bars of gold and silver are worth their weight in gold and silver. Fancy packaging, elegant engraving (like Bruce's bank note replica), certificates of authenticity, plastic storage capsules, and all similar marketing ploys add virtually nothing to the value. It's just the precious metal they contain. To find that value, go to a web site such as kitco.com and find the current value of the precious metal. At the time of this writing, gold is at $1305 US dollars per troy ounce and silver is at $19.60 per troy ounce. But look it up now. It changes every minute.
To compute the value of your gold or silver bar, first make sure it is 99.9% fine (i.e., pure gold or silver), then find out how much it weighs, which is always stamped into the bar. Next, be sure the weight is in troy ounces. Remember when dealing with precious metal, 'troy ounces' and 'ounces' means the same thing: they both mean 'troy ounces.' Don't be confused. Troy ounces are different than normal avoirdupois ounces, and there are 12 troy ounces in one troy pound, not 16. If the weight is given in grams, use the conversion 1 troy ounce = 31.1 grams. For instance, a gold bar like Bruce's is marked 100 grams. Therefore it contains 100/31.1 = 3.215 troy ounces. That's a lot of gold!
Once you have the weight in troy ounces, multiply by the gold or silver value per troy ounce to obtain the Base Value (BV). Bruce's 3.215 troy ounces of gold is worth 3.215 x 1305 = $4196 Base Value. But tomorrow it will be worth more, or it will be worth less, as the price of gold goes up and down.
The actual value of a gold or silver bar is the value you can buy or sell it for. If you are buying gold, expect the dealer to charge a little more than Base Value. If you are selling, expect the dealer to offer a little less than Base Value. Of course it is YOU who must decide how much a 'little more' or a 'little less' actually is. As a rule of thumb, I like to use 15 percent as a margin. Using my rule of thumb, Bruce could sell his $4196 BV bar for 0.85 x 4196 = $3566. But, if Bruce shops around for a buyer, he might be able to do much better. The size of the margin is proportional to the size of the transaction. If you have $50,000 worth of gold to sell, you should be able to do much better than 15%. If you have $100 of gold to sell, buyers won't touch it for 15%, they will want more. Remember, dealers are in business to make money and keep their dealerships afloat. They can't do that without reasonable margins. Shop for the best deal and always watch out for scams.
With all that said, if you can somehow bypass the dealer and buy or sell directly from another investor, you can omit the dealer margin and keep the money for yourself. This, in general, is very difficult to do. Dealers are set up to deal; private individuals are not.
Caution - Tungsten weighs about the same as gold. Right now tungsten is selling for $1.50 per troy ounce. I once heard a story about a guy who bought gold-plated bars of tungsten at the gold price, not the tungsten price. He was really mad when he found out his gold was tungsten. Ouch! This is the risk you take when you buy gold and silver bars. Their guarantee is only as good as the seller you bought them from. While there are plenty of honest and reliable dealers, there are also scam artists and shysters. Buyer, and seller, beware.
Check the real and fake silver bars in our side image. Can you tell the real from the fake? Click to this page from the Northwest Territorial Mint (click here) for the answer about how to tell them apart.