You cannot effectively buy gold and silver if you don’t know what it’s worth. That may seem obvious to you and me, so why do so many people buy gold and silver without determining or verifying its value?
As a knowledgeable buyer who is taking the time to learn, you will always know the value so you can make informed decisions.
To determine value, you need to know these three things…
- The market value (current selling price) of pure gold or silver
- The quality (purity) of the gold or silver you wish to buy or sell
- The volume (weight) of the gold or silver you wish to buy or sell
The market value is essentially the current selling price for gold or silver. The value fluctuates, and we use a standard called the Spot Price to determine value at any given time. There are several factors that affect the spot price, and a method for reaching the standardized spot price by the issuing authority. I am not going to go into that right now because it can be lengthy and it is important to stay focused right now by sharing the important things you need to know right now. For more information on spot price, you can search our blog or ask us here.
Also keep in mind when purchasing gold and silver, you may also pay a premium and commission depending on where you buy.
The quality of gold and silver is determined by its purity. This affects the value because you must know how much of the item you are considering is actually gold (or silver). Other metals are often added for various reasons. You can determine the percentage of gold (or silver) by various authentication tests. So if you have a 1 ounce gold coin that is 75% pure, you will know that the value is based on 0.75 ounces of gold, which you would multiply by the spot price to determine value.
This leads us to the importance of knowing the weight of the item in order to determine its value.