Gold Prices Shine Above the S&P 500
One of the many benefits of investing in gold is the fact that it goes up when the economy goes down. In fact, it is one of the major reasons people invest in gold. This means that when your other investments are going down, gold will make sure that your savings account is stable. If you have investments in the S&P 500 or other stock market investments, you need to consider investing in gold as well to protect those investments. Keep reading to learn more about gold prices, and what it means when gold prices shine above the S&P 500.
How Gold Prices Are Determined
Gold prices are determined by a few factors: the current economy, supply and demand, and the value of the United States dollar. The market price of gold is determined in a very simple way that all began in 1919. According to Zack’s, the members of the London Gold Market Fixing Limited meet twice each day via conference call at 10:30 a.m. and 3 p.m. GMT. The chairman of the group announces a starting price and each member bank specifies how many bars of gold they will buy or sell at that price.
Zack’s continues: If there are too many buyers and too few sellers, the price is raised; if not enough buyers want to buy gold at a certain price, it is lowered. When the number of buyers and sellers are within 50 bars of one another, the price is set at that point. This process typically takes less than 15 minutes but has taken more than two hours to complete in the past. During the first official gold price fixing in 1919, the price of gold was set at $20.67 USD per ounce or 4.94 British pounds.
According to CNN, some of the record gold prices throughout the early 21st century may be due to the volatility of the stock market and other financial instruments, as investors look for ways to reduce their vulnerability.
Gold Prices and The S&P 500
As mentioned, one of the other ways that gold prices are determined is by the value of the US dollar. When understanding how gold prices are determined in this way, it is important to also know a little bit about the S&P 500. According to NerdWallet, the S&P 500 is a stock market index that measures the performance of about 500 companies in the U.S. It includes companies across 11 sectors to offer a picture of the health of the U.S. stock market and the broader economy.
When investing in the S&P 500, you do not invest in a single company. Instead, you invest in a list of companies (known as an index). Some of these include Fidelity, Schwab, and others. Investing in the S&P 500 is a great way for beginners to learn investing and trading. Some of the companies included in the S&P 500 include Apple, Microsoft, Amazon, Tesla, and others.
You can look for your returns at the end of the year when you invest in the S&P 500. It is seen more as a long-term investment than other types of investing in the stock market. However, if there is an economic crash or —ahem—a pandemic, this can leave the S&P 500 not looking so good at the end of the year. For example, in 2008 the S&P 500 was down 37%. On March 12, 2020, the S&P 500 plunged 9.5 percent, its steepest one-day fall since 1987. However, it finished the year up 16%.
Past and Present Gold Prices
At the time of this blog, gold prices are $1,817.00 per ounce. The highest gold price in history was $2,067.15 in August of 2020. If you remember, 2020 was a tumultuous year for many businesses and individuals, so it is no surprise that the price of gold was the highest during this time. Alternatively, the lowest gold price was in November 2015 when gold closed at $1,057.
About Priority Gold
The great thing about investing in gold is that you don’t need to worry about your other investments while you have it. When the S&P 500 dips, you can rest assured that you will still have a retirement, savings, and a future ahead of you if you invest in gold the right way. If you are ready to invest in gold to protect your savings and secure your future, we can help.
We are one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink. We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers.
Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives. We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. Priority Gold guarantees the highest standards of customer service, which comes with honesty, professional conduct, and the Ethical Code of Business.
For more information, visit us at prioritygold.com