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Gold Price: What Affects it and How it Changes

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BBS Team



10 Interesting Facts About the Price of Gold

To understand how the gold price works, one must learn why people regard the commodity as a premium and how the market moves. Those who want to buy gold or invest in gold need to have ample knowledge of the things that can affect the trends of gold prices.

This article presents foundational truths, evidence in history, and news from the experts regarding the price of gold and its trend.

Here are TEN THINGS YOU NEED TO KNOW that will help you understand the price of gold.
The Value of Gold is Highly Sentimental.Technology Will Open More Niche Markets.The 2020 Pandemic Led Gold to a Record-Breaking Price.The Outlook for the Price of Gold Towards 2025 is Highly Positive.The Gold Price Will Always Rise in General.Every Gold Crash in History Was Followed by a Dramatic Rise.There Are a Few Crucial Factors That Differentiate Gold Prices in Different Countries.The Price of Gold Soars During Economic Crises.There Are Gold Items That Sell for More Than Their Price Per Weight.The Best Contingency for a Low Performing Gold Price is Diversification.

Fact No. 1: The Value of Gold is Highly Sentimental.

While natural, the way humans value the premium precious metal is more sentimental than practical.

Since history itself and beyond, the human aesthetic affinity for gold has always been present. Civilizations from then to the present regard the shiny, yellow, and beautiful precious metal as a symbol of power, dominion, affluence, wealth, and influence.

It has always been used for decorative purposes more than any other application.

While modern technology has opened new ways to use gold, it continues to perform most as a sentimental object.

People continue to adorn their bodies with gold jewelry and revere their gods with statues, trinkets, cathedrals, mosques, temples, and other places of worship decorated with the precious yellow metal.

If you look at the market niches where gold is in demand, they are mostly non-industrial – bullion, investments, jewelry, and decorations.

While the foundation of the valuation of gold seems unstable, the roots by which gold has locked on to society’s liking is deep. Humans are naturally highly attracted to the precious yellow metal.

These roots are the main drivers of the gold price and the main reason why the demand for gold keeps on increasing.

Investors know that people want gold this way or another and will hoard it to sell for profit at a time when the gold price is high.

Fact No. 2: Technology Will Open More Niche Markets.

The only practical use for gold in the olden days would be for tooth fillings. The metal is superbly malleable and easy to fit as dentures.

In the era of high-speed internet and fast data transfer, gold is highly needed for electronics, especially high-speed computers, and high-tech hardware. However, since there aren’t many mass-produced supercomputers commodified, most electronics created for the general market will use silver as an alternative.

Most electronics prefer silver because gold has impractical premiums. For today’s general mass technological needs, silver will suffice.

However, in the coming decades, when super-fast data transfer becomes a common logistic at home and for the individual, gold will start to perform better in the tech market. Plus, there are other applications for gold that can evolve and demand the precious metal more.

Fact No. 3: The 2020 Pandemic Led Gold to a Record-Breaking Price.

When lockdowns were put in place because of the threat of Covid-19, investors who knew how gold could protect them rushed to get the commodity.

This rise in price is what happens when the dollar value drops – people rush to buy gold, dramatically increasing the demand.

People know that the stock market, real estate, general business and commerce, and other investments could be significantly affected by a wide-scale emergency such as covid.

World trade has slowed down as travel has been restricted and the economic flow was maimed severely.

As the demand for the precious metal increased, the gold price started to skyrocket, hitting its all-time high in August 2020 at $2,067.15. That value is the highest price of gold that history has ever seen.

Now, investors know all the more that gold will perform the best during a crisis and will act accordingly. People have seen evidence of the importance of gold for protecting financial positions during economic downswings.

This rediscovered knowledge about gold prices during crises will lead more investors to seek the precious metal. More people are now interested to invest in gold.

While the increase in demand for gold investments is occurring, the mining industry might have a hard time catching up. With the lack of supply in the near future, scarcity will additionally increase the gold price.

Anyone looking to invest in gold today has to act fast.

The earlier, the better.

Fact No. 4: The Outlook for the Price of Gold Towards 2025 is Highly Positive.

Because of the significantly positive performance of gold in 2020, even the skeptics are considering investments. The increasing demand for gold investments will contribute to its price increase.

Also, even with the Covid-19 vaccine available, there are still plenty of threats that are looming over the economy. Inflation is always around the corner, and gold investors are preparing for these crises by continuing to hoard the precious metal.

Experts place the prediction for 2021 to close at $2,124 from 2020’s year-end price of $1893.66. The gold price will most probably continue to rise to $3,048 in 2025.

Now is an excellent opportune time to buy gold or invest in gold.

Fact No. 5: The Gold Price Will Always Rise in General.

Whether there is a pandemic, natural disaster, economic crisis, or none, the price of gold will always have a steady climb in the modern world.

The world population continues to grow, and economies are growing one after another.

The more nations reach their ideal level of prosperity, the more people will be able to afford to buy gold. There will always be a stable demand for the metal, and the gold price will always have a better closing value each new year.

Population, technological advancement, and the human knowledge of its financial hedging will never stop the demand for gold. There is no other movement but expansion.

While there might be changes by the month, gold will always have a better comeback. The need for gold is evident, and it is easy to see how it will keep on growing.

In 2015, the price of gold was $1158.86 per ounce, then annually rose to $1244.40 by the end of 2018. It grew to $1519.50 in 2019 with no covid in the equation.

Fact No. 6: Every Gold Crash in History Was Followed by a Dramatic Rise.

The stock market crashed, and the economic climate went into an all-time low during the last part of the 70s. One big reason why the economy went haywire was the massive losses caused by the Vietnam War.

Starting in ’74, when the value was at $922.09, the price of gold lost around 47% in just a span of one year and eight months, hitting an all-time low of $498.18 in August 1976.

Gold investors wondered why the safe have seemed not to do its job.

See the interactive 100-year gold price chart.

Then, within just three years, the gold price skyrocketed to more than 440% hitting $2,269.84 per ounce in 1980.

The same thing happened in 2008 when gold dropped about 30% within seven months from March to November, going lower than $750 per ounce.

The comeback was a dramatic 133% increase in less than three years, leading to a peak of $2,098.75 in August 2011.

Fact No. 7: There Are a Few Crucial Factors That Differentiate Gold Prices in Different Countries.

The gold price is virtually the same in any country. However, factors like currency exchange, shipping, warehousing, and other logistics can add value to local gold.

The price of gold is comparable to the cost of crude oil, of which price is the same in any territory or market exchange. The small difference between prices in different countries will be due to the cost of shipment or delivery covered by the buyer.

Fact No. 8: The Price of Gold Soars During Economic Crises.

This is an overarching concept about the gold price, and there are many reasons why people turn to the precious metal as an emergency fund. The root of this need is that investors know that people want to buy gold.

Gold is a commodity that people will always value, and if you own it, they will trade essential products with you. Whether the currency is stable or it crashes, someone will accept your gold for valuable things.

In a worst-case scenario like a war when the dollar bill is useless, people who owned gold were able to trade their items for food, safe passage, and even security. Investors who have a protective outlook will store gold for an emergency as such.

Opportunistic people in business who have found that there are investors who use gold for protection would also collect gold. They would hold the commodity until the prices are high and the investors are looking for gold.

This gold investment phenomena have, for years, become a recurring staple making gold enticing to get during a volatile economy. People start getting more gold for protection against inflation or a potent economic total crash.

As a result, the price of gold always soars in the duration of an inflationary period or other economic downswings.

It all makes sense. Anyone who has gold can leave a country at war and bring the accumulated wealth to another territory where you can escape danger.

Anyone who owns a business, stocks, bonds, real estate, or ETFs must consider owning physical gold as a contingency.

When all else fails, nobody will trade food for an ETF password or a gold certificate, which will just be a useless piece of paper during a war.

Fact No. 9: There Are Gold Items That Sell for More Than Their Price Per Weight.

Gold comes in many shapes and sizes. While there are standard gold bars priced by weight, there are also well-designed pieces like bullion items that can have an added value for their sentiment.

There are commemorative coins, private mintage, and bars that have historical or cultural merit. Some are rare collectors’ items and will sell more than how much it costs per ounce of gold.

The rarest gold items will sell significantly high in auctions. There are also family heritage items searched for by heirs of old clans that will auction well.

The gold statues and trinkets found in museums are historically significant and are priceless. Some gold bullion coins become aged by the year, and many will soon be regarded as heritage items that can sell for higher than their value today.

Fact No. 10: The Best Contingency for a Low Performing Gold Price is Diversification.

While gold’s performance in the incoming years is looking excellent, there will beby-the-month negative changes that might occur. Also, predictions, as well-analyzed as they are, are not absolute.

If you find yourself needing to sell assets, but the gold price seems to be at a position of loss for you, there won’t be any problem if you have other precious metals.

When you own other precious metals, you open yourself to more market niches and opportunities and supplement your gold investments.

During economic normalcy, the increase of the gold price slows down. If you own platinum, you will significantly benefit from its ability to have a value of up to twice as gold.

When you own a significant amount of silver, you have a foot on the electronics market, where it is highly demanded. It works like gold but on a cheaper scale, but it has an added demand in the industry.

If you have different precious metals assets, you can find a way out of a lousy gold price situation. When the price of gold is not working well for you, you will be able to find a way to protect your finances with your other precious metals.

Buy Gold Bullion

The best way for you to get excellent gold assets is by buying bullion. With bullion, you are able to subdivide your assets into denominations you can use to compute exact values that you won’t be able to do with larger pieces of gold.

You will have a hard time selling half of your one-kg gold bar. If you have one hundred pieces of ten-gram bullion gold coins, it will be easy for you to count how much you would like to sell for a specific value you need.

With bullion, you won’t only buy gold but also silver and platinum, even copper at a scale.

You will have lower value precious metals with silver and copper that will further add denominations to your assets. Plus, they are both in demand for industrial use, giving you another market opportunity.

You can significantly own from platinum during economic normalcy when it can double the price of gold.

With an excellent understanding of the price of gold, it should be easy to see how advantageous it would be to get bullion.

For the most convenient way to buy gold investments and other precious metals, learn more about our bullion box subscriptions.

We have five options ranging from $19 to $500, and all you have to do is pick, subscribe and wait. We curate every monthly box we send you based on gold prices and trends to ensure you are getting the best pieces in the market.

If you have questions, feel free to leave us your contact details, and we’ll reach out to you.

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