When Should I Buy or Sell Gold?
Having the right investment strategy is vital to building your wealth. Many investors hold commodities such as gold and silver in their portfolios. Knowing when you should sell and buy gold is essential if you want to maximize your gains. Before you can buy and sell gold successfully, you’ll need to know some of the key terms associated with the process and what makes the price of gold fluctuate. Then, we can discuss the best times to buy and sell gold so you can make the most money from your investment.
What You Need To Know About Buying and Selling Gold
Before you attempt to buy and sell gold, there are several key terms you need to know, including the following:
The spot price for gold is the current market price, which is determined by supply and demand. This amount changes constantly, but it’s how the value of gold is calculated for those looking to buy and sell. Spot prices are given in troy ounces and usually for U.S. dollars as well.
The bid price is the highest amount someone is willing to pay for your gold. For example, if you have a piece of gold jewelry you want to sell, the bid price will be based on the quality of your gold, the spot price, and other factors. The purer the gold, the higher the price.
The ask price is the amount you want to receive for your gold. You must consider the spot price and the quality of the gold or gold item you want to sell. Remember that you may want to leave room for negotiating when you set your ask price.
Premiums are the costs a gold buyer charges in addition to the spot price. They charge these fees because they need to cover their business costs and melt down items they buy. Typically, you can expect to pay about a premium of 5% when buying gold.
What Makes the Price of Gold Fluctuate?
It’s also important that you know what makes the price of gold fluctuate before you try to sell or buy. Some of the main things that cause the price of gold to change are as follows:
Economic policies set by central banks in the U.S., Europe, Japan, and other markets affect the price of gold. When the U.S. Federal Reserve, for instance, changes interest rates, the price of gold fluctuates. This fluctuation can dictate when you want to buy or sell your gold. The interest rate is tied to the U.S. dollar, so gold prices could fall if interest rises. Whereas if interest rates fall, gold prices may soar.
Supply and Demand
Supply and demand drive market prices in many areas, including gold. So, it makes sense that the more people who want to buy gold, the higher the price goes. If fewer people are buying, then the price will come down. Demand could increase if you notice that central banks are buying gold or China and India want more jewelry. Supply may be up if investors are selling.
Inflation means that your dollar isn’t worth as much now as it was in the past, so you can’t buy as much with it. This concept also affects the price of gold. As the dollar’s value goes down and prices of goods go up, gold also rises. People tend to buy gold as an inflation hedge because it holds its value over time, so the demand for gold goes up when inflation hits.
Economics is part of each of the above-listed items, but the overall economics of a country and the world can affect the price of gold. When people are uncertain about the economy, they buy gold to protect themselves and their investments. If the economy is doing well, investors may have their money tied up in other more lucrative ventures, causing the price of gold to fall.
When Should You Buy Gold?
Now that you know a little more about gold, let’s discuss when you should buy some.
Before a Market Crash
Before a market crash or a recession is the best time to buy gold. Although it can be difficult to predict when either of these events will happen, you can watch for the signs and set yourself up to take advantage of the market.
During Certain Times of the Year
Certain times of the year are best for buying gold. March has historically had the lowest prices, but early in the year seems to have lower prices in general, and as the year progresses, the prices tend to go up.
When the Price Is Right
If you notice the price of gold drops unusually low, don’t hesitate to buy some. Any time gold is a decent price, you can buy it without worry.
Any Time You Can
No matter what the price of gold is today, you can’t go wrong buying some if you can afford it. This is an asset that’s always good to have in your portfolio.
When Should You Sell Gold?
If any of the following things happen, you can consider selling your gold:
Sometimes life throws an emergency in your path, and if this requires you to raise capital, then you can sell your gold. One of the wonderful things about gold is that you can always find someone to buy it.
The Price Rises
If the price of gold rises unexpectedly high, you may want to sell to make a profit. You can then use the money to purchase other assets or wait for the price of gold to drop again and buy more.
It Just Makes Sense
There are a lot of economic variables that make up an investor’s portfolio. So, you should sell your gold when it makes sense for you. If the price goes up and you want to sell, you can. If you could put the money to better use, sell the gold. Do what makes sense for your financial situation.
Our Las Vegas Jewelry & Coin Exchange team has the experience to help you through the gold-buying process, whether it’s your first time or your 100th time dealing with gold. Contact us today to find out how we can help you with your gold selling and buying needs.
Image by Scottsdale Mint is licensed with Unsplash License