The ‘spot price,’ or the going rate for futures contracts on global commodity exchanges, is reported in dollars per troy ounce. Since one troy ounce is approximately 31.1 grams, to find the spot price of gold per gram you simply divide the reported price by 31.1. For example, a spot price of $1,750 per ounce is equivalent to $1,750/31.1 or $56.27 per gram.
Very little physical gold actually changes hands on the commodity exchanges, however. Instead, contracts are bought and sold speculating on the future price in the over the counter (OTC) market. While the standard COMEX contract is for 100 ounces, standard OTC trades range from 5,000 to 10,000 ounces in units of 400-ounce London good delivery bars.
By comparison, Credit Suisse, Pamp Suisse and Johnson Matthey produce gold bars for the retail market in weights ranging from 1 gram (0.032 ounce) to 1 kilogram (32 ounce). In retail trade the price per unit should fall as the quantity purchased rises. Since nearly 12,500 one-gram bars can be produced from a single London good delivery bar, it is reasonable to expect the simple conversion of the price of gold per gram to be substantially lower than the price of a one-gram bar.
So who buys gold by the gram? Those who electroplate gold, such as jewelers, frequently buy in small quantities. But gold by the gram also gives very small investors the chance to hedge their limited assets. Their relatively low price also makes one-gram gold bars ideal as an alternative medium of exchange.
While knowing the gold price per gram doesn’t directly translate into the price for one gram of gold, it does provide a good measure of how much your dealer is really adding on.