When is the Best Time to Buy Gold?

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Last Updated on: 26th January 2015, 04:49 pm

Although there may not necessarily be a right answer to this question, many financial analysts and investors argue that now is the best time to buy gold (c.f. as long as the price remains under $1,500 per troy ounce). The question that probably pops up in your mind right now is “Why now? Prices seem to keep dropping!”. The answer that financial analysts respond with is that gold was never meant to be a short term investment. Prices will occasionally drop, but over the long term (think 10+ years) they are bound to increase because of the following reasons:

  • Many large gold mines across the world are almost depleted.
  • Not enough new mines are being discovered despite increased exploration efforts by large mining companies worldwide.
  • Demand from industries that need gold keep rising (e.g. Electronics, Dentistry, Aerospace, Computer Hardware, etc…).
  • Demand from China and India keep rising as their population grows.
  • Quantitative easing policies from national banks in the United States and Europe continue.

In 2013, many Americans are investing through their IRA

One of the smartest ways to own gold is through one's retirement account. In fact, your IRA enables you to hold pure physical bullion gold while saving big on taxes. Request your free gold IRA kit on the right to learn more on how to get started.

Through the years, keeping a portion of your assets in the yellow metal (APMEX analysts recommend between 10%-20%) has given investors a chance to maintain the purchasing power of those assets, especially in times of economic turmoil.  Trying to pick the perfect time to buy runs the risk of missing the boat altogether if the price should take off.  Of course, prices move both up and down, as evidenced by the recent volatility in the price of the precious metal, which is why finding a perfect time to buy gold is so difficult.  Still, there are some parameters worth taking into account if you are trying to time your purchases optimally.

Buying gold in times of crisis

A possible answer to the question is that the best time to buy gold is during a crisis.  One reason in support of this contention is that, given gold’s history as a store of value, it is seen as a safe haven when people are unsure about the monetary system.  Another reason has more to do with the reaction of political figures and central bankers to a crisis than the crisis itself.  In fiat monetary regimes, where a country’s currency is not backed by gold or some other impartial measuring device, there is theoretically no limit on the amount of currency which can be created.

As a result, in times of crisis central bankers and politicians may be tempted to increase the amount of currency in existence in the hope that the resulting easing of monetary conditions will help solve the crisis and restore a country’s economic health.  The danger of such a policy is that it risks an inflationary outcome as central bankers push on a string, fruitlessly attempting to stoke demand in an economy which is in contraction mode.

Given gold’s reputation when it comes to preserving its purchasing power in inflationary times, the price of gold tends to do well during such periods, and serves to support the claim that buying gold during times of crisis is worth considering.

Image courtesy Moomsabuy/FreeDigitalPhotos.net
Image courtesy Moomsabuy/FreeDigitalPhotos.net

Buying gold during or after price declines

Everybody loves a sale, and with gold having recently seen its price plummet, buyers at current levels can certainly acquire more bullion for their money than they might have just a few weeks ago.  Of course, just because the price of something, be it gold or any other commodity, has declined, doesn’t mean it won’t keep falling.  However, if you believe in the long term case for gold as a hedge against the inflationary implications of excessive monetary easing, buying after prices have fallen, whether in a Gold IRA or some other account, can be tempting.

Buying gold for peace of mind

In the end, neither gold’s supporters nor its detractors can predict the exact course the metal’s performance will take.  Gold has been known to confound even the most sagacious of experts in its price movements, so one of the best reasons to buy the precious metal may be for the peace of mind it can bring you.  Over the long run, gold has done an admirable job of preserving purchasing power for its owners, likely contributing to the inception of the saying “good as gold.”  In these uncertain economic times, buying gold when it will bring you peace of mind is perhaps the best time of all to buy it.

David Robles
David Robles

David has a bachelor in Economics and an extensive financial background. He is CFP® professional which means that he is an expert in investment and retirement planning. David enjoys covering current geopolitical world events and topics that relate to the U.S. economy.

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FTC Disclosure: We are an independent blog that aims at providing useful information for retirement account owners interested in alternative assets like precious metals. However, our content does NOT constitute financial advice. Please speak to your financial advisor before making any investment decision. Also, the data quoted on this website represents past performance and does not guarantee future results.


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