Do you have gold in your home that you’ve been thinking about selling but haven’t yet? Have you been collecting rare gold coins but are not sure what to do with them? The best time to sell is when gold prices are at their highest. But how do you know when that is? According to Forbes, gold prices in June 2020 hit their highest level in over seven years. It may be safe to say that selling your gold now might be a great idea. You’ll get a higher rate than if you had sold your gold in the past. What’s more, prices will likely continue to rise. Why is this? Here are five reasons as to why gold prices might rise.
1.The Dollar Weakens
The dollar is currently hanging by a thread. Since 2001, the value of the dollar has fallen 40 percent, and since the 1950s, the dollar has fallen 95 percent. Because of this knowledge, investors have been moving away from the US dollar and, instead, into foreign currencies, commodities, and gold. The world is becoming less confident in the United States and its ability to manage its money. This is why investing in gold is a safer bet and why there’s an increase in people doing so.
Additionally, with the COVID-19 pandemic impacting the entire world, the economic impact has been severe, and monetary values across the globe have decreased. Having wealth that’s portable, liquid, or universally accepted tends to be highly sought after in a crisis. Rare and gold coins are the safest bet whenever there’s global uncertainty, such as a pandemic, protests, or war.
A steady rise in inflation has occurred as a result of the Federal Government’s relief measures for COVID-19 and because of multitrillion-dollar stimulus bills from Congress. However, this inflation isn’t just happening in the United States; it’s happening all over the world. More money is being printed, more stock and housing investments are happening, and the cost of living is rising. These three types of inflation are becoming more and more common everywhere.
This rising “real-world” inflation can cause gold prices to rise, as gold and rare coins are historically known as “inflation hedges.” Inflation hedging helps protect the value of an investment. Therefore, if the dollar falls (as mentioned above) due to inflation, the price of gold will do the opposite and rise.
3. Exchange-Traded Funds
Exchange-traded funds, or ETFs, have become more popular. ETFs are a type of security that involves a collection of securities that track an underlying index. A common form of ETF stocks, however, is to use gold.
When you’re using a silver or gold EFT, that means the security is backed by allocated gold. This gold is held in a secure vault on behalf of the investors. It’s then sold at all major brokerages. Despite growing concerns over fund transparency, gold bullion that has been placed in ETFs has been a fast-growing niche. As ETFs have helped transfer new investment money into the market, it has become a great buying option for US rare coins, especially those that are gold.
It’s important to note that EFTs are not a replacement for having a well-diversified portfolio of physical gold or coins.
4. Commodity Demand
As the commodity demand continues to grow, the gold prices grow as well. In 2001, a secular bull market in silver, gold, and commodities began. Since then, it has increased oil prices and pushed the price of gold up too. A typical long-term bull market lasts from 18 to 23 years, which means that if it was started in 2001, it’s set to run its course until around 2024.
In the last bull market, rare coins in the US outperformed bullion. However, the super cycle of commodities isn’t over yet, and because of that, prices for gold may rise due to a decrease in production shortages.
5. Internet Trading
It’s easier now than it has ever been to trade on the internet. Plus, with most spending much more time in their own homes rather than commuting or going out, people have the time on their hands to pick up a new hobby. This has all led to an increase in internet trading, which is, in turn, changing the coin market. People can buy gold coins and trade their gold coins much more easily and frequently, and with more demand than they have in the past. This helps increase the price of gold.
When you’re participating in internet trading, it’s important to be cautious. You want to make sure what you’re buying is authentic. Be sure to purchase any rare collectible or coins from a source you know and trust.
As you can see, world events, economic impact, and supply and demand all have a strong impact on why the price of gold may rise. During times of uncertainty, especially when the dollar drops, the price of gold increases. But when it comes to gold, don’t just pay attention to what’s doing in your own country; be sure to pay attention to what’s happening across the world. As economic conditions worsen, the price in gold tends to rise. This is because gold isn’t tied to anything like local currency is. It may sound a bit odd that an economic crisis is a good time to sell gold, but it’s the truth.
Of course, other factors may lead to gold prices rising, such as internet trading, EFTs, commodity demand, and so on. These are other factors to pay attention to if you don’t feel comfortable selling your gold during an economic crisis.
With the pandemic happening now and having long-term impacts, the price of gold is likely to continue rising for the near future. If you’re looking to sell or invest in gold, give Swiss America a call today, and we’ll be happy to teach you more.