As a passionate investor, I often get asked questions about gold.
- When is it the right time to buy?
- Should I buy now or wait until the price drops?
- After all, who doesn’t like a good bargain, right?
- So, when is the best time to buy gold?
The best time to buy gold is when the price is low and you have available funds at your disposal, specifically allocated for investment purposes. Gold is a volatile asset. Don’t jump in at all-time highs. The golden rule of investing is to buy low and sell high.
Understanding this is only a small step in educating yourself when choosing the right time to buy.
We all want to buy at the best possible price and what I have found is that there are certain months within a year that seem to offer better cheaper prices.
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Buying Gold May Be Seasonal
Thanks to Bundesbank, LBMA, we can see that in the last 45 years, on average, gold seems to surge within the first three months of the year, and then as we hit spring, the price begins to decline and stays somewhat cool during the summer.
It then begins another rally as we head into autumn and winter.
So, as the famous saying goes, we know that history doesn’t often repeat itself, but it does tend to rhyme.
Using this information to our advantage, we can see that on a historical basis, the best times to buy gold are in early January, early March, and April, or from the middle of June to early July.
This time is when we see the lowest offered prices. We can see that the price does not always revisit the low of the prior year.
January is the low, yes, but it’s not the all-time low. It’s just the low of that respective year. Remember, this chart shows us the average.
It does not account for the years in history when gold soared, nor for the years that gold did nothing but fall.
Understanding all this and using this information to get a general sense of where the gold market is heading, we can see that investors generally get the best price earlier in the year.
Now we know that buying gold is somewhat seasonal and may make a great winter or spring purchase.
Remember, investing in gold is a patience game. It’s a long-term planned investment that requires us to get the lowest prices possible as we average into our position.
For those of us that do not understand how to read price charts, we can use this seasonal information to help us identify a time in the price that will give us the best potential in possible future earnings.
We never buy something that is at a high price. This goes for anything in life. Why would we purchase something overvalued and expensive when we know that there will come a time when the same products or assets will have a massive fire sale.
The whole point of investing is buying low and selling high.
Is There a Best Month of The Year to Buy Gold?
According to Bundesbank, LBMA, looking back through history from 1975 to 2020, the best month to buy gold is in March. This is because the price of gold dips almost one percent in the month of March.
So, if you were looking to allocate a percentage of your portfolio to gold annually, March might be your best option at getting the lowest prices available.
The Best Quarter to Buy Gold
Bundesbank, LBMA also looked at which quarter of the year is the best time to buy gold. Looking above at the charts, you probably already know which quarter it is. In any case, here it is shown below.
From 1975 until 2020, the second quarter of the year (April to June) has shown outright to be a period when gold is at its cheapest relative to the respective year.
The third quarter (July to September) has shown that gold is at its strongest. This means that gold will be at higher prices relative to the respective year.
3 Popular Ways of Buying Gold
1. Gold Bullion – Owning physical gold may be satisfying as you’ll have the ability to look at it and touch it, but the drawback is the need to safeguard and insure it.
2. Gold Futures – This is how we, as retail investors, will buy gold. We choose a broker online and create an account through them. Once we have our account, we can search for gold and click on the buy button.
3. Mining Stocks – A great way of taking advantage of the volatility of the gold market is by owning the stocks of the mining companies that produce gold! This option might be a double win for the investor as they can profit if the gold price rises and if the mining company can raise production over time.
When Should I Sell My Gold?
When the economy and stock market become unstable, the price of gold usually rises. This could create a significant sell-off as investors begin to take profits off the table from their gold positions.
However, if this momentum continues, the chances are that you will see a big sale happening for gold. This could entice investors to reenter the gold market and take new positions as the prices lower.
Keeping up to date with economic news will help us choose when the time is right for us to sell our positions, either in their entirety or perhaps to take small partial profits.
Gold is considered a long-term hold. This could mean different amounts of time for different people. However, the standard amount of time for holding any long-term investment is five years or more.
This is not a set rule. Everyone invests differently. It’s up to you to decide when would be the right time for you to sell.
Should I Buy Gold?
Whether you’re a seasoned veteran investor or a newbie just looking for ways of getting into the market, buying gold is generally a safe bet.
We now know the best time of the year to open a gold position and the benefits that this poses to us.
So, the next time there’s a summer sale going on, and you’re out and about clothes shopping, remember that there’s a sale happening at the gold market too!
And it just might be an opportune time to buy some shiny new gold!