Precious metals are like any other commodity in that prices can fluctuate for various reasons. This applies to even more popular metals like gold and silver, although long-term value tends to remain fairly consistent for both of these precious metals. As for why precious metals prices may drop, the experts from First National Bullion, Carlsbad residents’ best choice when they need advice about investing in gold, silver, platinum, and palladium, explore some of the possible reasons and contributing factors below.

Supply Surges

As technology improves, it becomes easier for some larger-scale mining operations to extract precious metals. As a result, there’s less labor and effort needed to access the often hard-to-reach places where precious metals are typically found in natural form. In some situations, this results in supply surges. If the market is suddenly saturated, even more in-demand metals like gold can experience price dips.

Reduced Demand

Some precious metals have industrial uses that increase demand and prices. In fact, the demand for silver is largely tied to its industrial uses, particularly in electronics manufacturing and the solar energy and medical industries. If industrial demand drops due to unforeseen circumstances, such as the recent global pandemic, prices for certain precious metals can drop.

Market Conditions

Investors and industry insiders typically make educated guesses about things like what actions the Federal Reserve may take and the general state of the economy over a certain period of time. These predictions often have an impact on trading practices and prices, which may result in a price drop for precious metals if the market outlook isn’t so rosy.

Global Conditions

Worldwide economic and political conditions can also affect market conditions and predictions for upcoming quarters. In turn, patterns of investment in precious metals can be affected. During times of economic uncertainty, there’s usually an increased interest in more stable investments like precious metals. However, other global concerns can cause investors to be hesitant enough for prices to go the other way.

Natural Fluctuations

There’s not always a clear reason for drops in precious metals prices. As stated earlier, gold, silver, and other commonly traded commodities experience natural fluctuations, sometimes within the same year. For instance, gold has had periods of both extreme highs and significant lows. This can happen naturally, or there may be special circumstances that affect spot prices or current market value.

How to Be a Well-Prepared Precious Metals Investor

Lower prices can actually be a good thing for new or budget-conscious buyers. In general, as long as you’re a well-informed investor and handle your precious metals purchases and transactions with a clear plan in place, price drops are often manageable. Increase your confidence with precious metals investments by:

• Working with an investment professional familiar with precious metals trends
• Paying attention to market patterns and influencing factors
• Starting small until you get a better feel for price patterns
• Mixing things up so you’re not fully dependent on a single precious metal

Whether they’re veteran precious metals collectors or new investors looking to buy gold bars, Carlsbad residents should reach out to the experts at First National Bullion. We offer a huge selection of palladium, gold, platinum, and silver items. Carlsbad collectors who are looking for the finest-quality coins, bars, and bullion should give us a call at (760) 253-8072 to speak with one of our precious metals experts.

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.