How To Trade The Gold
Trading the gold-silver ratio is an activity primarily undertaken by hard-asset enthusiasts often called gold bugs. Why? Because the trade is predicated on accumulating greater quantities of metal rather than increasing dollar-value profits. Sound confusing? Let’s look at an example.
The essence of trading the gold-silver ratio is to switch holdings when the ratio swings to historically determined extremes. So:
Note that no dollar value is considered when making the trade. That’s because the relative value of the metal is considered unimportant.
For those worried about devaluation, deflation, currency replacement, and even war, the strategy makes sense. Precious metals have a proven record of maintaining their value in the face of any contingency that might threaten the worth of a nation’s fiat currency.ï»¿
Selling Gold & Silver Bars
Gold and silver bars generally have high resale value, especially those bars that have been kept in professional vault storage.
Bullion bars produced by the most reputable mints and refineries have the strongest resale value. These bars come with a seal from the mint of origin, and sometimes include a serial number for easy identification and certification. With these bars there is low risk involved in buying or selling.
Why Do Gold And Silver Prices Fluctuate
Like other investment assets, gold and silver are prone to price swings based on investor sentiment. They can also fluctuate due to trends in underlying supply and demand fundamentals.
Traders determine gold spot prices on futures exchanges. Metals contracts change hands in London and Shanghai when U.S. markets are closed. But the largest and most influential market for metals prices is the U.S. COMEX exchange. The quote for immediate settlement at any given time is effectively the spot price.
A hundred years ago, gold sold for just $20 per ounce. In recent years gold has traded between $1,200 and $1,900 per ounce. Thats a huge move up in nominal terms over the past century. Yet in real terms gold prices today arent much different from what they were when they were last quoted at $20 an ounce.
Its not that gold has become so much more expensive. Its that the currency in which gold prices are quoted has depreciated so much.
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Cost Basis Of Physical Gold And Silver
The amount of tax owed on the sale of precious metals depends on the cost basis of the metals themselves. If you purchase the metals yourself, then the cost basis is equal to the amount paid for the metal. The IRS does allow you to add certain costs to the basis, which can reduce your tax liability in the future. Certain items, such as the cost of appraisals, can be added.
There are two special scenarios for calculating the cost basis of physical gold or silver. First, if you receive the metals as a gift, the cost basis is equal to the market value of the metals on the date that the gifter purchased them. If at the time of gifting the market value of the metals is less than what the person giving them to you paid, then the cost basis is equal to the market value on the day that you receive the gift. As for the second special scenario, if you inherit gold or silver, then the cost basis is equal to the market value on the date of death of the person from whom you inherited the metals.
What If The Precious Metal I Wish To Sell Isnt Listed
Although we have a list of items that we are actively buying, we are happy to consider all precious metals. Give us a call at 800-775-3504 if you would like to discuss a particular unlisted item. Please note that the United States Gold Bureau does not buy scrap metal, jewelry, or other items such as dental implants.
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How Long Does It My Package Take To Arrive At The United States Gold Bureau
Our buying process is not only straightforward and simple, but reliable and efficient. After creating a personalized client account on our secure website, you will receive an instant quote on the purchase price of your coins or bars, be able to print a packing list and pre-paid FedEx labels for shipping to our facility in Leander, Texas. Depending on where you live in relation to Leander, TX, we see most packages arrive in our facilities within three business days. This timeframe can fluctuate during storms, holidays or other events outside of the carriers control. Your payment is processed soon after your items are received and verified by our team.
Ounce Silver Bars/rounds Are Great For:
- New precious metal investors, who arent looking to spend a ton of money but want to buy as close to spot price as possible.
- Seasoned stackers who want to accumulate and stack as much metal as possible, while still maintaining a very divisible total.
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Whats The Difference Between An Ounce And A Troy Ounce
The troy ounce is the standard unit of measurement used for precious metals like gold and silver. A troy ounce, when converted into grams, is equal to 31.103 grams, which is heavier than the traditional ounce, equal to 28.349 grams.
A troy ounce is approximately 10% heavier than a regular ounce. An avoirdupois ounce, or traditional ounce, can be converted into a troy ounce by simply dividing it by 0.91. However, for every troy pound, there are only 12 troy ounces, making a troy pound lighter than a regular pound, which is 16 ounces. It can be confusing, but this is the standard for measuring precious metals like gold and silver.
What Factors Can Make The Spot Price To Go Up Or Down
Many factors influence the habits of buyers and sellers of precious metals. Silvers price tends to be more influenced by industrial demand, due to the many applications for which it is used . Gold has some industrial uses, but is overwhelmingly purchased for investment . The catalysts that have the greatest impact on spot prices are:
Why Do People Say the Price of Gold Is Manipulated?
The short answer: because it is. A short answer, however, may not be a simple answer, and thats the case here. Many, many words have been written about manipulation of the gold price. There is far too much available material to hit more than just a few of the high points.
The short answer is correct because ALL markets are manipulated, according to the most basic definition: trading with the intent of influencing a price and succeeding. Such an effort may be illegal, as with the LIBOR rate-fixing scandal. Or it may be legal, such as George Soross attack on the British pound that made him a fortune. Or it may fall into the gray area in between, such as when short sellers stage a coordinated attack on a companys stock price.
These big banks are in business to make money, period. It is to their advantage to push prices around to ensure that they make a profit. Because of their size, and the size of their contracts, they have a huge impact on the supply/demand equation, where the buyer of 10 coins from his or her local dealer has none.
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Selling Gold & Silver Bullion Online
Selling precious metals to an online dealer may fetch the best price because theyre operating expenses are much lower than a local coin shop that has to maintain a physical storefront.
Selling your gold or silver online to GoldSilver.com is easy. Just follow this process:
The Spot Prices Of Gold And Silver
Gold and silver prices move significantly year to year, so the best way to get a general gauge of the prices of these metals is to look at semi long-term charts. Below we have the gold and silver price charts dating from January 2000 to the time of this writing :
As you can see above, gold has ranged from ~$265/ounce to ~$1,850/ounce over the past 12 years, with a generally upward trend over the time period.
Silver has followed a fairly similar pattern, ranging from ~$5/ounce to ~$45/ounce over the past 12 years, with a generally upward trend over the time period.
What we can take from the above charts is that gold, as of late, has been significantly more expensive than silver. This price relationship between gold and silver exists despite the fact that there is actually much more above-ground gold in existence than above-ground silver current estimates place above-ground gold at ~5 billion ounces and above-ground silver at ~450 million ounces .
The commonly accepted reasons why gold is more expensive than silver, despite its relative abundance, are that gold is more widely used in jewelry, gold is seen as more of an alternative currency than silver, and gold is in higher demand by both central banks and individual investors than silver.
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Difference #: Silver Stockpiles Are Falling Golds Are Rising
This difference may not seem to have immediate importance to an investor, but its a behind-the-scenes development that could potentially have big consequences in certain circumstances.
Governments and other institutions used to hold large inventories of silver. Today, however, most of them no longer have stockpiles of the metal. In fact, the only countries that warehouse silver are the US, India, and Mexico.
Look whats happened to those inventories since 1970.
The primary reason governments dont hold a lot of silver is because its no longer used in coinage. But as we outlined above, silver is used in industry to a much greater degree now so if future industrial needs rise, or the supply chain were interrupted, governments will be ill-equipped to support those needs.
In contrast, central banks hold over 34,000 tonnes of gold in official Reserves. And on a net basis, they continue buying every year. These ongoing purchases contribute to the overall demand for the metal.
This source of demand isnt present for silver. However, it does put the silver market in a precarious position. If the need for physical silver were to suddenly increasea monetary crisis, a shortage in industrial supply, a spike in investment demandgovernments wont be able to meet these needs with such tiny stockpiles.
- If governments started to buy silver for any reason, it would have a huge impact on the marketdemand would spike, and the price would skyrocket.
The London Bullion Market Association
The LBMA is an association dominated by many of the worlds largest banks who alsomake a market in physical gold and silver bullion bars. The group is headquartered inLondon and is perhaps best known by bullion investors for establishing the fixprice. This price is unlike the spot price in that it is set just once per day in silverand twice per day in gold. The fix price does not fluctuate from moment to moment.
Fix prices are often referenced in contracts and agreements involving large quantities ofmetal. Parties can agree to trade at the fix price and avoid worry about agreeing on aparticular spot price while it bounces around.
And using a fix price makes it easy for either party to hedge. Bullion dealers, forexample, can sell inventory to a customer and buy replacement inventory from a mintusing the same fix price as the basis. Once again, they avoid worrying about the spotmarket moving against them during the period between completing the sale and making theoffsetting purchase.
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Begin Investing In Precious Metals Today
The possibilities are endless whether you choose to invest in silver or gold. Precious metal vehicles give you the peace of mind that your money is being safeguarded by tangible assets that have stood the test of time and have protected investors for centuries.
If youre still having trouble deciding which precious metal suits your goals, our specialists at the Oxford Gold Group can guide you through the investment process and enumerate all of your options, including:
- Silver coins and bars
Selling Gold & Silver Jewelry
The big factor here is if youre selling bullion jewelry or costume jewelry.
Bullion jewelry are pieces that contain nothing but gold. Some 22-karat pieces contain an alloy to give it added strength, but its content is otherwise nothing but real gold. This signals to buyers that if they want an adornment that will also have resell value tied to the price of gold, then they want to buy bullion jewelry.
In contrast, costume jewelry contains many other items besides gold or silver . Some costume jewelry can be very valuable of course, but resale is usually not as high because 1) the value is more subjective, and 2) the retail markup was initially very high.
Browse our selection of gold jewelry
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Gold As An Investment
Of course, there is the other side of the trade. A group of people is buying gold. Ignoring the speculators and momentum-chasers, as these groups have little effect on the long-term price trend, there is a logical reason for people to turn to gold as an investment.
As an aside, gold is not an investment. People may say they are investing in gold, but if they are just buying gold to hold or wait for its price to rise, they are not investing at all. They are either speculating on the gold price, or they are opting out of investment. Thats what it means to hold money: to not invest .
There are two reasons why people are turning to gold now, more than ever.
Why Gold Why Now
One, by our count, the baseline deficit before the virus was $1.7 trillion. Then, the CARES Act pus its follow-on added $2.3 + $0.5 trillion. Finally, tax revenues have dropped substantiallylets assume by $1 trillion. The U.S. government is now sinking deeper into debt at a rate of at least $5.5 trillion a year .
Do you want to be a creditor to Uncle Sam?
Everyone who holds a dollar balance is a creditor. Investing in gold or gold investing are the ways to opt out.
The other reason is that the interest rate has collapsed. In Fall of 2018, the interest rate on the 10-year Treasury bond was 3.2%. As recently as January, that interest rate was 1.9%. But, by March 9, it had fallen to 0.5%, and since then has been bouncing along the floor. See the graph of Treasury yields below.
At 3.2%, many people felt a strong incentive to lend to the U.S. government. In addition to the yield, there were certain capital gains to come. But, now, at 0.5%, there is hardly any yield and little expectation of a capital gain.
At the same time that the risk of lending to the government is rising rapidly, the return has been taken away. No wonder people invest in gold.
As we do not predict any end to either skyrocketing debt or collapsing interest rates, we therefore do not predict any end to demand for gold investing .
There are two schools of thought here.
We adhere to the second view.
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Why Should You Get Your Diamonds Certified
A diamond certification is a document that states and describes the quality of your diamond. These are usually issued by labs, that use special equipment in order to determine those things. When looking to sell a diamond, it is very important to have it certified because it will make it easier for you to sell in the future.
How The Gold/silver Ratio Works
Because gold and silver prices change based on the law of supply and demand, the gold/silver ratio has fluctuated over time. Before the adoption of the fiat currency system, national currencies were often backed by gold or silver. This meant the gold/silver ratio was far more stable in the past than it is today. Indeed, it would often be fixed at specified exchange rates relative to units of national currency. These exchange rates would change based on the perceived economic strength of the nation in question.
In 1913, the Federal Reserve was required to hold gold equal to 40 percent of the value of the currency it had issued. A significant change occurred in 1933, when President Franklin D. Roosevelt suspended the gold standard to stem redemptions of gold from the Fed. This, along with other measures, weakened the link between the dollar’s value and gold. Many observers view this event as the moment when the U.S. dollar became a de-facto fiat currency, after which the role of governments in setting the price of gold and silver steadily declined.
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What Is A Gold Share Or Gold Trust
Some Gold investors would prefer not to house or ship their Precious Metals, so they invest in what is known as a Gold Share with an ETF. These shares are unallocated and work directly with a Gold Fund company who then backs up the Gold shares or stocks, and thus takes care of shipping and storage. With that, the Gold buyer does not have to worry about holding the tangible asset. However, Gold investors who prefer to hold and see their investments do not care for this option.