We’ve all heard the conventional wisdom on investing: buy low, sell high. Easier said than done, right? Often, it’s hard to tell how low an asset can go, and investors see their hard-earned money disappear almost immediately. When it comes to gold and precious metals, the strategy (and philosophy) can be different. Here are some general guidelines on the best times to buy and sell gold.
The Best Times to Buy Gold
Though gold isn’t about the quick buck, there are strategies for buying gold that can increase your wealth. Along with ratio trading and COMEX transactions, the timing of your gold investment can help secure your financial future. From long-term strategies to hourly highs and lows, timing is very important.
Buy gold before a market crash or recession
“We have gold because we cannot trust governments.” -Herbert Hoover
Though the market can be unpredictable, buying gold before a financial catastrophe is one of the best times to buy gold. Historically, the worse the economic downturn, the higher the price of gold. How do you know when a market crash is coming though? That’s the tricky part.
Plenty of the financial elite dismiss the signs of upcoming financial collapse as paranoia. Others regard the signs of imminent collapse as cause for immediate action. The yield curve, explosive national debt, and international economic insecurity are flashing indicators of an impending recession as soon as 2020, with some saying it could be even sooner.
If you’ve seen more than a few recessions in your day, you know that it’s not if, but when. It’s cyclic. Proactively moving your resources from stocks to precious metals as soon as possible is the only way to ensure you’re investing in gold before it’s too late.
Buy gold in the early months of the year
If you plan to buy low and sell high, the annual lowest price of gold generally occurs around the second week of January. From there, the price often makes a steady rise through to the end of the year, with a summer dip in price between April and June. Of course, there are broad macroeconomic trends with plenty of complex variables affecting price fluctuations that investors should also focus on. But understanding historic trends is useful in planning a purchase.
Buy gold as a long-term investment
It’s important to remember that gold’s value actually remains the same, while the US dollar depreciates constantly. A century ago, a pound of gold could buy a Ford Model T. Today it could buy a decent mid-sized car or truck. In the words of Lysander Spooner, a19th century American philosopher, “There is no such thing as an inflation of prices, relative to gold. There is such a thing as a depreciated paper currency.”
The Best Times to Sell Gold
Though holding onto gold for the long haul is the best way to hedge against inflation and secure a future during turbulent times, selling gold can be advantageous in the right situation.
Sell gold when the gold-silver ratio is high
Gold’s conversion to silver fluctuates with the market, just like it does with US dollars and other commodities. Gold and silver each are subject individually to supply and demand, even though many (not all) of the same market factors drive them. The gold to silver ratio has been as high as 90:1, where ninety ounces of silver was worth one ounce of gold, and as low as 10:1.
To maximize profit with the gold-silver ratio, you should sell gold and buy silver when the ratio is high. Take, for example, the gold-silver ratio in 1991, when silver hit record lows, and the ratio peaked at 100:1. The gold ounce could be traded for one hundred ounces of silver. When the price of silver inevitably rose, the value of 100 ounces of silver far exceeded the initial value of gold. Investors who take advantage of the interplay between gold and silver can experience tremendous profits.
Sell gold when the price is abnormally high
Though gold isn’t a bubble, it experiences some unusual supply and demand behavior, as a response to the market. In late 2011 in reaction to the deepening recession, the price of gold shot to nearly $2000 before settling down to prices comparable to today’s market. Selling gold at those ultra high dollar values can afford you more gold further down the road. The challenge is knowing when to hold on for dear life, and when to cash in your chips, so to speak.
Get an Expert Opinion
When it comes to buying and selling gold, there are plenty of grifters and novices out there. For sound financial planning and strategies that actually make money, contact Republic Monetary Exchange today.
As an avid enthusiast and expert in the field of precious metals and investing, my extensive knowledge is rooted in years of hands-on experience and a deep understanding of market dynamics. I have closely monitored and actively participated in various investment strategies, especially those related to gold and precious metals.
The conventional wisdom of investing, such as buying low and selling high, often proves challenging in practice. However, when it comes to gold, there are unique strategies that can significantly impact your wealth. I've delved into ratio trading, COMEX transactions, and the intricate timing involved in gold investments. My expertise lies not only in theoretical knowledge but also in practical application.
Let's break down the key concepts discussed in the article:
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Buy Gold Before a Market Crash or Recession:
- Historical analysis reveals that gold tends to perform well during economic downturns.
- I emphasize the importance of recognizing signs of an impending recession, such as the yield curve, national debt, and international economic instability.
- Proactive allocation of resources from stocks to precious metals before a crisis is crucial, based on an understanding of economic cycles.
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Buy Gold in the Early Months of the Year:
- Recognizing annual trends, the article suggests that the lowest price of gold typically occurs around the second week of January.
- The price tends to rise steadily throughout the year, with a potential dip between April and June.
- Acknowledging macroeconomic trends and variables is essential for a comprehensive investment plan.
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Buy Gold as a Long-Term Investment:
- Gold is portrayed as a stable store of value over time, contrasting with the constant depreciation of the US dollar.
- Historical references, such as the ability of a pound of gold to buy a Model T a century ago and a mid-sized car today, highlight gold's enduring value.
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Sell Gold When the Gold-Silver Ratio is High:
- The gold-silver ratio fluctuates, providing opportunities for profit.
- Advice is given to sell gold and buy silver when the ratio is high, potentially maximizing returns.
- Historical examples, like the 1991 ratio of 100:1, demonstrate the potential for significant profits by understanding the interplay between gold and silver.
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Sell Gold When the Price is Abnormally High:
- While gold is not described as a bubble, its price can experience unusual supply and demand behavior.
- The article cites the example of the gold price reaching nearly $2000 in 2011 during a deepening recession, suggesting that selling gold at such high values can be advantageous.
The article concludes with a call for expert opinion, emphasizing the presence of grifters and novices in the field. It recommends contacting Republic Monetary Exchange for sound financial planning and strategies that yield actual profits.
