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When you have gold that you’re planning to sell, it makes sense that you want to make as much money as you can from the transaction. You can only sell it once, and you want to put that money toward your bigger financial goals, from paying off debt to starting a retirement savings fund.
Predicting the gold market is no easy task. As with any market, if it were easy, everyone would be making a mint off it. That said, there are certain economic conditions that tend to drive up the price of gold and others that can lead to lower prices.
Individuals with physical gold bullion, such as coins, bars, watches, or jewellery, can usually expect to get the best prices when they sell in person. Bullion dealers like Muzeum have to evaluate a piece before they can make an offer, including weighing and identifying the precious metal content. There are fewer costs involved if you go to the dealer yourself, although many do offer mail-in options.
Beyond making sure you find a good bullion buyer, there are certain market factors to watch to find the perfect time to sell. While you can never be 100% accurate, these signals can help you understand what the bullion market is going through and how you can profit from it.
Poor Performance on the Stock Market
Every dollar you invest comes with an opportunity cost. Let’s say you invest $1,000 in gold bullion. Over the course of the year, prices remain relatively stable, and your $1,000 is relatively the same at year-end. Over the same time, the S&P 500 rose 15%. If you’d invested that $1,000 in an ETF that tracked the S&P 500, you’d have $1,150 at year-end.
But growth is never guaranteed in any market, and you could just as easily have seen a 15% dip in the value of your stocks.
Stock markets tend to show a lot more volatility than precious metals, which makes them a desirable asset when stock markets are falling, and less desirable when stock markets are booming.
According to Morgan Stanley, a boom on the S&P 500 at the end of 2023 has put the stock market in a precarious position, and the bank expects a correction in the year ahead.
Interest Rates Are Low
Low interest rates can also lead to elevated gold prices. When the investment market wants an asset that will safely appreciate without much downside risk, it first looks at bonds. However, when those bonds deliver low interest rates, they may actually perform at a loss compared to inflation.
Low interest rates can correlate to higher gold prices. As central banks around the world begin to cut interest rates now that inflation is falling, gold prices may be trending upward.
Inflation Is High
On a similar note, high inflation can also lead to a rush of gold demand and higher prices. Gold has long been used as an inflation hedge. There’s been a long-standing rule of thumb that an ounce of gold is always worth the price of a high-quality suit.
It’s a short-hand way of saying that gold keeps pace with inflation, whereas inflation eats away at the value of your cash savings.
With a period of high inflation apparently coming to an end, there could be downward pressures on gold prices, making now a great time to sell gold that you’ve been holding onto.
