You invested in gold because you want a hard asset that isn't going to fall in value with the whims of the market and rampant inflation. But how do you know when it's time to sell that shiny yellow metal? Finding the ideal time to do so can feel overwhelming.
After all, you want to get the best price for your precious assets without watching them spike in price following your sale. Fortunately, tried and true ways to know when it's time to sell gold exist. You have to know what to look for.
Keep reading for five signs that provide the go-ahead for converting gold into cash.
Selling Gold 101
Do you have a collection of gold coins, some old jewelry, or even dental scrap you'd like to liquidate? Maybe you've decided it's time to clean your house or get your finances in better order? Or perhaps you're interested in maximizing the next big spike for this commodity?
No matter your reason, you need to understand how gold gets valued to anticipate the best pricing better. No one can be certain how gold will fluctuate over time, especially when you consider the complicated tangle of factors and conditions that can impact it.
Fortunately, once you learn to recognize the signs, you can time it right for the highest payout possible. Factors you need to watch for include:
Rising real interest rates
The Dow-gold ratio
These five indicators will help you identify the most opportune time for selling gold in 2021. When to sell gold and where to sell gold remain two essential considerations you have as a gold asset owner, so it's time you put our knowledge to work for you.
Factor #1: Times of High Uncertainty
What do we love so much about gold? Apart from its charming luster, rich color, and incredible versatility, it remains a revered store of value, especially during times of high uncertainty.
For this reason, gold owners should cultivate the ability to know when moments of uncertainty will lead to significant gains on gold purchases and potentially large yields. While we don't have a crystal ball to peer into the future, we can look to the past to better understand recent trends.
Two Examples of Uncertain Times
For example, we've watched two massive spikes in the value of gold in recent years. These include the surge that occurred between 2009 and 2011. In this case, skyrocketing yellow metal valuations correlated with the extreme economic uncertainty of the Great Recession.
When did we see the second rise in gold take place? In 2016, following the Brexit vote. As with the Great Recession, investors flocked to gold because they felt concerned about the global economic outlook.
Of course, once investors started gobbling up gold reserves, the precious metal's value exploded.
The Forecast Based on Current Events
So, how do these two history lessons fit into the picture of the world today? Currently, economic uncertainty exists when it comes to the relationship between China and the United States.
Murmurings about aggressions between China and Taiwan have further complicated the issue. How bad is the situation? The Council on Foreign Relations recently named a United States-China confrontation over Taiwan the top potential conflict to watch in 2021.
We've witnessed a severe global slowdown due to COVID-19 and the shutdowns it precipitated. And we've watched stock market prices rise, stagnate, and fall.
The makings of war continue to develop in the Middle East as the Palestinians and Israelis lob missiles back and forth. We live in a time of great uncertainty.
But does this mean it's the best moment to sell? Gold prices have dropped a bit since their all-time spike of $2,075 in August 2020.
However, with all that's going on today, we recommend keeping an eye on rising values, especially as markets respond to current events.
Factor #2: Rising Interest Rates
What others indicators point to the best time to sell gold? Let's consider the role that rising interest rates play.
To do this, we need to start by dispelling a common misconception, the notion that gold performs poorly in conjunction with rising interest rates.
But is this the case? To answer this question, we need to dig a little deeper.
Real Interest Rates
Let's take a moment to focus on real interest rates. What are they? At any given point in time, the real interest rate represents the nominal interest rate subtracted from the inflation rate.
Despite what you've been told, gold proves more likely to increase than decrease during Federal tax hikes. When you take a closer look at the past three decades, gold has risen in value alongside interest rates.
Currently, real interest rates are negative in many nations around the world. And don't expect this to change anytime soon. After all, gold prices rose throughout the 1970s and 1980s even after real interest rates became positive again.
Forecasts for Real Interest Rates
Today, central banks throughout the world find themselves in more dire conditions than in the 1980s. As a result, they can't raise interest rates without negatively impacting economies nationally and internationally.
What can you expect as interest rates hover near zero? Gold may sit at its best value, making it a worthwhile time to consider selling.
Factor #3: Mainstream Trends
Are there individuals in your inner circle who own gold or gold-related investments? More than likely, the answer's a resolute "yes."
Why does this matter? Because when the people around you start fixating on gold, it's time to consider another question, "Should I sell my gold?"
Should I Sell My Gold?
As gold continues to rise in value, it inevitably becomes a major topic of conversation. You'll start hearing about it everywhere, from the mainstream media to major news networks.
"Sell my gold" topics will overtake water cooler talk at the office, and you'll also hear about it at social gatherings such as dinner parties. When conversations about the shiny yellow stuff go mainstream, watch gold prices and prepare to liquidate.
More Talk, More Value
The more interest others show in this commodity; the higher values will go. After all, gold prices ultimately depend on demand.
Of course, the public's fascination with gold as an asset proves inextricably linked to feelings of uncertainty. So, this tip goes hand in hand with the previous one.
What's the bottom line? Consider imminent cash out when gold chatter intensifies.
Factor #4: The Dow-Gold Ratio
What's another factor you should bear in mind? The Dow Jones Industrial Average (DJIA) concerning the price of gold is known simply as the Dow-Gold Ratio. This ratio indicates how many units of the DJIA a consumer could purchase with one ounce of gold.
Why the Dow-Gold Ratio Matters
One of the most-watched (and oldest) indicators on the market, the Dow-Gold Ratio provides invaluable info about gold pricing.
What's the historical precedent for this observation? Let's consider historic market heights for a moment. These include 1929, 1966, and 1999. In each case, the Dow-Gold Ratio also climbed.
Conversely, during historic market lows, such as the end of the 1930s and the Great Depression, the ratio sat at two. During the rampant inflation of the 1970s, the ratio was little more than one.
Knowing When to Sell
When's the best time to sell gold under these conditions? As the ratio reaches much lower levels.
On May 16th, the ratio dropped to 18.65. That said, the ratio changes daily, hourly, and by the minute, so you'll need to bookmark a site that reports it and keep monitoring this indicator. You can get the latest fluctuations via this link.
Factor #5: Cash Needs
There's one more vital sign that could indicate when to liquidate gold.
Unlike the other factors on this list, this last one proves highly personal.
When it's all said and done, the best time to sell your gold is when you need cash or no longer want to own your precious metal.
When to Part With Gold
While these last two variables may sound like no-brainers, it's all too easy to hold onto gold simply because it's gold. But remember that hoarding this asset could cost you money over time, especially if you're paying holder fees to a depository.
These fees add up quicker than you think and could end up costing you a significant chunk of change. What's more, you can't realize gold's actual value until you sell it.
Other Investments Worth Considering
Liquidating your gold assets might provide you with the cash you need to invest in something more lucrative. If you find a place to sink your dollars while earning higher returns in the process, it makes parting with gold a lot easier.
Consider this. When you compare the trajectories of the DJIA and the spot price of gold over the same period, the DJIA has skyrocketed ten times. As for gold, its value has increased five times and been subject to much higher variance.
Diversifying Your Holdings and Portfolio
But what if you're not a big fan of the stock market? Don't let that prevent you from diversifying your holdings and portfolio. By having cash on hand, you have greater flexibility when it comes to non-monetary assets.
In other words, selling gold may represent an excellent way to diversify your wealth by buying real estate or other commodities, such as silver.
Where to Sell Your Gold
At this point, you've got a much better understanding of when to sell gold. But you likely still have questions about where and how to do it. Start by finding a knowledgeable team of gold and precious metal buyers with which to work.
Whether you're selling bullion, jewelry, coins, or other gold-related items, you owe it to yourself to work with a reputable local business. That way, you don't have to worry about the hassles and risks associated with mailing your assets off to an internet-based company.
When you visit a showroom and work face-to-face with a gold buyer, you gain access to their years of knowledge and expertise. You also get an instant appraisal and quote for your item. And, you'll never deal with the downtime of getting a long-distance offer.
Vet local companies with the Better Business Bureau, which lends trust and credibility. Brick-and-mortar precious metal buyers also list their credentials onsite, which means you can check out their certifications and verifications to see if they're right for you.
Best of all, face-to-face gold buyers keep up-to-the-minute gold prices and calculators so you can get a better idea of what your gold's worth during your visit. As you can see, it's hard to beat the convenience of a local gold buying company.
And once you develop a working relationship with this company? You'll never have to worry about whom to go to when you're ready to liquidate precious metals (or purchase more).
How to Sell Gold
Once you find a local gold dealer that you feel comfortable working with, the process of liquidating the shiny yellow stuff proves a cinch. While you might find slight variations in each company's procedures, most customers will go through a few simple steps.
Present the asset you'd like to sell at the showroom. Get it appraised on the spot, receive an offer, and make a decision. If you decide to sell, the buyer will cut you an immediate check or hand you cash, whichever you prefer.
As you can see, it's hard to beat the ease of selling gold to a reputable local buyer. Check out these FAQs for more gold selling info.
Make Gold Work for You
In our current economic climate, gold continues to perform strongly. As the globe faces increased uncertainty, it may be time to sell your unwanted gold. The process starts with finding a gold buyer you can trust and feel comfortable working with.
Not sure where to start? We've got you covered. Contact American Gold & Diamond Buyers to work with a reliable, reputable team that can help you get the most for your gold.