Gold prices have been surging since late 2018 and have climbed nearly 35% in 2020. This unprecedented surge is causing a slew of investor interest in gold as the U.S. economy remains unstable. The U.S. economy shrank by a stunning 9.5% from April through June, marking the fastest quarterly drop in modern record-keeping.

Here are four reasons why gold prices are exploding:

Sense of stability

Gold is insulated from inflation and uncertainty. It is relatively stable over time, and its value isn’t easily depreciated by outside factors or currencies.

Weakened dollar

The dollar has depreciated and gold is cheaper in other currencies.

Low yields

Current Federal Reserve policies have weakened the bond market and brought down yields, making gold more attractive to investors.

Fanfare

Increased media attention leads to more investor interest, and some analysts expect prices to continue to rise.

Last month, Phillip Streible, an analyst with Blue Line Futures predicted gold would hit $2,500 by December 2021. Other market watchers believe it could happen as early as next week or by year’s end.

Predicting the future

Physical stockpiles of gold have exploded, and there is reason to believe that gold prices will continue to rise.

ABC stated that today’s economic and market conditions create a perfect storm for soaring gold prices. But the article also added a note of caution by one expert: People want to find some sort of insurance in a financial crisis and own a safe asset. But there just aren’t safe assets in a financial crisis.

While this is a lot of information for someone looking to unload an old trinket, this just might be the Black Swan episode people have been waiting for to cash in.  We would be happy to provide you with a valuation on any gold pieces you may wish to liquidate. Visit our gallery or give us a call for a complimentary consultation.

The price of gold is going up. It might be a good time to consider selling your old gold jewelry or other gold items you have sitting around collecting dust. Take a look at what’s happening in the world of gold. It’s all coming up roses and it may be time to cash in while the getting is good.

Here are some facts about gold to shed some light on how it is priced and traded:

Spot price

Spot Price represents the price at which the commodity may be exchanged and delivered upon now. The spot price for a troy ounce (31.103 grams) of gold in U.S. dollars (USD) is driven by speculation in the markets, currency values, current events, and other factors, and is used to determine the exact price and changes every couple of seconds during market hours.

How spot gold prices are determined

Gold is traded worldwide and the spot gold price is calculated using data from the front-month futures contract traded on the COMEX. Gold pricing is fixed or set by the London Gold Fixing Company twice a week at 10:30 AM and 3:00 PM GMT. This price is determined by certain LBMA market makers, including representatives from Scotiabank, Deutsche Bank, and HSBC. Gold is always traded in USD.

Bid and Ask prices

Bid prices represent the current maximum offer to buy, and Ask prices represent the current minimum offer to sell.

Actual purchase price vs. spot price

The spot price does not factor in a dealer, distributor, or minting markups. The spread between their buy and sell prices represents the dealer’s gross profit. This will figure in the valuation of your old jewelry or other gold items.

The price of gold is the same all over the world

The price for an ounce of gold is the same all over the globe. Gold can be highly volatile, but the price can stagnate during quiet periods. Many factors affect volatility. Gold may be a “safe-haven” asset because it has almost no counterparty risks and needs no performance by outside entities to retain its value. However, there are times when gold and the stock market move together.

Gold is traded all over the world around the clock. Banks, financial institutions, and retail investors can access the gold market worldwide. Gold spot prices change every few seconds during market hours and can fluctuate throughout the course of a day.

Gold as an investment

You can invest in gold in the form of bullion or paper certificates. Physical gold is found in bar, coin, and round form. Purchasing gold certificates is another option. A gold certificate is a piece of paper evidencing ownership at some other location. Some investors prefer to hold their precious metals in hand.

Futures contracts

An alternative investment strategy is the gold futures contract that insures the sale or purchase of gold at a certain price on a specific date. The price of the futures contract can fluctuate between now and then. Obviously, there is a higher risk in a futures contract as it is based on speculation.

Gold products, especially gold coins, are priced based on gold content and their collectability. The collectability premium may have wildly different market values based on the mint, rarity, and condition. These factor into the valuation of your jewelry or other gold items such as coins, so proceed with caution. Consider trading up to something of higher collectible value. We can help you.

Tax exposure

Certain states place sales taxes on physical precious metals such as gold. When buying online, internet retailers will only charge you sales tax if you are an in-state customer, and if the state does indeed tax precious metals.

Assay

An Assay is a certificate or encasing that guarantees the purity and authenticity of the accompanying gold piece. Assays typically include a serial number, which will match the serial number imprinted on the bar. Assays will also include a signature by the official assayer of the piece.

With gold hovering around $2,000 per ounce, now is an opportune time to reevaluate your gold jewelry collection and recycle it into something new. Visit our gallery or give us a call for a complimentary consultation.