When Should I Buy?
Knowing when to buy gold and can be a bit tricky. In this article, we’ll explore the importance of
purchasing gold at regular intervals rather than just focusing on the spot price.
If you sat in my chair…
A few months ago when gold was at $2,050, we were literally shoveling it out the
door. Everyone was buying, no one was selling. Recently when gold hit $1,890, I felt
like the Maytag repairman (you have to be old enough to get that one). I looked at
Kelly, my assistant, and asked her to test the phone lines to make sure they still
worked. It was dead – hardly any buyers, more sellers. And the premiums (the
amount you pay over the spot price) on ALL gold and silver items dropped like a
rock!
This is always the way it is. People FOMO (Fear of Missing Out) when the price is
high don’t take advantage of prices when they retreat. Man’s age old enemies enter
the picture – Fear and Greed. When prices are low, people get fearful that they will
drop lower. If they bought at higher prices, they are also fearful of making another
“mistake” if they continue to drop.
Others get greedy hoping that the price will drop further so they can buy cheaper. But
how low is low enough. Most haven’t quantified that – just lower. The quandary
takes place when prices begin to rise, as they are right now. Those same buyers can’t
possibly buy now because a week ago they could have bought for $60 less. If prices
continue to rise (Credit Suisse predicts a new all-time high by years end), they will
either have missed the opportunity to add at lower prices and have to pay more if they
want more.
The Pitfalls of Buying Gold by Timing the Market
Trying to time the market and buy gold at the lowest possible price is very, very risky. As a
professional I have learned that even I cannot time my personal purchases. The precious metals
market is influenced by too many factors, not the least of which is manipulation. These variables
make it impossible to predict the best time to purchase gold at its lowest point accurately.
The Power of Dollar-Cost Averaging when Buying Gold
Dollar-cost averaging is a time-tested investment strategy that involves purchasing a fixed dollar
amount of an asset at regular intervals, regardless of its price. Applying this strategy to gold can
lessen the risks associated with trying to time the market. This will also help smooth out the
effects of short-term price volatility. If you focus too much on price, you will end up frozen like
a deer in the headlights.
Long-Term Focus for Steady Returns
For this or any investment strategy to work investors must have a long term mindset. Investing in
gold with a long-term focus allows you to take advantage on its ability to preserve wealth over
time. By consistently purchasing gold at regular intervals, you build a diversified portfolio,
reducing your exposure to market fluctuations and improving your chances of long-term success.
Consistently Buying Gold as a Hedge against Inflation
Inflation lessens the purchasing power of fiat currencies, which makes your money worth less
over time. Gold has historically acted as a hedge against inflation, which means its value will rise
as the cost of living rises. By acquiring gold regularly, you create a buffer against the destructive
effects of inflation and can protect your wealth.
2023 Canadian Gold Maple Leaf – 1 Troy Oz, .9999 Pure Gold – $99 over spot.
2023 Canadian Silver Maple Leaf – 1 Troy Oz, 99.99% Pure Silver – $6.95 over spot.
