Is Selling Gold for Cash Worth it?
Historically, gold has always been a great investment and it still is today. As a matter of fact, over the past 20 years the price of spot gold has seen a 579.84% increase. And while it is true that spot gold prices might slightly differ from actual gold prices, this is still a very accurate indication of how good an investment in gold can be. However, this is a question every gold owner faces and we’ll be providing an answer here.
Is selling gold for cash worth it? Yes. As long as you get a good price for it. Ultimately, cash offers you the opportunity to do more and meet urgent needs. Even with an investment in gold which tends to do well in times of uncertainty, cash is still the most valuable liquid asset you can possess at any time.
Furthermore, the end purpose of any investment is to ensure you can receive cash for it subsequently. So, once again, selling gold for cash is worth it at a good price. However, as much as this is a general answer, the truth is individual circumstances might differ and that might require you to make a different choice keeping certain factors in consideration.
In this article we will be discussing the pros and cons of keeping your gold or selling it for cash. We’ll also point out certain things you need to keep in mind when selling your gold to ensure you get a good price.
Owning gold can generally take two forms; you either own it as a result of a conscious investment or as adornment and jewelry which you buy or get as a gift. Most of the time, however, gold serves both purposes or takes both forms. While it is easy to argue that gold has no longer holds any monetary qualities in today’s digital age, the fact that most central banks continue to add to their gold reserves is strong evidence against that argument.
Benefits of Owning Gold
- It serves as a great hedge against inflation: Let’s take the 1970s “great” inflation for instance where from a starting position of about 2% in the late 1960s, inflation rose to 12% in 1974. At the same time the price of gold went up from US$35 per ounce in 1971 to US$180 in 1970. The reason behind these movements is quite simple, once money begins to lose its value people look for ways to preserve their wealth, and a great way to do that is by purchasing an asset that has proven itself over time like real estate or even gold.
- A Way to Preserve Wealth: Multiple scenarios that could lead to the drastic fall or subsequent collapse in the value of a currency; wars, national disasters, bad governance, or even inflation. Whenever this happens gold has proven to be relatively stable and most times, since its demand increases, its price also goes up. Most importantly, gold historically retains value better than paper currency. For instance, an ounce of gold today will have a higher price on paper and more value than whatever it was 50 years ago.
- Gold also makes great jewelry and even better gifts.
Disadvantages of Owning Gold
- Return on Jewelry is not Always Impressive: When you convert your gold into jewelry, any jeweller will then definitely charge to craft whatever piece you intend to get. Subsequently, these costs you incur from the jeweller form a substantial part of the total amount you spend, sometimes as much as half. However, when the time comes to sell, the total amount you spent at the jewellers will not be considered, only the value of the gold itself will.
- Fails to Provide Regular Income as an Asset: When you purchase gold as an investment it does not provide any returns until you eventually sell it. This means gold does not measure up to other investments like stocks or real estate that provide regular income in form of dividends and rent.
- Substantial Profit Requires Long-Term Investing: To profit off an investment in gold you must maintain your investment for a long time. It is a well-known fact that the price of gold can be volatile in the short term. To avoid taking a loss on your investment in gold you should be prepared to maintain that investment for at least a year.
You have probably heard the phrase “cash is king” at some time in the past. And while that is true to a large extent, deciding to trade in an asset like gold for cash has some pros and cons depending on what exactly you intend to achieve. Here we’ll consider the pros and cons of cash in relation to gold.
Benefits of Getting Cash
- More Opportunities: When you are selling gold for cash it frees up more assets which you can then invest in other opportunities. As we pointed out earlier, getting a substantial return on an investment in gold might take a considerable amount of time. Since not all investment opportunities take this form you might be able to get similar or even higher returns on other opportunities in shorter timeframes.
- Liquidity: Cash is, no doubt, the most liquid asset there is. With cash on hand you can easily meet urgent and arising needs. More importantly, cash on hand means you can transact directly with anyone at any point in time.
- Low Risk: Cash is always cash. And while the value may subsequently appreciate or depreciate over long periods, having cash in the short term exposes you to no capital risk. $200 in your pocket will remain $200 if you do not risk it on an investment.
Disadvantages of Getting Cash
- Missed Opportunities: The biggest disadvantage of selling gold for cash is that while gold always has the potential to substantially increase in value soon, that is not the situation with cash. Once you convert to cash the chances of a drastic appreciation in value are very low.
- Inflation Risk: With cash in hand the risk of inflation and the subsequently reduced value of cash is always there. Gold is an asset that can protect the value of your money from the effects of inflation. However, when you sell it for cash, you are left exposed to this risk.
Solid arguments can be made for both sides. However, determining the question of worth is up to you and depends on what you consider most valuable. Regardless, the most objective view is that as long as you get a good price at the time you are selling, selling gold for cash is worth it.
How to Get a Good Price When Selling Gold for cash
The question then arises as to how you can ensure that you get a good price when selling your gold. There are a few things you need to keep in mind to ensure this. We’ll be going over some of these briefly.
To get a fair offer for your gold the most important thing you need to do is understand is how much it costs. Once you know this, you will know what offers to accept and which ones to ignore. There following some of the best ways to determine the value of your gold:
- Talk to an Appraiser: If you decide to talk to an appraiser who is going to determine the value of what you intend to sell, make sure the appraiser you talk to belongs to a reputable trade society. Since members of these societies demand certain conduct and ethics from their members, you can rest assured that you will get an honest appraisal. It is important to keep in mind that appraisers charge for their services.
- Calculate the Value Yourself: To calculate the value of your gold, you will need to first know a few things. First of all, you should be able to determine the gold’s purity. This is usually measured in karats. The higher the karat number, the purer the gold. Purer gold is also more expensive. The second thing you’ll need to do is determine the weight of your gold. Most buyers offer per gram, so you should also determine the weight in grams. Once you have all that information, you can then calculate using a tool like www.401gold.ca/calculate/ or www.kitco.com. However, you should also keep in mind the fact that most buyers will only offer about 60% to 80% of its actual value.
- Get Offers from Various Buyers: Alternatively, you can also estimate the value of the gold you intend to sell by offering it to different buyers and seeing how much they will pay for it. If you decide to do this, you will need to talk to at least 3 buyers to get a good idea of the gold’s average value. Most times you will have to call the buyers, let them know the purity and how much it weighs before they make an offer. With a premium buyer like 401 Gold, you can easily determine this by checking out the payment calculator on our website.
While determining the value of the gold you intend to sell you can adopt one of the methods we have discussed above or even combine all three. Once you do this you are sure to get good value in cash when you eventually trade your gold for it.
Finally, once the transaction is concluded you should always remember to ask for a receipt.
We have discussed at length the factors that can aid in your decision whenever you are trying to figure out if selling your gold for cash is worth it. The conclusion remains that all things being equal, selling your gold for cash is worth it when you get a good price.
Is Now a Good Time to Selling Gold for Cash?
Yes. The price of gold right now is not at the highest it has ever been; however, gold is currently at some of its highest price ranges since October 2014. So yes, now is a good time as any to sell gold. Furthermore, if you need the cash, you should sell.
Is Selling Gold for Cash a Good Idea?
Selling gold for cash is a good idea if you get a fair price for it or when you need cash. If you have bought physical gold as an investment, you are in the best position to determine when you can get a good return on that investment. But if you find yourself needing cash for whatever reason, selling your gold is a good idea.
When Can You Sell Gold?
You can sell gold for cash at any time you choose. However, most of the time it is advised that you wait until the price of gold is generally high or you need the cash for other things. Those will be ideal situations in which to sell gold, but the gold market is always open, so you can sell at any time.