When one is looking for financial security, especially in times of crisis (such as the Coronavirus-related economic plummet), he or she can turn to gold for stability. Traditional securities such as stocks, bonds, and cash credit often fluctuate in value depending on the economic conditions at a given time. Even the value of the currency itself can change – they already do when the economic waters are calm, how much more when they are not.
This is why financial institutions, investors, and individuals looking to protect their assets are looking to store gold. Why is gold a worthy investment? How can you buy and sell gold? In this article, you will learn why buying and selling gold is a worthy endeavour, and what steps you can take to join the gold market.
One can accurately predict the value of gold at any given time – a bullion’s value, for example, can be determined by its gold content, the price of gold on a given day, and the quality of your gold bullion (if there are no signs of wear and tear, you will be offered a higher price.)
Through time, gold has proven itself to retain a reliable value against fluctuations in the values of currencies, stocks, and bonds. Sure, gold does not always outperform stocks and bonds, but it does offer stability. This is the reason why financial institutions down to the casual investors look to store gold as a defensive store of value: when there are threats to the economy, gold can serve as a hedge to protect one’s assets.
Even though gold assets technically do not produce cash flow, they are liquid which means they can be converted into cash anytime. Another interesting way to interpret this is that gold can be literally liquid – gold assets such as jewellery can be sold to be melted down and converted into bullions, given that they achieve a certain amount of gold content.
Gold is not highly correlated with other assets (when the value of other assets go down, gold may go up), and this makes it an excellent diversifier. Owning gold can help one reduce the risk on their investor portfolio.
Gold bullions are gold assets in the form of gold bars, ingots, or coins. As mentioned above, its price is determined according to the price of gold on a given day and the amount of gold there is in your bullion. Bullions are usually issued by government mints (Australia, United States, United Kingdom, to name a few), and you can be confident that dealers or buyers accept bullions.
Buying and selling gold bullions can make you feel really immersed in the gold buying and selling business, and it’s the fact that you can hold physical gold in your hands that creates this feeling (it would not feel too different than the way travelling merchants in the ancient trade routes traded gold!) However, just make sure that you take extra care to preserve its physical quality, as that will also affect its value. You will also have to insure the gold bullions you own and store them in a safe place such as a vault.
You can buy gold bullion through gold dealers: you can find them either online or in your local community. Pawnshops may also sell gold. While you can succeed with either coins or bars, a good piece of advice circulated in the community is to transact in bars to avoid having to pay a coin’s collector value.
Profiting from this is quite simple: you simply sell your gold bullions to a reputable gold buyer or dealer. They will give you an estimate; different buyers may also provide different numbers so you are free to go around your city to compare the prices different buyers give you so you can choose the best deal.
When crises happen, or even just when the economy is not performing as well as it usually does, you can expect the price of gold to be higher. This is due to its low correlation factor (as compared to other assets.) Thus, selling gold during times like this will help you gain a higher profit.
Buying and selling gold jewellery is one of the ways first-timers can start. Not everyone already owns gold bullions, but owning gold jewellery or other pieces of gold is quite common since gifting or buying gold has been a part of our culture. If you do own gold jewellery, you can sell them to your local dealer and use the profit you earn to buy other pieces to sell.
When you do start buying, you want to get yourself equipment such as a gold testing kit, professional jewellery scale, magnet, file, and loupe. These help you identify how many carats of gold are in the pieces. This also protects you against scammers, as there are sellers who falsify the information about their pieces to score a higher profit.
When you start selling, the same pricing mechanism follows: prices are based on the amount of gold and the value of gold in the market. You can wait until the market goes up so your price goes up as well. Timing also matters on the converse: buying gold when the market goes down will make for a better profit since you purchased at a lower price.
There are ways to trade gold that doesn’t involve buying and selling physical gold. Exchange-traded funds, Contract-for-Differences, or investing in gold futures contracts are a few examples. These involve speculating on the way gold moves within the market, and it requires a level of investor knowledge. If you are a first-timer, you may learn this over time, but a great place to start is at the physical gold market.
Gold Buyers Brisbane offer buyers or sellers the best prices for gold bullions or jewellery. Explore our website today to view your buy-and-sell options. To discuss with us further, call us +61449 159 617 or email us at email@example.com. We would be happy to help you out as you start your gold investment journey.