Gold, just like oil, is a commodity that has its own rate and fluctuations. Gold is often seen as a stable investment, even during turbulent times. It has been this way for centuries and makes gold a solid product to rely on. However, the supply of gold is simply what is left on earth and nothing more. Since it is becoming more difficult to find gold (and they have to dig deeper to get to new supplies), it is becoming an increasingly scarce commodity. However, consider the fact that there is already a lot of gold that is circulating on our planet - imagine how much we can actually use for recycling. The beauty of gold is that you can recycle it by melting it back and use it for a new purpose (and it keeps its value). The value only stays the same if the gold is treated in the right way and calibrated under the right circumstances, so we can still call it gold of a certain carat.
When there are turbulent times in the world economy, world politics, and human wellbeing, investors on the stock market are more cautious of what will happen next. This directly affects inflation and reactions in stock markets. For instance, while writing this blog we are experiencing severe political boycotts with sanctions against Russia due to the situation in Ukraine.
“The combination of roaring energy prices, grain prices, base metal prices is culminated in dramatic inflationary pressures that continue to be the major underlying support behind gold moves higher,” David Meger, director of metals trading at High Ridge Futures, said in a report of Reuters.
Gold as a commodity has been seen as extremely stable for many decades. Its scarcity and historical precedent of stability means we trust in the value of it. It is more predictable than any other commodity or stock. Logically, investors looking for stable investments with predictable value are turning to gold. Therefore, we are seeing a rise in the demand for gold and, in turn, the price is also increasing.
Gold price is always stated in relation to fine gold (this means: pure gold). Right now, jewelry sold by MP is made from 14 carat gold. 14 carat has 58,5% pure gold in its total weight. This is also expressed in the trademark 585 you can find with a loop in your piece of jewelry. The rest is either silver, copper or other materials to make the piece stronger. Pure gold is very soft and therefore not suitable for making a ring, for example, since it will not keep its shape. So they put other materials in the total alloy to make it suitable for jewelry making. The price of a piece of gold jewelry therefore depends on the gold price and the percentage of pure gold in its total weight.
So when is a good time to invest in a piece of gold (jewelry)? Of course, fluctuations happen in the market but since it is such a stable commodity, it is never a bad idea to invest in a piece of jewelry. It is a scarce product so you know your gold will be worth more in turbulent and uncertain times. This gives you a stable way of investing in pieces that will keep their value and become more valuable over time.