An Economy That Could Soon Favor Gold and Silver

If you’re new to the gold and silver markets, you may be a little bewildered at how precious metals are priced and who determines pricing. The price of precious metals like gold, silver, platinum, and palladium is determined by global markets and influenced by supply and demand dynamics. For those considering acquiring physical gold bullion for retirement security, it is essential to understand how these prices are set and what factors contribute to their fluctuation. Let’s break it down.

Gold’s price is determined by the spot price, which represents its current market value for immediate delivery. This spot price is influenced by trading activity on major global exchanges like the London Bullion Market Association (LBMA) and COMEX in New York. The LBMA sets the gold price twice daily at 10:30 AM and 3:00 PM GMT, establishing benchmarks based on global supply and demand. Platinum and palladium prices are similarly set by the London Platinum and Palladium Market. Futures markets also play a critical role in determining spot prices, as these contracts, which commit to buying or selling precious metals at a future date, heavily influence daily market values.

Precious metal prices are dynamic, often changing multiple times per minute during active trading hours. They fluctuate based on a variety of factors, including geopolitical events, economic indicators like inflation rates, and the strength of the U.S. dollar, as these metals are priced in dollars globally. Additionally, market activity occurs nearly 24 hours a day due to the overlapping of trading in Asia, Europe, and North America. Markets typically pause late Friday and reopen Sunday evening U.S. time, providing a short break in the otherwise continuous trading cycle.

Prices also respond to specific triggers. Limited mining production can drive prices higher, while abundant supply may reduce them. Economic uncertainty, such as during periods of inflation or geopolitical instability, often increases demand for precious metals as they are sought out as safe havens. A weaker U.S. dollar tends to raise prices, as more dollars are required to purchase the same amount of metal. Conversely, higher interest rates may reduce the appeal of metals, as they do not generate income or dividends.
For consumers considering physical bullion, it’s important to note the difference between spot prices and retail prices. When purchasing coins or bars, buyers typically pay a premium over the spot price. These premiums cover costs like manufacturing, distribution, dealer markups, shipping, and insurance. Additionally, owning physical bullion requires secure storage. Options range from home safes and bank safety deposit boxes to professional vaults offered by many dealers. Gold and silver are the most liquid precious metals, making them easier to sell quickly, whereas platinum and palladium are more closely tied to industrial demand and can be less predictable in value.
Tax implications should also be considered, as profits from selling precious metals may be subject to capital gains taxes. It’s wise to consult with a financial advisor to understand tax obligations and plan accordingly. Buying physical gold for retirement security offers significant benefits, particularly as a hedge against inflation and currency fluctuations. Gold has been a stable store of value for centuries, and its ability to diversify investment portfolios makes it an attractive option during periods of economic uncertainty. Silver, platinum, and palladium can complement gold investments, though their value is often more volatile due to industrial uses.
Understanding how gold and other precious metals are priced, when markets operate, and the factors influencing value can empower you to make more informed decisions. The price of gold, silver, platinum, and palladium is controlled by global markets, influenced by supply and demand, and subject to constant fluctuations. If you’re considering physical gold bullion for retirement security, focus on understanding the spot price, premiums, and storage options. Diversifying with gold can provide a hedge against inflation and economic instability, offering peace of mind for your financial future.

With this knowledge, you’re better equipped to navigate the precious metals market and make confident investment decisions. With proper planning and knowledge, investing in physical bullion can provide peace of mind and stability for those seeking to secure their financial future during retirement.

For thousands of years, gold and silver have held a unique place in human history as symbols of wealth, power, and stability. The journey of precious metals as currency and a store of value spans cultures, continents, and centuries, reflecting their universal appeal. From ancient civilizations to modern-day investors and global governments, gold and silver remain an enduring asset. 

The Origins of Gold as Currency 

Ancient Beginnings 

Gold’s story as a currency begins in the ancient world. Its physical properties—durability, malleability, and rarity—made it an ideal medium for trade and a symbol of wealth. Archaeological evidence suggests gold was used for ornamental purposes as early as 4,000 BCE, but its role as money became prominent much later. 

Egypt (c. 3,000 BCE): 

The Egyptians revered gold as a divine substance associated with immortality. It was used in trade, though not as coined money. Pharaohs often hoarded gold to symbolize their divine authority. Gold rings and bars functioned as early currency, exchanged for goods and services. 

Mesopotamia and the Fertile Crescent: 

The Sumerians and later Babylonians used gold and silver in weight-based systems to facilitate trade. The Code of Hammurabi (c. 1754 BCE) even included references to payments made in gold. 

The Birth of Coined Money 

The formalization of gold as currency is credited to the Lydians, an ancient civilization that existed in what is now Turkey. As early as 600 BCE, the Lydians minted the first gold coins, made of electrum (a naturally occurring alloy of gold and silver). These coins, standardized in weight and purity, became the prototype for monetary systems worldwide. 

The Greeks and Romans further refined the use of gold coins, making them central to their economic systems. Roman aureus coins were highly valued and widely circulated across the empire. 

Gold in Medieval and Early Modern Economies 

Islamic Caliphates (7th-13th Centuries): 

Gold dinars became a staple currency in Islamic territories, fostering trade across North Africa, the Middle East, and Asia. The reliability of these coins established trust in cross-regional commerce. 

European Monarchies: 

In medieval Europe, gold florins (Florence) and ducats (Venice) were among the most trusted currencies, facilitating trade during the Renaissance. 

Gold Standards and Banking: 

By the 18th and 19th centuries, gold-backed currencies became the norm. The Gold Standard, first formalized in Britain in 1821, pegged paper money to a specific amount of gold. This system created stability in international trade, as currencies were universally convertible into gold. 

Gold’s Universal Appeal as Currency 

Gold has several key qualities that make it a natural and universal choice as a medium of exchange. 

Intrinsic Value – Gold’s rarity and beauty gave it intrinsic value that transcended cultural boundaries. 

Durability – Gold doesn’t corrode or tarnish, making it a reliable store of wealth over long periods. 

Portability and Divisibility – Gold coins and bars have been convenient for trade, while silver and smaller denominations allowed for precise transactions. 

Universal Recognition – Across the world, gold has been recognized as valuable, enabling trade between diverse cultures and empires. 

Modern Appeal of Gold 

While gold is no longer used as an everyday currency, its role as a store of wealth has only grown. Today, it is treasured by individuals, institutional investors, and governments alike. 

Gold as an Individual Asset 

Inflation Hedge – Gold’s value tends to rise when fiat currencies lose purchasing power, making it a popular hedge against inflation. 

Crisis Commodity – In times of economic or geopolitical uncertainty, gold’s stability shines. It’s often referred to as a “safe haven” asset. 

Cultural Significance – In countries like India and China, gold remains a symbol of wealth and prosperity, frequently used in jewelry and ceremonies. 

Gold for Institutional Investors 

Portfolio Diversification – Gold is negatively correlated with other asset classes, such as stocks and bonds, making it a valuable addition to diversified portfolios. 

ETFs and Derivatives – Modern financial instruments, like gold-backed ETFs (e.g., SPDR Gold Shares), allow investors to gain some exposure to gold (albeit, in an imperfect form) without holding it physically. 

Governments and Central Banks 

Reserve Asset – Central banks hold significant gold reserves to stabilize their economies and currencies. For instance, the U.S. holds over 8,000 metric tons of gold in reserves. 

Strategic Security – In times of global economic instability, countries rely on gold as a universal asset with enduring value. 

The Enduring Legacy of Gold 

From ancient Egypt, the Greek Agora, the banks of London to Wall Street, gold has proven its timeless appeal as a currency, a symbol of power, and a store of wealth. Its unique properties have made it a universal medium of exchange and an enduring hedge against uncertainty. 

Even as digital technologies and cryptocurrency reshape the financial landscape, gold retains its luster as a tangible and stable asset. Whether in the vaults of central banks or the hands of private investors, gold continues to represent security and wealth across the ages. 

In a world of fluctuating markets and monetary innovations, gold and silver hold an unparalleled role in human history.  

Gold is the only asset that has survived every war, every crisis, and every empire. Gold can help you and your family weather whatever economic storms the future holds, too. 

Trump may give seniors a little breathing room. Is this your opportunity to get into gold?

As President-elect Donald Trump prepares to assume office in January 2025, several proposed tax changes could impact retirees: 

Elimination of Taxes on Social Security Benefits

Trump has advocated for making Social Security benefits entirely tax-free. Currently, beneficiaries with combined incomes above certain thresholds may have up to 85% of their benefits taxed. Removing this tax could increase retirees’ disposable income.  

Extension of the 2017 Tax Cuts

The 2017 Tax Cuts and Jobs Act (TCJA) introduced lower individual income tax rates and increased the standard deduction, among other provisions. Many of these measures are set to expire after 2025. Trump aims to make these tax cuts permanent, which could continue to benefit retirees by maintaining lower tax rates on retirement income and preserving higher standard deductions.  

Potential Reduction in Capital Gains Tax Rates

There is speculation that Trump may propose lowering the top long-term capital gains tax rate from the current 20% to 15%. This reduction would benefit retirees who rely on investment income, allowing them to retain more from the sale of appreciated assets.  

Elimination of Taxes on Tips and Overtime Pay

Trump has suggested making tips and overtime pay tax-free. While this change primarily affects working individuals, it could also benefit retirees who continue to work part-time jobs that include tips or overtime, increasing their take-home pay.  

Adjustments to Estate and Gift Tax Exemptions

The Tax Cuts and Jobs Act significantly increased the federal estate and gift tax exemption, which is set to revert to lower levels after 2025. Trump’s administration may seek to maintain or further increase these exemptions, benefiting retirees concerned about estate planning and wealth transfer to heirs.  

Considerations for Retirees 

While these proposed changes could offer financial benefits, they also raise concerns about the long-term sustainability of programs like Social Security and Medicare. For instance, eliminating taxes on Social Security benefits could reduce available funds for these programs, potentially leading to future benefit cuts.  

This presents a dilemma for seniors. You may have some short-term breathing room, but what if long term viability for social security is threatened? This could be a good time to solidify some gains by putting some funds into gold. 

On the other hand, many (including Trump himself, Elon Musk and others) are warning that all the changes they are planning in government could lead to short term pain. The economy could get worse before it gets better. 

Putting some money into gold could be a way around the haircut (or punch in the face) that many are expecting in stocks. Watch Kenny Michaels explain.  Short – Be A Chameleon 

If you haven’t added gold to your portfolio yet, give us a call and we will help you every step of the way.
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