The price of gold has skyrocketed over the last several years and rose to an all-time high point above $1,250 dollars an ounce on June 8, 2010, as investors remained nervous about the state of the global economy. Silver too has climbed steadily in price, reaching $18.35 on the last day of trading in July. Nevertheless, silver is nowhere from reaching its record high of $49.50 an ounce in 1980.
The reasons both precious metals continue to rise will be discussed in more detail shortly, but first how to purchase them in bulk.
Both gold and silver can be purchased in bulk from a variety of vendors. Most recent attention has been focused on Goldline, one such vendor. Goldline International is currently under legal investigation for its business practices, as it is believed that the vendor is selling gold at overly inflated prices. Industry experts claim that Goldline marks up prices, on average, “90 percent above the melt value of the coin and 47 percent higher than the competition.” As Goldline continues to be investigated, investors will want other alternative vendors from which they can purchase gold and silver in bulk.
Gold, in the form of bullion bars (gold bullion is a recognized weight and fineness of gold that you can purchase for the current price of gold, plus the small percentage costs incurred in refining, fabricating, and shipping the bullion) and coins can be purchased through dealers such as KITCO which is one of the world’s largest retailers of precious metals. Although KITCO’s fees are high, they are considered cheaper than most of their competition. Gold and silver can also be purchased from various local dealers, and large banks, etc. As of late, bulk buyers of gold and silver have also turned to the Dubai market and other gold markets in the Emirates because there is a large concentration of gold and precious metal dealers and, therefore, stiff competition.
Additionally, as a result of the Emirate’s free trade policy with virtually no taxes, gold jewelery from the main production centers is offered at competitive prices. In particular, the Dubai gold souk is extremely popular. As a last resort, if you are not able to buy gold or silver in bulk, it is possible to buy and/or trade the corresponding Exchange Traded Funds (ETFs) as they offer a great deal of liquidity and there is no need to store or insure them.
Buying both gold and silver in bulk is not easy and requires a degree of knowledge about both precious metals markets and the precious metals themselves. It is always important to remember that the market or spot price of gold and silver does not include mark-ups and fees that you will usually have to pay when working with dealers. Additionally, as it pertains to gold, the gold bullion quality will affect the actual price you pay. For example, scrap metal gold is often lower quality and sells for less whereas gold 9999 represents the highest possible bullion purity and will cost more. It is extremely important to trust the source from which you are buying. Also, shop around and compare prices before you make the actual bulk purchase as gold and silver prices per ounce may vary depending on the dealer. This will ensure you buy the highest possible quality gold or silver at the best price.
Now might be the time to answer the question we touched on briefly above, why does the price of gold and silver fluctuate? The price of silver fluctuates primarily as a result of price speculation and global demand to hold silver, not so much because of supply. Generally speaking, when economic times are good, people are more likely to buy luxuries containing silver, thereby driving up the price. Because sentiment can change quickly, the price of silver is apt to be volatile.
Owning gold, on the other hand, is viewed by many investors as a reaction to poor economic times. Gold is viewed by many to serve as a hedge against the weakening global economy. When a country such as the United States runs an extremely large deficit, there tends to be a risk of default as it pertains to the country’s outstanding obligations. This risk drives people from the nation’s currency into gold, triggering a surge in demand. Further, during times of political unrest and war, countries implement expansionist monetary policy which also causes the nation’s citizens to lose faith in the value of their currency, further exaggerating the demand for gold. Although there are other factors which lead to increased demand for gold such as inflation, the above are significant drivers.
It is difficult to tell whether the price of gold or silver will continue to rise over the coming months and years. If you do decide that these precious metals are the right investment for you, make sure that you understand what to look for when buying and from whom to purchase. It is easy to be deceived in the metals markets.
Published or updated September 22, 2011.
{ 8 comments… read them below or add one }
We have a crazy family friend that screamed for decades that gold is the only true investment. From 1984 – 2004 the his investment was essentially random: he made a few thousand, lost a few thousand, but basically was just treading water with some noise from commodity markets. Until the crisis, I suppose.
I imagine he’s pretty pleased right now, gold being about 4x more expensive than the early 1980s. Of course, thanks to steadily growing investments and compounding, the retirement accounts of everyone else still blow his out of the water (and won’t evaporate should the economy recover in the coming years).
I will say I wish I had bought some gold in 2007 when people started to see the writing on the wall (auction-rate market failed, subprime crisis brewing, etc)… At this point, though, buying gold seems just as risky as anything else. I wouldn’t want to sink thousands into metal that would be worth half once panic abates.
Gold isn’t worth the risk of thousands of dollars. Sure it might be at an all time high but nothing seems worth investing into these days. Its hard to make money in a very down economy
From what the graph has provided, I agree that it is a good idea to invest in precious metals: Especially Gold. I agree that even though Silver isn’t rising as quickly in terms of value, it’s still a good investment. Thanks for sharing this info with us.
Excellent article! Remember, when buying gold or silver – look at the ALL the costs (not just the mark up over spot). State tax, shipping fees, minimum order sizes, and payment method are all things to consider. For instance, some dealers can offer a low mark up – but they have a $10,000 order minimum. Other dealers may require wired funds, and will not accept your credit card. NOTE: many credit cards offer you a % of cash back on every dollar you spend. This can offset some of your transaction costs.
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seems like if your supposed to buy low and sell high gold would have been a good investment a few years ago, but with stock prices at record lows I would think that is where the real money is to be made. Gold may continue to go up, but the the higher you buy in the harder it is make money.
i would be very leary about buying gold, since like the housing bust, it’s just might have already peaked. and, now, it just might start to decline. awhile back, was the time. when it was selling low. but, to each his own. we all better go back to being patient and being more careful before we jump into the next financial trap.
Investing in gold and silver may be a good option when you want to solidify any profits you make from any business ventures you’re a part of. Thanks for posting this info.