Gold Bullion Valuation

The key concepts relating to valuing gold bullion are explained below.

Gold Weight

Gold bullion contains pure gold plus some impurities. The weight of the pure gold (excluding impurities) is expressed in troy ounces (toz). Be aware that troy ounces weigh slightly more than normal (avoirdupois) ounces (oz). 1 troy ounce equals 31.1035 grams. When calculating the value of gold bullion, it is only the weight of the pure gold (excluding the impurities) that is used. The gold price is expressed in pounds per troy ounce (£ per toz).

Gold Bullion Coins

With gold coins, the weight of pure gold (excluding impurities) is usually stated in troy ounces, so the value is calculated as:

Coin Value (£) = Gold Weight (toz) X Gold Price (£ per toz)

eg What is the value of a 1 toz coin, if the gold price is £2,000 per troy ounce?

Coin Value = 1 X 2,000 = £2,000

Gold Bullion Bars

With gold bars, the weight (including impurities) is usually stated in grams along with the purity. Purity refers to the proportion of the total weight that is pure gold. Purity is measured in fineness or carats. Fineness is expressed in parts per 1,000 (eg 999.9 = 99.99%). Carats are expressed in parts per 24 (eg 22 = 91.67%). So the value is calculated as:

Bar Value (£) = Bar Weight (g)  X  Purity (as a %) / 100 / 31.1035 X Gold Price (£ per toz)

eg What is the value of a 1Kg 999.9 fine gold bar, if the gold price is £2,000 per troy ounce?

Bar Value = 1000  X  99.99 / 100  /  31.1035  X 2,000 =  £64,295

If the bar’s weight of pure gold is stated in troy ounces, then the same formula for coins above can be used.

Gold Dealer’s Fees

When buying gold, the dealer’s fee is applied as a % on top of the value above, typically between 1.5% to 8%.

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