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Posts Tagged ‘sell gold coins’

The main purchasers of gold today are investors; while it is true that gold is much in demand to make jewelry this is secondary as high prices and poor economic conditions are deterring consumers from splurging on high-priced jewelry. The question is why are investors buying gold so heavily and especially at a time when investments elsewhere such as real estate and stocks are taking such a beating?

The answer is wrapped up in our financial system and the global economy actually works , so this article will seek to explain in laymen’s terms a very complex financial structure which has underpinned economies worldwide for the entirety of modern society’s existence.

Gold was sought after in early times because of its beauty and rarity; when coins were first minted, the value of a coin was the value of the gold it contained. For instance, the pirate phrase, “Pieces of Eight”, comes from the Spanish gold coins which pirates were in the habit of “acquiring”. As any self-respecting pirate would engage in drinking a bottle of rum or two after time at sea, the value of the Spanish gold coin was far in excess of the average pirate’s bar tab – they would break the coin into eight pieces and use this small change to settle their tab.

As paper money made its way into economies, the value of a monetary note or bill was backed by an equivalent amount of gold buillion. If you hold a dollar bill in your hand, you know that it was backed by a dollar's worth of gold held at Fort Knox or another gold repository. This was known as the Gold Standard and was established shortly before the end of the Second World War in the Bretton Woods Agreement.

As time went on, the amount of gold required to back the currency dwindled, so less gold was stored to back the paper currency in circulation. When a recession occurred, savvy investors would move their investments from stocks and cash deposits into gold investments because gold was and is viewed as a safe haven for the value they have accumulated. This practice is still in use today as the value of paper money has been decoupled from gold reserves; in effect thre is nothing but the promise of the US Government to back the value of the bills issued by the Treasury Department.

Whenever economic times grow hard, more investors fly to gold as an investment which in turn drives the price of gold up. A couple of years ago, you could buy gold for around $330 an ounce but today, at the height of the recession in 2009, you will not find gold for less than $900 an ounce (and for a brief time it was over $1,000 an ounce).

This is why selling your old gold, especially in the form of old jewelry, is such a good move – you are raising cash for your tightened budgets and getting absolutely top dollar for the gold you have. It is a seller’s market but there is a sting in the tail – as soon as the recovery makes its presence felt, investors will dump the gold they have bought onto the market. Supply will outweigh demand and the price of gold will drop dramatically and very fast. This is why pundits are recommending that for the owner of small amounts of gold, now is the very best time to sell it as you are not likely to get a better price in the future unless the economy takes another nose dive.

The rare precious metal gold has been sought after by mankind for the last 5000 years. This has led to gold becoming one of the most valuable of metals in the world and the history of mankind. It’s importance has been further underlined by governments around the world using gold bullion to provide the asset-backing for the money they issued – in the times of early coinage, the value of a coin was actually the amount of gold which it contained – the stamp of the treasury or mint which issued it was a quality assurance that the coin really contained that much gold and this spread to the use of gold for other purposes, particularly jewelry and today gold is always stamped with a “hallmark”.

It is this link to the financial worth of currency which creates most of the demand for gold today. Paper money is just that – paper – it is a promise that the bank or treasury department of a nation will pay that “value” which is promised on the paper (a dollar, $5, $10 or whatever). It used to be that for every $1 issued as paper, there would be $1 in gold stored at Fort Knox or the Federal Reserve Bank in New York – everyone had confidence in accepting the dollar bill simply because the US government had the gold to make sure it held its value. In depressed times, the value of “paper” would become suspect or in relative terms, the paper money would lose its value relative to other currencies or assets – investors would therefore look to put their money into other valuable assets which would not be affected by the economic recessions and gold was an obvious choice.

Traditionally, when economic hard times appear, savvy investors will turn to gold to invest in because its value increases dramatically when recession appears. The current recession is a good case in point – three years ago, gold was bought for between $300 and $400 an ounce – this year if broke the $1,000 an ounce limit and is still costing more than $900 an ounce today with recovery looming.

This is why it is a great idea to sell gold at this time – you are highly unlikely to get a better price for the gold you have if you hold onto it. Many people considering selling their old jewelry and selling their old gold coins to raise some extra, much-needed cash to balance their tightening budgets cannot wish for a better time than the present to make the transaction. Gold supplies are low, which drives up the price of your old gold; investors are in dire need of gold. This means when you come to make enquiries about selling it, you are very likely going to be very surprised at the price you will be offered but a word of warning – as soon as the recovery is established, the prices being offered will drop drastically and they will do so very quickly as investors holding gold unload it onto the market in order to use the cash raised to reinvest back into stocks and bonds.  Companies are also buying platinum and palladium, as well as certain gemstones, so go through your jewelry box and see if you can sell your jewelry for a profit.