Gold has had nearly unprecedented losses in the last few months, leading many people to wonder what to do with their holdings–be it bullion or jewelry. This article is not going to give advice on when to sell or hold gold, but it will give some pointers to people that are deciding to liquidate in a downward trending market.
– Watch out for premium reductions on the buy side
Dealers like Alexandria Gold and Silver have accumulated holdings of gold and silver. Many of their counterparts have inventory that is exposed to market fluctuations, making a downward trend in metals a rather stressful time. To accommodate for market losses (potential or realized) dealers will often lower their buy premiums and hike up their sell side. To a degree the market can dictate this, especially on the sell side, but be aware of excessive gouging or unnecessary price jumps. The distributors that provide dealers with inventory are often not as price-affected as you would think, and many dealers hedge their inventory and are not as affected either—but they still take the downtrend to make a few extra dollars. Here at Alexandria Gold and Silver, we limit our market exposure to begin with and our premiums rarely change–and only when the market actually dictates a change.
– Be aware of big news events both domestically and internationally
Gold has lately been extremely sensitive to domestic wellness. Indicators that point to US growth or stagnation have been heightened catalysts for the market. FOMC meetings are highly anticipated and every word it critiqued and torn apart to find the “real” meaning. Housing data and jobless numbers are two other big indicators that affect the gold price. If a seller (or buyer) watches these releases and times a sale or purchase accordingly, there can be the difference of $50 an ounce or more depending on the market response. Also, remembering that gold is exchanged internationally is key to understanding it’s movements. Big buyers (India, China, etc) are important to watch, and their overseas trading hours are different then ours. Watching how gold performs overnight (overseas) can give you a head’s up about what it will do in US trading hours.
– Don’t get caught up in fear-mongering or over-zealousness
For every article you read that gold is bottoming out there is another saying that it is ready to go to $5,000. Many big distributors have analysts and columnists that release their feel on the market. Many of them are legitimately giving their honest opinion, but some are out to make more money for their companies by relaying what they want people to see opposed to what they actually think is happening. Big banks often have projections on what the average gold price will be for a certain year or quarter. I have found that watching these adjustments to their projections worthwhile.
– Remember why you invest in gold
Markets ebb and flow, but remembering the fundamentals of gold—and why you invested in it— is always important.
As always, Alexandria Gold and Silver offers transparent pricing on jewelry and scrap gold as well as bullion and coins. Feel free to call us or stop by our location at:
6911 Richmond Highway Suite 310
Alexandria, VA 22306
See you soon!
Saif and AGS