There’s an interesting thing that happens when investors go to buy any asset. Most people sit on the sidelines and wait until the asset gets popular and then they buy. This isn’t a great strategy. But you also don’t want to do the opposite and wait until the price comes down. Because… what if it never does?
You’ve been waiting for the best time to buy gold, but now it’s hit record highs. Does that mean you shouldn’t buy? Or is it going to go higher, and you need to buy now? We get these questions all the time and cover market trends and dynamics so that you can make the best decision for your situation.
This article covers some ideas about when is the best time to buy gold but you should be aware that the best time is almost always right now. Why? Because all the benefits you get with holding gold remain the same if you take a long-term view.
We’ll also cover all the different ways you can buy gold like owning physical gold, investing in gold mining companies, or buying gold-related funds.
Understanding gold prices
If you want to understand when to buy gold, it’s a good idea to start with how gold prices work. Like the stock market, many factors influence its price, and understanding these dynamics will give you a clearer picture of when to buy.
How are gold prices determined?
Supply and demand: This is a basic economic principle says that when demand for gold increases and supply remains constant, prices go up, and vice versa.
Market speculation: Traders and investors speculate on future gold prices, which impacts current prices.
Central bank policies: Central banks’ gold reserves, buying/selling activities, and monetary policies, primarily interest rate changes, affect gold prices.
Global market exchanges: Major gold exchanges, such as the London Bullion Market and the New York Mercantile Exchange (now called the Commodities Exchange, or COMEX), set daily gold prices based on trading activities.
Other factors influencing gold prices
Economic uncertainty: During economic chaos like recessions or financial crises, investors buy gold. When they do this, the price goes up. If we look at history, back on September 18th, 2008, gold prices reached a six-week high because investors fled the stock market and piled into commodities. The financial markets reacted, and gold became everyone’s safe haven.
Geopolitical events: Wars, political unrest, and trade tensions also increase demands. Tension in the Middle East, like we have right now, usually increases gold prices.
Inflation: Investors think of gold as a hedge against inflation because when inflation rates rise, the purchasing power of paper currencies declines. This makes investors turn towards tangible assets that can outpace inflation. Take the impact of the pandemic as an example. Inflation started rising in mid-2021, and gold prices ramped up 38% from $1,800 an ounce to $2,500 today.
Interest rates: There’s an inverse relationship between gold prices and interest rates. Low interest rates decrease the opportunity cost of holding gold, and investors buy. But, when rates rise, gold becomes less appealing since investors can deposit their cash in high-yield CDs or savings accounts. This means when interest rates rise, it’s a good time to buy gold.
Currency fluctuations: The U.S. dollar’s value inversely relates to gold prices. When the dollar weakens, gold prices increase because gold is cheaper for investors paying with other currencies.
Finding the right time to buy gold
Now that you know what drives the price of gold, what is the actual best time to buy?
Obviously, you want to buy gold when the price is “low” and then sell it when it’s “high.” The challenge is “high” and “low” are in quotations because these numbers are relative to when you buy.
Since no one knows the future, no one can just tell you exactly when to buy but you can look at historical trends and economic conditions.
Here’s a few ideas:
1. Seasonal patterns
The best way to see the future is by looking backward. Historical data shows some patterns in gold prices, but we advise caution when relying on these trends:
First vs. second half: Sometimes prices are lower in the first half of the year compared to the second half of the year.
Varied buying times: You may see people suggest early January, March, April, and late June as potential buying periods.
Yearly fluctuations: Prices can cool down during spring and summer and then increase from late August through December.
2. Economic conditions
The shakier the economy looks, the higher the price of gold.
Unsure times: When people worry about the economy or they see negative news about credit, currency, stocks, and debt, they turn to gold.
Underperforming investments: If stocks and property markets fall, this also increases prices of gold.
Market influences: The reality is that economic conditions, inflation rates, and overall market performance often affect gold prices more than seasonal trends. Take the August 2024 jobs report as an example. This report shows 142,000 new jobs but the July report worried everyone and suddenly the price of gold increased. You have no way to know what’s going to happen in order to time the market.
3. Long-term perspective
The good thing about gold is that the price is dynamic so there’s never really a bad time to buy it.
Holding period: You’ll want to hold gold as a long-term safe haven asset to ride out market fluctuations.
Regular purchases: If you are concerned about the right time, you can buy gold more often but in smaller quantities. Using this dollar-cost averaging strategy helps smooth out the purchase price over time and reduces your impact of short-term price changes. As one Reddit user wisely put it, ‘Don’t wait to buy Gold, buy gold and wait’ (u/azrolexguy).”
4. Current market trends
You can watch the gold market to see what’s happening. A good resource is Gold.org and you can read reports like their July 2024 analysis which shares information like:
Gold supply grew by 4% year-over-year to 1,258 tons and mine production reaching 929 tons.
Recycling supply was the highest for a second quarter since 2012, driven by rising gold prices.
Regional investment trends showed strong demand for gold coins, bars and ETFs in the East, while the West saw a decline.
You can also see real-time statistics like supply and demand directly on their main website.
5. Gold versus the stock market
Investors sometimes use the Dow/Gold ratio as an indicator of when to buy gold. The ratio compares the value of the Dow Jones Industrial Average (DJIA) to gold by measuring how many ounces of gold it takes to purchase one share of the DJIA.
Or, you can use data from sites like Longtermtrends to see the historical performance of gold and silver to the S&P 500 and Dow Jones. We pulled a chart showing the ten year trend and you see the impact for gold investments during the pandemic versus all others:
6. The gold bull market cycle
Gold’s value often follows long, distinct cycles. The most significant bull market in recent history occurred in the 1970s, followed by a 20-year bear market. Comparing that period to today, we appear to be entering the “blow-off top” phase, where prices historically experienced their largest surges.
7. Current market insights
The long-term pattern of gold prices still holds despite the mid-2020 deviation because of the global shutdown. If history serves as a guide, we may be approaching the last leg of this gold bull market. You’ll see analysts predict further price increases and on our podcast we also recently discussed how gold might reach $3,000 and ounce. What this all means it that right now is an excellent time to invest in gold.
When should you sell gold?
We’ve focused on when to buy but you also might want to know when is a good time to sell your gold bullion. Here’s what we usually hear from investors who sell their gold back to us.
Watch for the signs
The biggest thing is to understand market conditions. Here are some indicators that might make it time to sell.
Market movements: You should track the market and watch for changes in gold prices.
Economic indicators: Look for economic indicators like interest rate changes, inflation data, and geopolitical events. For example, if the Federal Reserve says they are going to raise interest rates, investors might put their money in savings accounts instead of gold.
Other factors prompting you to sell
But many times, the reason people sell has nothing to do with the market an everything to do with their own situation. Since we enable investors who buy from Swiss America to sell their gold back to us, we usually see these as reasons why people sell:
Financial goals: If you’ve reached major financial goals and need to liquidate assets you might sell gold for cash. We have customers who held gold as a physical asset for years and now need the cash to fund their retirement.
Portfolio rebalancing: Advisors always say you should review and rebalance your investment portfolio to stay in the right asset allocation. If your gold holdings have appreciated and now the ratio is out of alignment with your investment goals, you might decide to sell.
While you can obviously sell your gold whenever you want, most people advocate for a buy-and-hold strategy. A recent and popular post in the subreddit r/Gold agreed, saying, “The right answer is you only sell it when you need to. Otherwise, you keep the wealth preserved in gold, full stop. If you’re buying physical gold to flip, you’re doing it wrong.”
Gold is a good invesement and you haven’t lost money unless you sell. Hold on to your gold, and prices usually rise if you give it enough time.
One Reddit user, u/moonbunR, shared their thoughts on why selling during certain times—like the summer—might not be the best idea:
“Summer is here and I know a number of people who are getting eager to take advantage of the volatility and turn in a profit but before you do that I would like to make a case against it and you can all tell me what you think about it.
First, you are not likely to make any sizable profit because the price change is not enough to cover your premiums.
Second, historically the price of gold has always stayed stable around these mid months with only some serious increase towards the end of the year. So if you sell now, your re entry price will likely be higher than your selling price
Third, there is a lot of speculation on how policy will play a part in gold prices for example in case of rate cuts, until then you are not sure how the price will play out and selling now might put you at a disadvantage.
Finally, physical gold is a medium for wealth storage, it is not very efficient when it comes to trading for profit, that’s why there is paper gold. So all that said, your best bet is in holding.”
Building a gold investment strategy
As you can see, there are many factors to consider when buying and selling gold. To take the guesswork out of this process, you need a gold investment strategy. Here are the elements to include in your plan:
Setting goals and risk tolerance
Define goals: Our customers usually seek wealth preservation, growth, or income generation.
Assess risk tolerance: Match your gold investments to your comfort level. If you aren’t sure where to start, our team can provide guidance.
Allocating assets in an investment portfolio
Diversification: Allocate 5-10% of your portfolio to gold for risk reduction and stability. You can also diversify with gold mining stocks, gold bullion, gold coins, gold bars, and more.
Balancing gold with other investments
Stocks and bonds: Balance gold with other assets for growth and income.
Retirement accounts: Consider options like a precious metals IRA which gives you all the tax benefits of a traditional IRA while holding physical gold.
Other precious metals: Consider silver and platinum for further diversification.
Choosing a gold dealer
Besides learning about the gold market, you should also research the gold dealer you work with. It’s a good idea to make sure the dealer has been in business for decades, has many positive reviews, and invests time in providing relevant information and insights.
Consider Swiss America’s track record, longevity, and range of educational resources to help you evaluate investment options.
The best time to buy gold
If you’ve decided to buy gold, the reality is that you can’t time the market. But that’s ok because what makes gold investment appealing is that it’s an insurance policy for when things go wrong. So it doesn’t really matter when you buy, just owning this precious metal gives you a plan B for the next financial crisis, inflation period or economic downturn.
If you want to learn more about investing in gold, connect with us and learn more about your options.
Best time to buy gold: FAQs
When is gold cheapest?
In the past, March was the cheapest month to buy gold, and the first quarter can have lower prices than the second half.
What will gold be worth in 5 years?
No one can predict gold’s value in 5 years. The reality is no one can predict the value of any asset in 5 years. The good news is experts believe gold will remain a valuable asset because of its role as a hedge against inflation and economic instability.
Is it a good time to buy gold right now?
We think it’s always the right time to buy gold because you can’t time the market conditions and gold gives you an insurance policy against potential chaos like economic downturns or inflation.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
