Gold Prices Today

We’ve all seen the endless and catchy commercials about selling your gold jewelry because the gold prices today are at an all-time high. Does it lead you to wonder how much you could be earning if you had bought yourself gold when it was cheap? When was it cheap? What made people buy gold then? Should you buy gold now, so that if the price continues to rise you’ll be ahead of the game? Or is this as high as it will get and buying now will lead to losses for you? These are all valid questions. Let’s discuss them all and try to clarify any confusion about gold prices today and what it means going forward.

How Does Gold Relate to the Economy?

Originally, gold was used to actually give money a conceivable value. Simply stated, gold standards (there were many varieties) were predetermined rates used to exchange one nation’s paper and coin currency for gold or to exchange it for another country’s paper and coin currency.

Until 1968 the rate of exchange for an ounce of gold was $35. This was the rate on any day of any week. If you wanted to purchase 2 ounces of gold, it would cost $70. Any day of any week, it was always $35/ounce. Gold prices today vary daily.

The “standard rate” was abandoned when westernized countries found gold’s stability to be a negative trait when manipulating values were the goal.

Large central banks that exchanged multiple currencies would use the standard rate as a gauge for exchange rates. The convenience came from a centralized value.

When 1 ounce of gold was equal to $35; 1 ounce of gold could also be equal to £50; (i.e.) then $35 was equal to £50.

Until the mid-20th century the Federal Reserve mandated that banks kept gold on hand and available for exchange, up to 40% of total currency that they held and were accountable for to their customers. This was partially to prevent false inflation of the dollar’s value; because when more money is put into circulation than there is to back its value, the value loses its worth because you have nothing to show for it.

Why Do Gold Prices Change?

It has only been in the last 40-45 years that the Federal Reserve chose to abandon the gold standard systems. As mentioned previously, the difficulty that many countries encountered when attempting to manipulate economic conditions to reflect declining or strengthening markets led to the shift away from gold standard systems. Since abandoning the standard rate of gold, the price of gold today not only fluctuates daily but also trends in series of peaks and valleys that resemble the peaks and valleys of the world’s economic market. It may not, however, relate to the markets in the way that you expect.

The Breakdown:

There is no physical, tradable substance that we (or most other countries) value currency through, anymore. This means there are no longer formal explanations for a declining economy by saying it’s the decrease of this in ratio to an excess of that. (e.g. excess currency in circulation to gold backing it.)

Simply put, gold is subject to the same shifts that the market is experiencing in a more generalized way. A dollar will only be worth what the economic market determines a dollar is worth – this is the larger concept of inflation. Gold is still subject to a valuation – it also has a worth all its own.

How much gold that $1 (or $1000) is worth compared to how much an ounce of gold is worth, also changes daily. The middle ground is the answer to the question: What are gold prices today?

Why Do People By Gold? What is the Benefit?

Buying gold is best done for purposes of a long term investment. Gold should not be looked upon like a source for windfall profits, it won’t be 500 shares of some obscure stock that you buy for $.50, and then see an unbelievable rise over 6 months to $30/share. The price of gold today ranged between $1520/oz. and $1550/oz. They both increased almost $30 in 6 months, but the difference was the stock increasing at 5900% and gold at only 2.3%. (The likelihood you find stock that rises that quickly is not great, but it’s not unheard of and good research goes a long way in stock market trading.) Gold, on the other hand, is still worth what it was 30 years ago. Consider 30 years of investing in small of amounts of gold frequently:

30 years ago in 1981: (est.) $400/oz. We get to factor in a huge drop in the price of gold in 1981 – various theories exist to why, it’s the nature of the market – but we know now, that ups & downs occur and the value of gold goes right along with it.

A fair estimate is to put $25/week from a budget aside to buy 1oz of gold every 4 months. (3 oz./year in 1981)

As time goes on, gold prices rise. We’re establishing a career now though, so we keep buying at 3oz/year most years and sometimes we hit bumps along life’s road so a good average to work with can be 2oz/year.

2oz/year 30 years $620 (age price 1981-2011 for easy calc.)

60 oz. for $37,200 over the years. . .

Gold Prices today are $1500/oz

60 oz is worth $90,000 on today’s market - A $55,000 Profit with conservative estimations

This helps us to understand how a gold investment is more beneficial than a typical savings account, bond, or mutual fund. The trading currency of those accounts are still the USD (or your local currency), and that is what fluctuates in value. Simply putting money away while markets respond to inflation, or investing in markets that reflect the fluctuations of inflated markets can’t offer you the confidence of stability. Purchasing gold, however, gives you a tangible purchased item with a proven history of not only maintaining its worth but also trending upward in price during downturn economies.

Now, imagine that you had saved $90,000 worth of gold on today’s market and the economy looks like it has recently. One ounce of gold that you bought for $620 is now going to earn you $1500 during harder times. If you find yourself on hard times in a tough economy, it’s simply a matter of selling maybe 10 oz. from your 60 oz. You keep a solid investment (50oz at gold prices today = $75,000) tucked away, while still offering yourself $15,000 to use as a safety-net to prevent truly falling on hard times.

Imagine that you don’t need all $15,000 and you can set it aside about half to see if the gold price drops again. $7,500 buys a lot of gold on a sudden price drop like the one in 1981. This leads to the next question that is asked frequently: if gold prices today are so high, then should I wait or buy gold now?

If Gold is Worth So Much Now, Should I Wait To Buy?

To answer this question, there are two sides (at least) to make points from; waiting for the market to bounce back or establishing a buying pattern right away are both appropriate options – ultimately, it’s a personal decision based on personal scenarios.

Yes: If you spend 2 years waiting for the price to drop again and it only continued to rise, then you’ve wasted 2 years that you could have been buying gold that much cheaper – whatever that much was over the last 2 years, but instead you were waiting.

Maybe Not: Do you have money in your budget to buy in at gold prices today, with the expectation that you won’t get it back for many years? If gold is expensive because the market is poor, how are your personal finances holding up against the force of that? If you can’t afford to put it away for 20-30 years as a long term investment, prioritize getting through this gold-peak and market-valley. You’ll be ready for the next go-round.

The most important thing to remember is to view this investment in the long term. When you are making your decision about whether or not you should buy into gold today, two months from today, or twelve months from today, simply be reasonable. When you decide to make your purchase, whenever it happens, consider that you’re look forward to 30+ years of weathering market ups, downs, watching gold prices fall, then dramatically rise and fighting the temptation to sell: Are you going to ask yourself “If only I had started 2 months earlier, then when we pay for our retirement home in cash we could spring for that snazzy doormat the very same day.”

With investing, just like with any other money matter, and especially with long term investing, it is important to focus on the goal so that you don’t lose the beauty of the forest by staring at the detail of one tree.

Why are Gold Coins different from other Bullion

When investing in gold many people choose to invest in bullion coins. By purchasing bullion coins a buyer invests money at current market value into gold with its proven history of stable and upward trending with confidence that further down the road that trend returns gold at a market value higher than initially invested. To explain we’ll use details of American gold coins circulated from the time of the 1849 California Gold Rush to articulate the process of valuing gold coins.

First Gold Minting

The largest amount of gold owned to that date was being mined in 1849 during the historic California Gold Rush. The first coins minted from the historic Gold Rush were done at the Philadelphia mint in $2.50 pieces with simple “CAL” stamps in them. Anxious to diversify and excite the public in the new currency, Congress enacted a plan to coin gold in amounts ranging from 1 to 20 dollars. These first minted gold coins were termed “double eagles” and came from 1850-1907 were issued in 3 major types. We will remain brief by only discussing the 3 Liberty Head coins.

Liberty Heads

Double Eagle Liberty Head Type 1 : very few of these pieces are still found in circulation, and even fewer are in “mint condition”. The majority of mint-grade coins known to still remain were from the 1854-1856 and 159-1860 New Orleans (mintmark “O”) series as well as a few rarities from the circulation time spanning all of 1849-1866 in Philadelphia (no mintmark) and San Francisco (mintmark “S”) also.

Double Eagle Liberty Head Type 2 : the greatest change made to coins struck for circulation in 1866 were 4 words added as unifying code to a country on the brink of civil. Staring at our dissolution into the Union and Civil forces a petition was made to include “IN GOD WE TRUST” on newly circulated Eagles. More than 16 million coins from 3 mints – Philadelphia, Carson City (“CC”), and San Francisco (“S”) – but a large quantity were used for international trade. These coins, circulated from 1866-1876, have also become a rarity coveted by collectors.

Double Eagle Liberty Head Type 3 : over 31 years, from 1877 to 1907, the U.S. mint struck the largest quantity of the 3 Double Eagle variations. At 5 minting facilities – Philadelphia, San Francisco (“S”), Carson City (“CC”), New Orleans (“O”), and Denver (“D”) during the last 2 years – there were more than 64 million coins produced and entered into circulation. Aside from its much larger production numbers the greatest difference between type 2 and 3 is the notation of its value on the coin. Type 2 printed: TWENTY D.” while Type 3 printed: “TWENTY DOLLARS”.

Collector Coin Valuation

While none of these seem like very serious or consequential differences, and they’re not in reference to currency use, they are the epitome of collection value. Gold coins have a worth based on their “weight in gold” additional to an individual collector’s perceived value of the piece in reference to their own personal collection. A collector who possesses all American Double Eagle gold coins minted from 1849 to 1933 with the exception of the Double Eagle Liberty Type 2, known to have reached far and wide overseas during circulation, will value it much higher than a casual first-time gold investor. These are the considerations necessary for practical investing, especially in early and novice gold coin investment ventures.

Buying Gold – What You Should Know

As we all battle through tough economic times we try to help each other along in any way possible. As we all do our very best to keep our heads above water, sometimes the only help we can offer to each other is a piece of advice or information taken from a trusted source. One idea that has garnered some attention during this recent economic decline is to buy gold as an investment. For many of us this was an uncharted territory of finance and investment, and we sought as many resources for guidance as possible. Here is a basic breakdown of my own diligent research and what I used to make my own purchases based upon it.

Gold Bullion vs. Gold Bars

In the simplest format of due diligence, let’s start at the beginning: terminology. What is bullion and how is it different from bars? Gold Bars are the heavy, longer than they are wide, casts of large amounts of gold. These are most often used by national governments, international banks, or national repositories the United States’ Fort Knox in Kentucky. Gold bars are too heavy for everyday use and are typically only used for very large sums of money being traded. You might be imagining some familiar heist movie that has thieves using gold bars to illustrate the large amount of money they have been able to take in a small parcel. This is an example of the value held by gold in comparison to the currency we use for everyday exchanges. Gold bars are typically 400 ounces after being cast and imprinted by the casting facility.

Modern Gold Bullion

To answer the problem of gold bars’ inefficiency for everyday use or smaller sums, gold bullion was introduced specifically for trade by individuals. Gold bullion coins issued by governments for trade or collection purposes are referred to as “Modern Bullion” because the coins are still being issued into circulation. To add even more interest to the intrigue of individuals looking to buy gold bullion, the government mints commemorative coins, national coins of symbolism, and items of particular value to collectors.

By the nature of gold as an investment, the imprinted value is not representative of its fluctuating value. An example of this: the American Gold Eagle bullion coin, presented with an imprinted value of US$50; it is actually valued at the “spot price” of gold in the most recent market reports. Market reports for current “spot prices” are given in $ amount per troy ounce, where 1 troy ounce is equal to 30.103 grams.

Historic Gold Bullion

Not all gold bullion being traded is in the form of coins that are being issued by present-day governments. These may be in the form of coins from previous generations’ circulations, when the gold standard was used by nations throughout the world, or in a multitude of other forms dating much farther back. These gold bullion pieces are referred to as “Historic Bullion” or sometimes “Obsolete Bullion”, considered to be rare and valued for their rare status in addition to their inherent monetary value. Before paying any listed price for a piece that is termed “Historic” or “Obsolete” it’s very important to research the piece and verify that it is in fact of valuable gold weight. Gold is incredibly malleable and as a result was often mixed (or “alloyed”) with other more sturdy metals for circulation as currency.

If your purpose in buying a historic piece is for investment purposes, the amount of pure gold in it will be the priority basis to determine value. If you are a collector and your interest is in the context or significance of the piece, then the amount of actual gold by purity will be less important and your research for valuation will be based on contingencies to collection value.

24 Karats

Most of us are familiar with the karat system, if only by name. We’ve been conditioned to appreciate “24 karat” gold, but surprisingly not many of us understand why it is so valued. The term karat is a way to express the purity of gold. This is especially important when valuing gold bullion pieces; an example is given in our previous description of historic gold bullion being alloyed with other metals to stabilize the malleable traits of gold in purest form. The reason that 24 karat (24k) gold is so coveted is representation of 99.99% purity of the gold used, the most pure that a piece of gold can be attained. Pieces of 24k gold should be handled as infrequently as possible, due to their immense malleability. Examples of coins that can be purchased at 24k purity include:

American Buffalo
Canadian Maples
Australian Kangaroos (stamped as “Nugget” with Kangaroo emblem)
Chinese Pandas

22 Karats

At slightly less purity is 22 karat (22k) gold, rated at 91.6% pure gold and is most often alloyed with silver or copper. These pieces maintain the appearance of gold but aren’t subject to tarnishing or the damage that more pure gold pieces often incur as a result of gold’s malleable quality. Examples of coins that can be purchased at 22k purity include:

American Eagles
British Britannias
South African Krugerrand

21.5 Karats

The lowest purity rate offered to gold bullion pieces is 21.5 karat (21.5k) gold, rated at 90% purity. This purity is most commonly seen with historical bullion pieces and maintains a muted yet pristine gold shiny hue. Examples of coins that can be purchased at 21.5k purity include:

American Coronet Head Eagles & Half Eagles
19^th & 20^th Century Austrian & French Francs
Austrian Corona 10’s

Gold is offered in less pure states, the most common example being jewelry which is most often rated at 75% purity, or 18 karat gold

These basic fundamentals of gold and how it values based on both the style it’s available and the purity can propel you earnestly into your “golden days.” Understanding how to fundamentally evaluate gold pieces based on market price will offer you a confidence when looking to buy gold for investment. You now have a discerning judgment ready to further research topics you might need to determine a personal value of collector pieces. When you are ready to buy gold remember that an old piece of gold is not an inherent piece of wealth, nor is a piece of gold in current circulation without investment value.

Scrap Gold Prices

I can’t be the only one who feels haunted by those catchy commercial jingles about buying or selling gold for those tempting cash prices. As for myself, my vivid memories of grilled cheese, cereal and soup as staple foods for months at a time in college make it easy to for me to see why people being tempted by an offer of any amount of money for gold pieces not being used anymore. Catchy commercials with jingles getting stuck in your head to remind you of very tempting scrap gold prices makes it hard not to inquire, at the very least. Let’s discuss the pros and cons to these tempting scrap gold prices being offered.

PROS

There’s certainly a large list of buyers to choose from! There’s no shortage of gold buyers ready and willing to take that gold off of your hands.

With a discerning eye for a reputable company, you will get cash. If you know what you’re gold is worth ahead of time, then you can be confident that you’ve gotten back no less than that (+ some “handling fees” along the way).

The gold market prices change daily, this can be advantageous: open lines of communication with a gold buyer, ask them if you are mailing your pieces in, will they be using a market spot price from the date you send the pieces or the date they receive them?* This can either be a negotiating point or one to plan around.

CONS

Most of the gold in today’s jewelry and other household items you may be recovering scrap from, like solder or computer chips, are not likely to be more than 22 karats (22k) and more likely to be 18 karats (18k).

You can still sell 18k pieces, but the rate for sale will be a fraction of the gold market listed price for the day, without proper calculations a buyer can use lots of smooth talk and numbers to whittle down the purchase price.

The overall buying process can be somewhat unnerving when using the mail; you mail your pieces with a detailed description to the buyer then wait for a price quote. If and when they respond, and if the price quote isn’t agreed upon, any fair company will return your gold pieces to you. You’re expected to put in your confidence first, though, by sending off your gold for appraisal.

Neither of the lists were meant to sell or sway you from, at the very least, inquiring about scrap gold prices; there are some very important clues to best approach the trade. Along with the topics mentioned, you, as a seller of scrap pieces, should take time to remove any other gems or precious metals from the piece to be sold.

One reason is to prevent any false devaluation of your piece, motivated by the enticement of more profit from the included extra the buyer did not have to pay for, but can then sell on a precious metals or gems market. The other is to avoid any concern with an often offered service by the buyer to ‘remove any extraneous metals or gems and return them’ to you, often ‘at no charge’. Just these few considerations can make your decision about scrap gold prices in those tempting commercials a lot easier.

*market prices = 24k gold/troy ounce; where 20 pennyweights = 1 troy ounce; and 1 pennyweight x 1.555 = 1 gram*

Explaining the Gold Price Chart

With access to gold price charts at our fingertips through quick search engine queries, it’s reasonable that we should ask what exactly that price represents. An individual buyer or collector of gold might choose to use a private retailer of gold products. With the recent surge in gold’s already existing bull market there has been a correlating surge in these offers by retailers who market gold services. Another option is to use more trusted vendors, established and traditional institutional investment firms. This is why a thorough research process into the company you choose is just one of the detailed steps to gold trade.

The Conduit

While individual nations often do maintain their own reserves of gold supply, the gold pieces traded through market exchange and quoted through gold price charts are not purchased directly from these national reserves. Instead, the conduit is the Foreign Exchange Market, known commonly as ForEx. Marc Levinson described the ForEx in The Economist: Guide to Financial Markets (2005, 4^th ed.) as a “worldwide decentralized over-the-counter financial market for trading currencies.” ForEx allows nations and very large centralized banks to conduct business across currency boundaries. It is also responsible for the speculative future value of currencies and interest rates applied to currency. Their impact on interest rates is very important, even if only speculative.

Hedging Speculations

There is a widely accepted understanding among investment and finance professionals that there exists a correlational value between interest rates and gold prices. With a rise in interest rates there is an expected drop in gold prices. Conversely, with a rise in gold prices – as seen after India’s announcement of 200+ tons recently – there is often a decrease in interest rates. This is interestingly, as well as more complex for this article, related to the fact that gold does not carry a tax of its own. When an investment broker or firm makes purchases based on speculation, this is called hedging. In this respect the commodity traders of currency, to include gold, can use ForEx to pursue opportunities to hedge profits through gold trades. A large purchase of gold with an expectation of interest rates to drop in the near future, thereby increasing the USD$-values on the ever-coveted gold price charts can mean very large profits.

Hedging gold against interest rates is no small feat, though. There is a multitude of other factors lying just below that simple idea. After all, if we know that whenever it rains there’s a huge shoe sale at the mall, it isn’t long before everyone in town is at the mall on every rainy day looking for shoes, right? It’s the people who can determine when ELSE the sales occur that can get and stay ahead of the pack. Currency and precious metal trading is certainly interesting, and with a great brokerage firm working for you, it can be incredibly profitable. Remember that it’s typically a long term investment with lots of peaks and valleys through the years. Some days you’ll get all of your day’s joy from the gold price charts and some days you might wish you hadn’t looked, but gold truly is the most stable investment for profit any person can make – if they’re willing to see it through.

Investing in Gold

Once you’ve made the decision to buy gold as an investment venture, your next question is likely to be what kind of pieces are best for investing in gold? Without some experience in the gold-buying subset of finance and investment strategies one may think that jewelry or inherited items of antiquity are the resources that “gold buying and selling” are making reference to in the media.

Jewelry is one form of gold that can be considered tradable for market value; however, the market value of jewelry-grade gold (often 18karat, indicating 75% gold purity) is not typically in the same category as true investment gold pieces. After removing jewelry from investment options, there are 4 other options for investing in gold, each with their own benefits depending upon the preferred length of investment. These include:

Modern Bullion
Historical Bullion (aka Obsolete Bullion)
Gold Bars
Gold Certificates representative of bullion

Modern Bullion

Gold coins have had a recent surge in popularity with American citizens, as well as citizens of well-developed international countries like those in Europe and especially China. There are advantages and disadvantages to be found with gold coins, better known in the gold market as bullion when group with gold bars.

Advantages to investing in modern gold coin bullion include:

Worth found squarely in its current market value: today’s total price is the “spot price” + buying fees, then when ready for trade or sale again it is worth that day’s “spot price” and any selling fees (when applicable).
Coin bullion is easy to maintain and easy to store until ready for resale: unlike gold bars that are heavy or certificates that require trade for actual gold pieces purchased, coin bullion is bought, stored, and sold with little to no cost or maintenance by the owner.
Based on modern bullion’s simple valuing construct it has the greatest returns on short term investment in reflection to the fluctuating gold market.

Historic Bullion

The performance of gold bullion – coins or bars; modern or historic – shows a historic rising trend in markets all across the world. Its stability is the cause for abandoning the gold standard currency system in the U.S. some 40-50 years ago. There is one particular form of gold that has managed to stand out, and above, the rest, however. Rare historic coins have a special, if not, better value on our gold markets.

Characteristics that set rare coins apart include:

A worth based on historical significance and collector significance, in addition to market value.
Higher initial price, traded off as a long term investment opportunity that offer a patient buyer the time to find specifically motivated buyers of their special piece.
Rare coins are most frequently considered long term investments and as a result their worth has more time and opportunity to increase with the upward trends of gold’s market value.

Depending on what your goals are when you decide that investing in gold is a journey that you are ready to begin, you will make choices between various forms of gold. When choosing gold as a short term investment, modern coin gold bullion is considered a sensible purchase. When choosing gold as a long term investment, historic or rare gold coin bullion is considered a logical approach.

Gold Prices

Gold prices are at record highs right now. With gold inching towards the $2000 per ounce, there’s huge amounts of speculation about just how high gold prices will actually go. Some forecast gold reaching the $2000 per once mark while others claim that the gold prices today are simply unsustainable and will come crashing down.

Why are gold prices so high right now? With the US economy (the entire global economy arguably) in the trash can right now with property prices falling and the US dollar dropping like a rock, people are seeking SAFE investments. Stocks are not a sure bet and other forms of investment are shaky. This makes gold, a historically “safe investment”, a popular investment as people flock to put their money in something tangible. Unlike stocks, gold has inherent value to it; even if the price of gold drops, you STILL will have something of value. If stocks or other investments collapse, you are left holding worthless paper.

Should you invest in gold? Right now gold is at a high, but there’s a good chance that it will keep rising higher in this unstable economy. Make no bones about it: gold WILL fall at some point. The question is WHEN. With the economy as it is, it’s a fairly safe bet that gold will continue to rise for the next year or two.

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Gold Prices Today