– Nigel Doolin, Head of Trading at Core Bullion Traders.
“When should I buy gold?”….a simple question, often asked. The answer, although it requires some decisive action, is actually quite straightforward. To make your decision on when to buy gold, you must have some background knowledge of both the commodity itself and the methods of buying it.
A solid investment
Gold has a reputation for being one of the most stable and solid investments available. Over time investors have come to rely on gold’s stability, particularly in times of economic downturn and turmoil – which during this Covid-19 Emergency we are obviously experiencing worldwide. However, even if the gold price is at an all time high, it can still be a good investment as part of your diversiﬁed portfolio. Gold is an investment that you can buy and hold physically. Gold’s value is not solely based on what the Federal Reserve or ECB does. Nor is gold affected solely on the fluctuation of your country’s currency. Gold is seen around the world as a solid investment and ideal hedge.
There is a constant demand for gold worldwide, with the mining companies racing to keep up with demand. However the technology used by most mining companies has not improved for some time. Therefore it seems inevitable that demand will surpass the gold production eventually, driving the price of gold higher still.
Dollar cost averaging
Instead of trying to ﬁgure out the perfect time to buy gold, why not investigate the best way to buy it? Consider the ‘Dollar cost averaging’ method – this is a strategy in which an investor places a ﬁxed dollar amount into a given investment (in this case gold) on a regular basis. The investment generally takes place each and every month regardless of what is occurring in the ﬁnancial markets. Dollar cost averaging is a strategy that is better suited for investors with a lower risk tolerance and a long-term investment horizon. A long-term view of investing in gold is generally the most advised. Of course – the Dollar cost averaging strategy is no guarantee of good returns on your investment. Dollar cost averaging into an investment that continues to fall each and every month is not a wise move.
So, when should I buy Gold?
No matter when you decide to buy gold, one thing is true – gold has historically been a solid choice for people looking to preserve their wealth . Don’t get too caught up in trying to time the market for the perfect time to buy gold. In most market analyst’s views; gold is a smart investment for anyone at any time once it is kept relative to your portfolio. See Core Bullion Traders gold products here.