This is not the time to sell, unless it is time for you. That is to say, Gold and Silver have not reached the pinnacle of bubble territory, when it would be a good time for anyone to sell. For many reasons, it seems we are nearer the beginning of a good run, than the ending. Nevertheless, we all can have times, sometimes, when we need fiat currency - for whatever reason, and may need to sell some of the Gold or Silver we have accumulated for just such a rainy day. In those times it is important to be dealing with an honest and ethical partner when it comes to precious metals, who will offer you a fair price according to market conditions.
What is Normal?
During “normal” times, you can expect to pay a small premium over “spot price” to purchase precious metals. Typically, you could also expect to receive less than spot when selling precious metals. But as we all have seen, these are in no way normal times. Who among us can remember living through a global pandemic, with the economic upheaval we have seen lately? Due to a number of factors we have discussed in previous articles, we are seeing unprecedented demand for physical Gold and Silver. This has created a scenario that allows a seller of certain quality Gold or Silver products to be paid a premium over “spot price” to sell precious metals. This is currently true for clients who deal with the United States Gold Bureau.
As a financial analyst and precious metals advocate for many years, I’ve had occasion to keep a pulse on what is going on with various metals dealers nationwide. Before you purchase precious metals from someone, it is prudent to check out how they treat those who wish to sell back their metals. Often the process and price to purchase quality bullion and/or investment grade precious metals can be similar among dealers. But a quick scan through the “sell back” price offered by various dealers can reveal huge differences in how they treat customers. I give the United States Gold Bureau high marks for extreme fairness shown to clients not only when purchasing, but also when selling precious metals. Unfortunately, I have not seen this same level of fairness offered to the public, among dealers industrywide.
We are living in unprecedented times, with extreme pressures building to push Gold and Silver prices higher in Dollar terms. Why would anyone want to sell in this environment, when prices seem to be headed higher? There can be numerous reasons. Unfortunately, personal emergencies sometimes occur. In the world’s 5th largest economy (India) for example, farmers and small business owners are turning to their holdings of Gold to provide liquidity, when banks have turned off the loan spigot for other collateral. Whether by selling or offering as collateral for a loan, precious metals are all that is keeping many business owners afloat right now. As we mentioned last year, Gold has also become more important to the banking industry here in the United States. It is now considered a Tier-1 asset, and solid collateral to own and/or loan against.
Sometimes, it may make sense to cash in to provide capital for a meaningful purchase. With real estate loans becoming more difficult to obtain, it may make sense to sell some Gold or Silver to come up with a down payment. If you responded to our 2019 or 2020 outlook for Gold and Silver, you would currently have some nice gains available to sell. For those with no immediate need for cash, we believe the current trends in place are set to continue.
The Recession is Here
You also may remember that we told you about an impending recession that was likely to occur this year, in 2020. We also said that it would probably happen before it was recognized or reported by mainstream news outlets. Both of these things have now occurred, with economists arguing over which month in 2020 the recession actually began. What there is no disagreement about, however, is that we are currently smack dab in the middle of a bonafide recession, while proof of inflation also swirls around us with every trip to the grocery store. What was true 2 years ago is still true today, and becoming more pronounced. We don’t like to think of people needing to sell Gold or Silver for basic living expenses such as food, healthcare, or rent, but sometimes it can become necessary. In times like these, it is good to have something to sell with universal appeal. Sometimes income can be reduced or cut off from issues related to the global pandemic and an employer. In other situations, someone’s income may be steady, but the price and supply of necessary items might become out of reach for those who haven’t learned to save in Gold and Silver.
Whether it is an ounce of Gold every 3 or 4 months, a couple ounces of Silver each week to help with living expenses, or half of your holdings for a significant purchase, it is important to receive a fair price when you need to sell. While I would not recommend selling right now, and believe Gold and Silver have much further to climb, our personal circumstances can differ at any given moment. When you need to sell, you need to sell. The time to develop a strategy, and make connections with a good partner in the precious metals arena is before the crisis comes. The people you want to purchase precious metals from today, are the ones who will pay you a fair price later on, when you want to sell. It is best not to have your personal emergency compounded by receiving less for your Gold and Silver than it is worth.
Right now and for the foreseeable future, you can sell certain Gold and Silver products for a premium over spot. This may someday no longer be the case, when we get back to “normal” times - whatever/whenever that turns out to be. For this to be true in normal times for something other than bullion products, you may want to consider investment-grade metals that have a good track record of performance in most market conditions (see graphic above). For any of this to be true, in any market condition, requires a strong and faithful partner - which if you are reading this article, you have already found.