The value of gold is tied to its scarcity on the planet. The purchasing power of gold, therefore, remains about the same throughout history. This is why it pays, in the long run, to familiarize yourself with how to buy gold.
Gold jewelry has been a prized and precious commodity since the dawn of human civilization and continues to be an invaluable resource for a multitude of reasons. In this article, you learn why and how to buy gold jewelry in 2020.
How to Buy Gold in 2020
The question, of how to buy gold, is directly tied to the question, of when to buy gold. The cycle goes that when it’s a bull market, the central banks sell their gold reserves, and vice versa in a bear market. The better the market is doing, the more gold is being sold, which means the price of gold is lower.
Gold has an inverse relationship with the United States Dollar (USD). If the market is producing widespread value, gold is less likely to be in demand. But, as soon as the volatility of the market begins to shake investor confidence, gold is historically where they turn for stability.
But, at the same time, when the market flips into a downturn, investors and bankers look for a stable place to put their money, which gold provides. At this point, the price of gold begins to go up. So, in essence, the price of gold acts inversely to the price of the USD.
So, it’s all about knowing when to buy gold. The time to buy gold is in a bull market – about to turn into a bear market. And it just so happens that you might be seeing that exact thing occur.
Is 2020 the Right Time to Buy Gold?
As the world reacts to the current COVID-19 pandemic, the stock market seems in free fall. As of the closing bell on March 16, the DOW finished down nearly 13%. At this moment, pay attention to the price of gold, because – if history is any teacher – the price of gold will likely go up if the stock market goes down.
That’s because gold is a rare and finite natural resource. Logic dictates, there is no more or less gold in existence than ever has been. All the gold that has ever existed on earth still exists somewhere.
The value of gold, therefore, remains steady over the long-arch of time. But, it becomes more valuable to sell gold in a bear market. This is the reason why the price of gold jewelry and bullion might see a spike if the stock market descends.
If you haven't already – it is currently a good time to buy gold. And, you probably already have some gold in your portfolio. You can invest in gold in a few different ways, and the most common is buying gold jewelry.
Buying Gold Jewelry
Even if it is stashed away in a jewelry drawer for decades – gold retains its value over centuries and millennia. And, gold jewelry retains an added value attached to the artisanship, unlike most gold coins and gold bars.
Gold is often featured in jewelry, as it has a beauty and elegance unlike any other material on earth. But, just because a piece of jewelry looks like gold doesn’t mean it is pure gold – or even mostly gold. If you want to know how pure your gold jewelry is, you have to look at the piece itself.
How Pure is Your Gold?
Look at any piece of gold jewelry, and you find a mark to signify it’s purity. Gold jewelry features, either, the karat, or the percentage of purity as a three-digit number (to the tenth-percent).
For example, a gold piece that features 999 means that it is 99.9% pure gold or 24 karats (24K). A piece of jewelry today would rarely be pure gold as it is too soft of a metal to hold up to normal wear and tear. This is where you see gold alloys being used.
In the United States, 18k gold is used in much fine jewelry. 18K gold can be represented as .750 or 75% pure gold. 14K gold is .583 or 58.3% gold content by weight. Lastly 10k gold contains only .416 or 41.6% of actual gold. The remainder of these alloys used in jewelry commonly is a combination of nickel, copper, silver, and palladium.
Gold-filled and gold plated metals may feature the letters: GF, HGEP, or GP. Gold-filled is generally of superior in construction as it must contain 5% of actual gold. In contrast, if the piece is plated in gold, “GP or “HGEP” there is negligible gold and that electroplated coating can wear off very easily.
A simple way to understand the purity, or fineness of the gold is when expressed in karats. 1 karat represents 1/24 of the gold's purity. So, 24 karat gold is 100% pure 24/24. 18 karat is 75% pure 18/24, 12 karat gold is 50% pure 12/24, etc.
According to the New York Times, the current spot price of gold is about $1,703 per ounce. Remember, the most important factor when buying gold jewelry is to consider the purity of the gold.
If the market continues its free-fall decline throughout the emerging world-crisis, the price of gold will likely see a steady rise. And, regardless of anything else, gold jewelry is a timeless touch to your attire.
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