Gold is considered as the safest investment, especially in a period which is marked by economic uncertainty and where stocks are falling. Many people redeem gold when in need of cash, and some people trade it in large volumes.
Gold prices get volatile once they start moving. That is, generally the market price of gold doesn’t remain constant once the price graph sparks off. Prices fluctuate very heavily in a given period before they settle for another period. In fact, some speculators and investors take advantage of sudden gold price fluctuations, and capitalize on the market by selling and buying gold bullion, jewelry, securities, certificates, and investments on a regular basis. Selling or buying gold jewelry is preferred by many, however, there are more avenues with which one, cannot only sell gold, but can also invest in the metal to make profit at a future date. Also, the volume of new gold that is mined out every year, plus the volume that is recycled is much lesser as compared to the demand. The market price is thus always on the rise in the long run. The price value is no doubt bound to show a rise and fall, which we can refer to as ‘seasonal fluctuations’.
The Logic Behind Selling and Buying Gold
The rule of thumb regarding trading gold at market price is quite simple. It depends on the demand and supply ratio of gold. More supply and less demand results into fall in prices, whereas, less supply and more demand skyrockets it. The trick to make profit is to sell at a point where the market price is either maximum or is on a rising graph. One should stay alert and analyze the market during peak points, such as the time between Thanksgiving and Christmas, when people start buying jewelry. In some cases, when the economy goes into a negative cycle such as a downfall of all economic indexes, or cycles such as a recession or depression, inflation, deflation, and events such as a drop in the price levels in the overall economy, price levels of gold get affected. As mentioned above, there are a considerable number of channels for selling or purchasing gold, and also investing in it. One thing to take note of while trading gold is that it carries a certain handling charge and price differentiation in accordance with the Carats or its quality.
If you want to trade in order to profit and capitalize from the gold market movements, then investing in gold bullion is good option, owing to the fact that the bullion is minted by the government and is recognized as a reliable form of gold. Bullion can be in two forms, namely gold bars and coins. Many countries have standard bullion bars and coins which are minted by it, and are brought and sold through all major banks, financial institutions, and government agencies. Good Delivery bars from Europe, French Coq d’Or, British Sovereign, Austrian Philharmoniker, Austrian 100 Corona, American Gold Eagle, Canadian Gold Maple Leaf, Mexican Gold 50 Peso, Australian Gold Nugget, and Chinese Gold Panda are some examples of such bullion. The advantage of selling gold coins and bars is that they can be sold instantly and yield a substantial profit. The drawback, on the other hand, is that you have to invest a substantial amount initially.
Traditional Gold items
This may include normal jewelry such as rings, or single piece jewels such as earrings, pendants or parts of jewelry. Selling it often tends to be a complicated process, because the buyers such as jewelers and banks often tend to conduct extensive checks to decide upon the authenticity and purity of the gold. Apart from that, there are several instances wherein the sale of gold in small quantities does not become that profitable as the handling charges are substantial. In such cases, low quantity of the metal also becomes a drawback. Hence, selling simple gold in small quantities should be done when the market price rises substantially; this will ensure a good margin of profit.
The valuation of gold jewelry is a bit different as compared to the valuation of bullion. Gold bullion or small gold volumes are priced as per their individual weight, bearing in mind the requisite rate of gold price in accordance with the carat. In case of gold jewelry, however, the formula of valuation is different. When it comes to gold jewelry, apart from the weight, the demand for that specific brand, the designer and crafter of the jewels are taken into consideration to determine the final cost. Also, additional percentage, i.e., how much should the brand and designers skills account for, is mentioned in the sales certificate and is denoted in percentage of weight. Thus, selling the jewels crafted by recognized designers and brands often tends to be highly profitable, especially if you auction it. In several cases, old jewelry which caries antique value also tends to be a factor that brings in high profit.
One of the the safest and also the most profitable option is the purchase and sale of securities. Securities of gold include gold certificates, bonds which are tied down to gold and the gold companies securities. These securities are directly influenced by the market price of gold. It also includes ‘Paper Gold’, which is considered safest when the weight of the gold is high. In paper gold, you do not buy the metal, but a paper indicating that you would get the stated physical metal upon redeeming it. It is safe as one doesn’t have to guard physical gold, and it remains with the paper issuing authority like a bank. In such a case, people trade gold paper to make a profit. However, when it runs out of demand, there are chances of making losses.