How the Economy Affects Gold Prices

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Gold is a material that is notorious for its constantly-fluctuating prices and the seemingly random rates at which that price changes. Former Federal Reserve Chairman Ben Bernanke once famously told Congress that, “nobody really understands gold prices, and I don’t pretend to really understand them either.” The average resident of Orange can’t be expected to comprehend the complicated logistics of pricing gold and the minutiae of economics that affect it. That being said, understanding some of the basic factors that affect the value of gold is beneficial when you want to buy or sell. 

Value of the US Dollar

The value of gold around the world is priced in US dollars, so the value of the dollar has a considerable impact on the price of gold. The stronger the US dollar is, the lower the price of gold will be. When the US economy is weaker and the value of the dollar goes down, the price of gold will generally increase. Everyone falls on hard times, and an economic downturn likely affects you in a way that makes it difficult to hold off on selling your gold for cash if it’s needed. However, if you do want to ensure that you’re receiving the most value for your gold jewelry, it’s ideal to wait for a time when the US dollar is especially strong.

Central Banks’ Gold Reserves

Countries’ central banks, or reserve banks, are the banks that manage the country’s currency, money supply, and interest rates. These banks hold large gold reserves in order to strengthen the nation’s currency, since having tangible assets tied to the currency makes it more reliable. When central banks purchase gold, it causes the value of gold to increase. Recently, Asian and European banks, especially China and Russia specifically, have begun purchasing small amounts of gold, which has resulted in an increase in gold’s value.

Inflation

Inflation, perhaps surprisingly, has a direct relationship with gold prices. When inflation rises, so does the value of gold. Inflation causes the value of that country’s currency to decrease, and so citizens tend to hold their money in the form of gold rather than a weakened currency. Therefore, when inflation remains high over a longer period of time, gold increases in demand and in price.

Commercial & Industrial Demand

Everyone knows the basic laws of supply and demand: when supply is low, demand will become higher and the value of that object goes up. When the demand for gold jewelry increases and the supply becomes more limited, the price of gold automatically rises in response. Once the demand for jewelry decreases, the price of gold will also decrease. Almost fifty percent of the world’s gold production is used in jewelry, so the values of these two items are very closely linked. If you have gold jewelry that you want to sell, wait for a time when gold prices are higher and the demand is increased in order to receive the best value for your items.

Watch & Wares has been buying and selling gold for more than twenty years, and we’ve established ourselves as the local experts. Orange residents know that when they visit Watch & Wares, they’re receiving a fair and competitive appraisal offer that directly reflects market prices. If you have gold jewelry that you would like to sell for quick cash, stop by Watch & Wares in Orange today or give us a call at (714) 633-2030 to schedule an appointment.

The Advantages of Buying a Pre-Owned Rolex

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If you invest in a pre-owned Rolex rather than a brand new one, you can save hundreds or thousands of dollars and secure a bigger return on investment while still proudly owning a piece of timeless luxury. Orange County residents trust Watch & Wares for authentic pre-owned Rolex watches that are in like-new condition. With significant discounts over current retail prices, the pre-loved route is one that an increasing number of shoppers are opting for as they realize that a big chunk of the retail price is just for the retail purchasing experience itself.

#1. Cost Savings

Although Rolex watches can increase in value over time, this is a gradual process that requires holding onto the piece for several years or decades. It also means that the value has increased to be greater than the original retail price at the time of purchase (whether that be last year or 30 years ago); it does not mean that the current value is greater than the current retail price. It takes an exceptionally rare Rolex to be able to sell it for above retail price while it’s still a current season item. Therefore, as a buyer, you are guaranteed to save money if you purchase your Rolex secondhand from a trustworthy luxury watch dealer such as Watch & Wares. If you want to splurge on a luxury item while still getting the best deal you can, choose a pre-owned Rolex in practically perfect condition from Watch & Wares.

#2. Timeless Style

Classic styles are classic for a reason. Unlike trendy, seasonal items, designer brands will continually make their classic models with little to no stylistic changes over time. Classic styles hold their value over time because they continue to look the same every season since their conception. Styles such as the Datejust or Submariner are examples of classic Rolex models that have stayed consistent in design since their introduction to the line. When you purchase a classic second hand Rolex, you can trust that it will continue to stay in style for years to come, making it a worthwhile purchase. No one will notice that you have “last year’s model” or an outdated version; they’ll just admire your beautiful, classic Rolex.

#3. Long-Lasting Quality

Rolex watches are built to last. Part of their luxury appeal is the incredible craftsmanship and high-quality parts that are used to create each timepiece. When you purchase a second-hand Rolex, you don’t have to worry about the wear and tear taking a toll on the device’s ability to function. With reasonable use, a Rolex should last for decades. Like any device, it will require a bit of servicing to keep it in top shape, but every pre-owned Rolex is repaired and restored to full working order before you purchase it, so you can enjoy the watch for years to come. 

#4. Return on Investment

We all know the danger of purchasing a new car: as soon as you drive it off the lot, the value depreciates greatly. The same rule applies to luxury accessories such as Rolex watches. The vast majority of the time, the value of a Rolex will decrease significantly as soon as it’s purchased from the store and becomes a “used” watch. Although some models can continue to depreciate slightly in value over the years, by far the biggest depreciation occurs immediately after purchase. When you purchase a second hand Rolex, therefore, you’re allowing the original owner of the item to take that financial hit for you. By avoiding this immediate depreciation, you’re guaranteeing yourself a better return on investment over time than if you purchase a Rolex brand new. If you invest in a classic model, its value will likely hold or increase over time and you can quite often sell it for even more than you purchased it for, especially if you purchased it at a discounted rate from a reputable dealer such as Watch & Wares.

If you’re looking to purchase a Rolex in the Orange County area, consider a pre-owned timepiece from Watch & Wares. All of our Rolexes are guaranteed authentic and are restored to like-new condition before resale. Be a smart consumer and maximize your return on investment by choosing a pre-owned Rolex today. To view our inventory or find out more about our pre-owned items, give us a call today at (714) 633-2030.