The gold price varies with market fluctuations but you can always count on gold to store its value. As an investor, there are factors that you need to keep an eye on in order to know the best time to buy or sell gold bars:
Manufacturers of gold bars can set their own premiums. The premium can vary from a few percentage points above the gold spot price to an exorbitant percent. Where you buy your gold matters.
Costs of Raw Gold Production
The amount of gold that is produced on a yearly basis is around 2500 tons. The manufacturing cost tends to rise with inflation. Gold producers have to pay increasing higher fuel costs, increasing labor costs, and other costs that are affected by inflation. Rising inflation also inflates the premiums. This is why many gold buyers have raised their prices when buying gold from the public.
Supply and Demand
The one important factor that influences the price of gold is supply and demand. Just like most things, when the demand for gold is higher than the supply, the price of gold goes high. Supply and demand are affected by socio-political factors, the economy, political and technological influences.
Gold is bought by investors but for the most part, it is used in other industries. Of all the industrial consumers, jewellers are the biggest consumers. Approximately 50% of the global gold production goes into the jewellery market.
There are countless experts who are always analysing the price movement of gold. They are always ready with predictions about the future. If you look back at what has happened in the gold market you will realise that gold is a resilient asset. If there is one investment that you can make with confidence that would be gold. Economic crises, political turmoil, and general uncertainty can help keep the gold price on the upswing.
A lot of financial analysts agree that over the next five years the inflationary pressures brought on by the global pandemic will push more investors to buy gold. Increasing demand brought on by inflation means the price of gold is more to go up than down.
It is important for gold buyers understand the market. If the demand for gold keeps growing then they will need to adjust their gold buying premiums accordingly.
Historically, gold has continued to hold its value better than most investment assets. The cost for gold production fluctuates a lot, it makes it almost impossible to be absolutely certain of what a bar of gold will cost you tomorrow, next month, or next year. What you might pay for gold today might be less than what you would pay tomorrow. For example, a Troy ounce of gold during the last months of 2018 was $1201, by the third quarter it has risen to $1746.
What will a gold bullion bar be worth next month or in the next 6 months? It’s impossible to be sure but what is important is to take the plunge, you cannot afford to sit on the fence when it comes to gold investments.