With the price of gold skyrocketing to record levels, many consumers are questioning the wisdom of selling their gold jewelry and coins or tucking them away as an investment. The television and radio hucksters would have you believe that the price never drops, but that’s just not true.
Should You Invest in Gold?
While it’s true the current prices have reached all time highs, between 1979 and 2000 the price dropped by nearly fifty percent. Though gold can have some short-term uses in a broad portfolio, it’s rarely a good candidate for long-term investment because of its volatility. The myth that it will rise indefinitely has many unsuspecting investors buying without the knowledge that gold has a long history of pricing bubbles (times when the price cannot be justified by any rational assessment of the real value it may generate.) Bubbles inevitably lead to a price crash.
Dealers, private owners and scrap collectors are doing a booming business buying the gold that consumers are looking to profit from. These items are then sold to refineries where they’re melted down and its purity determined. The higher the karat, the greater the value: 18 karat gold is 75% pure gold, for example; 12 karat is 50%.
Questions to Ask Before Selling Your Gold?
With the price of gold fluctuating every day, selling your gold at top dollar can be a little tricky but profitable when the price is high. With so many places offering to buy gold, it’s no wonder that consumers are confused as to which way to go. Even eBay has gotten into the act with their new site feature, the Bullion Center. But before you even begin to choose a buyer there are some important questions to be answered to be sure you aren’t going to unwittingly dispose of a pricey piece and not what you think is a hunk of gold.
- Do you know what you’re selling and its estimated value?
- Is the item worth more as is than if it were to be melted down and recast?
- Could it have historic value or be of interest to a collector?
If you can answer these questions and still want to sell, it’s time to find a reputable buyer. In our next post, we’ll share tips on choosing the best buyer for your gold.
About the Author: Noreen Ruth writes for several popular finance websites. She is interested in educating consumers about using credit responsibly and about legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content to educate consumers on credit card offers, debt consolidation, loans and other finance related topics.