Bartering of cash with gold is common, especially during periods of volatility. Gold is used as a hedge against stocks or any other portfolio because it maintains its value while the other investments are declining. However, the process of investing your cash in gold comes with several key factors that you should consider for you to have the best bargain in the market. Below are five tips that you need to consider whenever you are selling cash for gold.
1. Essentials in Estimation of the Market Value of Gold
The first and probably the most important permutation that needs to be made at the time of investing is the determination of the present value of gold in the market. Gold price changes every day depending on market factors among them being demand in the world markets, currency exchange rates and other measures of economic activity. Before proceeding to make any transaction make it a point to know the most current price of gold that is known as the spot gold price this one gives the current price of gold in the international market.
Thus, you have to compare the prices that are being offered to you by the different dealers when you trade your cash for gold. It’s quite important to note that dealers always make their offers slightly below the market value to accommodate all their margins. Make yourself knowledgeable about a difference in retail and wholesale prices, and other premiums that are added to the physical gold such as coins or bars. They are certainly better off if they have information about market prices because this will assist them in making a proper decision.
2. Different Kinds of Gold that Can Be Purchased
Gold is in many forms, and this comes with its strengths and weaknesses depending on the type of gold that is being used. Bullion is perhaps the most familiar type of that the precious metal can take and this is followed by coins and jewelry. Gold in bars or ingots is almost always the most refined and, hence, is always priced near the actual market price. Investors also use the so-called coins like American Gold Eagle or Canadian Maple Leaf. That is why the coins themselves are slightly cheaper than bullion – they are made smaller and are collectible; however, they are easier to trade or sell.
The other physical asset is gold jewelry which is also a bit expensive because it comes with extra expenses depending on its design and workmanship. Thus, one needs to carefully pay attention to the fact that most expensive jewelry bought as an investment has a high GOLD content like 18k or 24k. Avoid the gold plated or gold filled items you will find to be worthless in future. It is therefore imperative that one selects the right form of gold to invest in so as to get the most benefit possible.
3. Dealer Reputation and Reliability
Not all gold dealers are the same and hence selecting a good dealer is very important. To make a good choice, try to choose dealers that are reputable and whose experience has been positively reviewed by their customers. Pricing, fees, and terms of sale should also not be hidden from the customer by the reputable dealers. They should also translate and issue the certificate of authenticity for any gold product you are to buy.
Stay away from dealers who are pushy and those who offer some great offer in the market. Such signs can be indications of scams or fake gold. Before dealing with any dealer, it is recommended to run a check on their credibility by referring to agencies such as the Better Business Bureau or even going as far as industry-specific agencies such as the Professional Numismatists Guild (PNG). Having liaised with a reliable trader in cashing an amount of gold; the person approaches the dealer to trade his cash for the gold.
5. Liquidity and Selling Gold
Lastly, the degree of marketability of the gold investment is important particularly if you may be called upon to sell, this you need to consider. Liquidity is the mobilization of an asset without incurring a loss where the asset is to be converted into cash. This is important to ensure that one is dealing with products that are easily identifiable and welcomed by the dealers in the market so as to trade cash for gold.
Precious metals and bullion as well as popular gold coins have high liquidity because many people need it and can easily resell it for the market price. The process of selling gold jewelry, therefore, may be more complex particularly if the piece of jewelry contains a complicated design or it is not made of high grade gold. When you are confident that you want to give your gold, then remember the costs or the commissions which the dealers are going to charge because they will affect your returns.