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Investing in precious metals can be a lucrative strategy. Like any other investment, though, profits rely on buying and selling at the right time. And while knowing when to sell gold can turn a quick profit, even experts have trouble getting this right consistently.
Of course, no one can perfectly predict the performance of any investment. If they could, we’d have to rethink stock and commodity markets completely. Fortunately, there are a few signs that can point towards the moment when liquidating your gold is the right move.
At Silver Gold Bull, we know that an informed investor makes better decisions. The following information should give you all the necessary tools to excel in this area. Knowing when to sell gold isn’t an exact science, but that doesn’t mean your approach can’t be scientific.
When Is Selling Gold the Right Move?
There are various times when it might be right to sell your gold. One stands out among the others, though, due to its obvious ramifications. If you find yourself in an emergency — whether it’s a medical bill or sudden need for a new car — liquidating your holdings is wise.
Various considerations go into deciding when to sell gold, but if you have a sudden need for money, it’s typically the right choice. Sure, there are alternatives that can get cash in your pocket. In many cases, however, it will end up costing you more than if you had just sold your bullion.
If you’re considering a loan, think about the following rates you’ll run into:
- APR for personal loans are usually over 10%, even with great credit.
- Credit card APR typically starts at 16%, even with great credit.
- Pawn shop interest rates can be 200% or more.
- Payday loans range from 300% to 500%.
These are typical rates when taking out loans, and they show emergencies are the precise time to sell gold. From 1971 to 2019, gold saw an average annual return of 10%. This is an amazing return, but these profits could be wiped out in the face of loan interest rates.
The simple fact is that you’ll lose more money taking out a loan than you would liquidating your gold supply. Even if you somehow knew the precise moment the precious metal would reach a record, the profits would unlikely cover the losses from expensive consumer and personal loans.
If you have an emergency need, that’s when to sell gold. Of course, this isn’t the only time when this is the appropriate move. In each of the following scenarios, selling gold is likely a good move.
You Have Specific Plans That Require Cash
The interest rates discussed above explain why liquidating certain assets is smarter than taking out a loan. Of course, this applies to more than just emergencies. What if you need a down payment on a home? What if you want to change investment strategies altogether?
If you have goals in life — whether they be financial or something else — you can meet them by selling. If you bought American Gold Eagles years ago, it was probably to invest in your future. If you’ve got big plans in the making, it might be time for that investment to pay off.
Your Storage Needs Have Grown Too Large
You can store a large value of gold in a tiny space. For instance, a single roll of 20 Canadian Maple Leaf gold coins had a value of over $40,000 when the yellow metal surpassed the level of $2,000 per ounce in 2020. This roll could fit easily into your pocket.
If you run low on storage space, though, the answer of when to sell gold may be out of your hands. You need somewhere to keep your investment — it’s as simple as that. There are options out there for precious metals storage, but keep in mind that these will carry costs as well.
Estate or Other Planning
Some people encounter situations for which they need to bring their investments down to a certain level. This happens frequently with estate planning when it’s necessary to divvy up properties. Selling your precious metals may make it easier to divide an inheritance among heirs.
This is one of many instances where knowing when to sell gold doesn’t mean you have to sell all of it. In fact, this is always the case. Even in emergency situations, it’s okay to only sell what you need to. This is a great way to get cash on hand while also preserving your investment.
How Much Profit Should I Get When Selling Gold?
In each of these situations, the profit you receive is less important than the need you’re facing. You should certainly try to sell your items for the highest profit, but if you think waiting a few days may result in a higher price, you could be sadly disappointed.
For instance, if you knew on August 6, 2021 that you needed money, you could have sold an ounce of gold for around $2,069. If you waited just five days hoping that prices would rise, however, that same ounce would only be worth $1,909.
Knowing when to sell gold when you need quick money shouldn’t be a wait-and-see game. If you’re not in these situations, though, there are ways to maximize your profit.
When to Sell Gold for the Best Price
Not everyone who sells gold does so because they need money. Sometimes you just want to get the most out of your investment. In fact, the primary rule in the investing world is “buy low, sell high.” How can you succeed in this endeavor?
Unfortunately, there are no guarantees. Even the best experts can’t predict price fluctuations 100% of the time. If you notice any of the following situations taking place, though, the question of when to sell gold typically becomes much easier to answer.
The Economy Is In Decline
People have always used gold as a hedge against poor economies. Precious metals hold universal value, but fiat currencies like the U.S. dollar do not. Inflation could steadily eat away at the value of the dollar, but these negative effects will not carry over into the world of gold.
In fact, the price of gold will likely rise during economic turmoil. Inflation means it will cost more to buy the same amount of gold. And as people worry about a worsening economic climate, demand for the metal will rise.
If you’re thinking “but couldn’t the price keep going up?,” you’re absolutely right. Of course, it could also drop at a moment’s notice. But if you bought gold to profit when the price is on the rise, you already know when to sell gold. The only step left is doing it.
Gold Goes Mainstream
Gold prices can jump based on many factors. When one of these factors occurs, though, it directly leads to other price-increasing scenarios. For instance, journalists reported that gold was on the rise due to lowered interest rates in June 2020. Within a month, the metal hit record highs.
In fact, the first gold bullion bar you ever bought may have been a response to similar news coverage. The fact is that precious metals prices increase when people get excited about them. If you see the news continuously focused on the price of gold going up, it may be time.
Knowing when to sell gold during these investor rushes may be difficult, but regardless of when you pull the metaphorical trigger, you’ll get a good price.
Watch the Dow-to-Gold Ratio
The Dow Jones Industrial Average (DJIA) — often shortened to just “Dow” — is a measure of the U.S. stock market. The price of gold relative to the DJIA is one of the most watched indices — and one of the oldest — in the world.
You can find the Dow-to-Gold Ratio by simply dividing the current Dow price by the spot value of the precious metal. This can give you a good idea of when to sell gold. The value of the yellow metal and the economy often have an inverse relationship, so the lower this ratio, the better.
After the inflationary period of the 1970s, this ratio dropped to nearly 1. This means the price of gold was at almost the same level as the Dow. In August 2021, this ratio was around 19.5. Experts recommend waiting for a lower ratio to liquidate, but if the price is right, don’t let an index stop you from selling gold.
Knowing When to Sell Gold Is Only the First Step
There are plenty of times when selling gold is the right decision. Maybe you have a specific need that requires you to offload some assets. Then again, maybe the precious metal’s price is so high that it’s impossible to ignore the profits.
Regardless of your reasoning, though, the decision to sell is only one step of the process. You want to make sure you get the best price for your bullion — otherwise your entire investment may have been pointless. When working with a reputable dealer, you’ll know you’re getting a fair price.
At Silver Gold Bull, we do more than just offer the ability to invest in precious metals. When you eventually reach a decision on when to sell gold, we’ll be here ready to help. Visit our Sell Your Gold page today for the best prices and fastest payments in the industry.
