Buy regularly and spread the risk
Buy low and sell high – for most investors, that’s the ideal. But how can you be sure that the ‘low’ really is the low – or that the high really is the ‘high’? Even financial professionals find timing the market a challenge.
Selecting the ‘best’ moment to buy gold, i.e. that moment when the gold price appears to be relatively low, is incredibly difficult, impossible even. In 2000 the gold price when measured in eight leading currencies ended the year up 0.6%; just five years later it ended the year up by more than 26%. Within those years the price went up and down – timing the ‘best’ moment to buy would have defied the spreadsheet of the shrewdest professional analyst.
Where is the gold price headed? We don't know; no-one knows. It would be great if we could buy gold when the market is low and sell when the market is high. Unfortunately, efforts to 'time the market' often backfire, and investors end up buying and selling at the wrong time. The chart suggests that over time gold rises in price, although there are times when it falls along that overall pat; if you want to have some gold then the best time to buy is perhaps now.
There is a way in which you can spread the risk of higher or lower prices. You could regularly invest your funds over a period of time. Buying this way can help take the emotion out of investing. It compels you to continue investing the same (or roughly the same) amount regardless of the market's fluctuations, potentially helping you avoid the temptation to time the market.
When you spread your buying this way you will acquire more gold when its price is low and less when the share price is high. This can result in paying a lower average price for gold over time.
At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn't 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.