How to Know When It’s the Right Time to Buy Gold

One of the trickiest aspects to investing in any asset is finding the right time to buy it. There are some who think you should buy whenever you feel the need, while others want to keep holding off until the price is just right.

All of us want to buy low and sell high, and we want to maximize that price differential between low and high so that we can pad our pockets. But sometimes waiting too long means missing out. So how to know when the right time to buy is?

Let’s look at two different schools of thought when it comes to buying gold and assess the pros and cons of each argument. Remember, at the end of the day you’re the one making the decision, and it’s best to have all the information in hand before you make that decision. Ultimately it’s going to be your call and it’s your comfort level with buying gold that determines when the right time to buy gold is.

The Case for Waiting to Buy Gold

There’s a case to be made for waiting to buy gold. Anyone who missed the opportunity to buy gold at $1,300 an ounce last year is probably kicking themselves now that gold is over $1,900. But some of those people may be wondering whether there might be a future dip where they could buy gold before it really takes off.

If you’re of the opinion that gold is going to hit $3,000 in the coming years, it might make a difference to you whether you buy gold at $1,500 versus $2,000, as you want to maximize your gains. But if the upward trend is still there, does it really matter how much you gain as long as you’re still making gains?

Remember, gold isn’t a get rich quick scheme, it’s a long-term investment, and one that you’re likely to hold for years. If you wait too long, and gold takes off again, you might not have a chance to buy at $1,900 again for a long time, if ever.

That being said, there are many voices out there saying that gold is ripe for a correction. Its run this year has been unusually steep, and anytime there’s such a quick rise, you would expect to see profit-taking and short-term corrections. That’s why investors such as Mark Mobius are cautioning against buying gold right now, telling investors to wait until there’s a price correction to buy gold.

Looking back at 2008, you could certainly make the argument that waiting is appropriate. While gold gained 25% in value between October 2007 and March 2009, the high and low points of stock markets, in late 2008 it saw a pretty significant correction, giving up most of the gains it had made for the year.

If you think this coming crisis is going to look like that, and that gold is going to see a significant correction once the full force of the recession/depression hits, then maybe you’d be right to hold off on buying gold now. But that relies on one big assumption, that the coming crisis is going to look just like the last crisis. And crises rarely ever look alike.

The danger you run, too, is that if you’re relying on selling assets to buy gold, such as rolling over assets from a 401(k) in order to invest in a gold IRA, by the time you think gold is at a level where you’re ready to buy, your other assets may have lost even more value, putting you deep in the hole.

The Case for Buying Gold Now

The case for buying gold now is a potentially stronger one. For instance, if you’re planning to buy small amounts of gold at regular intervals, it makes sense to start now. Then you can take advantage of dollar cost averaging to average out your costs, just as you would when investing in stocks.

There’s also the fact that the supply of gold to the investor market is potentially limited in a way that it wasn’t in 2007-09. Mints such as the US Mint are having to shut down or limit minting operations due to fears of COVID-19 spreading among their workforces.

The US Mint is having to choose between producing either silver or gold coins, not both at the same time. And with premiums on silver coins sometimes being higher than on gold coins, the Mint may very well decide to prioritize silver production over gold production. So if you decide to wait until gold corrects in price, you may find yourself unable to buy gold coins because the supply just isn’t there.

Another reason not to wait is because, for instance if you’re investing through a gold IRA, the process isn’t instantaneous, especially if you’re rolling over existing retirement funds. Between selling your current assets, rolling funds into your gold IRA, and then purchasing gold coins or bars, the process takes several business days at a minimum.

But if your current retirement account managers drag their feet, or if your funds get delayed in transit, or there are any other hiccups, you could be looking at weeks or even months before you’re able to buy your gold. Remember, a bird in the hand beats two in the bush, so if you want to buy gold, it’s best to get your hands on it as soon as you can.

Then there’s the question of the gold price. Yes, gold could suffer a severe correction, but what if it doesn’t? What if you want to wait until gold drops to $1,800, or $1,700, or even $1,500, but it never drops that low? And what if it takes off and breaks through $2,000 again and then hits $2,500 and beyond? You might have to end up buying gold at a far higher price than you could have, and you’d be kicking yourself for waiting.

If you think that the economy is going to worsen over the next year as businesses declare bankruptcy, earnings drop, millions of Americans remain out of work, and stock markets collapse, why wait to buy gold? Waiting to buy gold means taking on extra risk in many ways: the risk of buying gold at a higher price, the risk of your existing retirement assets losing value, and the risk of missing out on an investment opportunity that only comes around every few years. Don’t miss out on the possibility of a great gold investment – contact Goldco today and make gold an important part of your investment portfolio.