Time to Buy: Gold Prices Hit Rock Bottom

Traditionally, gold has been one of the soundest investments you can make because it retains its value. Even when currencies are plummeting and stocks are bottoming out, gold is always a sure bet. But that doesn’t mean that gold always sells for top value — its value fluctuates just the same as any other commodity or investment.

Keeping an eye on the value of gold will help you identify the best times to buy. The lower you can buy, the more you can make down the road when the value will inevitably rise again. Right now is that time to buy. Gold prices have hit a six-year low, and it was trading as low as $1,051.60 an ounce in November.

Gold fell to just under $1,045 an ounce in February 2010, but it steadily rose in value over the last several years. Gold dropped in price for six straight weeks before reaching this year’s new low.

Market Influences

Turbulence in the market has caused gold prices to drop, just as it does the prices of other investments. The latest drop can be attributed to the lingering fallout from the stock market sell-off at the end of August, as well as terrorist attacks such as those in Paris in November.

However, a few major influences have been linked to gold’s decline. They include:

1. The economic downturn in China. This month, the main stock market in China took a nose dive after the government began a major effort to crack down on some of the country’s biggest stock brokers. The move caused a lot of investors to slow down their spending on gold and other commodities and stocks.

At the same time, China is experiencing a slowing economy. The government insists that the growth remains steady at about 7 percent per year, but independent researchers have put the figure at closer to 4.5 percent.

2. The rise in value of the U.S. dollar. You would think that the rising value of a currency would be a good thing, but not in this case. Most markets trade gold in U.S. dollars. When the dollar gains ground and becomes more expensive in relation to other currencies, many international investors cut back on purchasing gold.

The dollar doesn’t show any signs of slowing down, which could mean bad news for gold prices for awhile. In fact, the dollars is at its strongest point in years, and it is expected to nearly equal the euro sometime in 2016. The dollar has not been on equal footing with the euro in more than 10 years. If the dollar continues its rise, gold prices are likely to continue to fall.

3. The Federal Reserve is expected to raise interest rates later this month. The Federal Reserve has kept interest rates at historic lows since the financial crisis in 2008, and it is expected to finally start raising rates this month.

The reason that such a move would be bad for gold is that investing in gold does not yield a return from interest. Therefore, many investors are expected to move away from purchasing gold so they can put more money into investments that pay interest dividends. That lower demand will likely help drive down the price of gold even more.

As with all things in the market, these are just predictions, not guarantees. Political changes , natural disasters, war and any number of other events can cause the price of gold and other investments to fluctuate.

History and the Future

In September 2011, gold was at an all-time high. It was selling for nearly $1,890 an ounce at the time, partially because of the European debt crisis and the downgrading of the U.S. credit rating. That high came a year and half after the last low for gold, so it shows that prices can fluctuate fairly quickly.

However, most forecasters expect the price of gold to continue to drop for the time being. Jewelry sales over the holidays will have a big impact on what happens with gold, as will what happens with the world economies and the Fed. If gold continues to drop, one estimate expects gold to go as low as $350 an ounce, which would be a drastic drop from current prices.

What does this mean for investors? Now is a great time to buy gold. You can wait until prices drop even more to pick up as much as you can at the lowest prices, but you will be taking a gamble. While gold is forecast to drop, there are no guarantees. Gold could start rising again, and you could miss your opportunity to make a sound investment.

If you’re comfortable with the gamble, you could wait to see if gold starts dropping as expected in the next few months and buy up as much of it as you can. Imagine the yields you could get if you did buy gold at $350 an ounce and then turned around and sold it at current prices when gold rebounds.

Buying from a pawn shop is a great way to get the best deals on gold. You can buy gold jewelry, coins or even bars, and you can find a steady supply. Pawn Now in Arizona buys and sells gold, so we always have a steady supply of gold for investors. If you know that you will need to tap into the value of your current gold investment in the near future, you can also bring in your gold to sell to us now before the prices drop more.

At Pawn Now, we buy gold outright or we offer pawn loans. You can put up your gold for pawn and get a short-term loan for the current value. Pawning gold is a good way to cash out its value without losing ownership of that commodity. Come in to see us or call us today to learn more about pawning or to find out our current buy and sell prices for gold and other precious metals.

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