When Is the Right Time to Buy Gold?

The Spotlight

1 minute read

Jul 27, 2021

Cartoon hands against the green background holding dollar gold coins as part of a scheme showing the working principle of the dca strategy

When buying gold, one of the main risks is to get in at the wrong time. But there’s a simple strategy investors can use to avoid it.

In our previous SPOTLIGHT issues, we’ve looked at tools and drivers signaling the current bullish case for gold.

Still, predicting the market, and especially the price of gold, is no easy feat as it can be influenced by multiple factors at any given time.

So what’s the right time to buy gold, you’ll ask?

Actually, you might need a crystal ball to answer this question.

But there is a proven strategy that doesn’t require a crystal ball: the DCA strategy.

What’s the DCA strategy?

In essence, the Dollar-Cost Averaging (DCA) strategy is simply choosing to buy a certain amount of an asset at regular intervals, regardless of its price.

If this can seem counterintuitive to some, it isn’t.

By choosing regular intervals (days, months, years, etc.) and making your purchase without taking price variations into account, the DCA strategy will help reduce the risk of buying at the wrong time.

In effect, the DCA strategy removes much of the detailed work of attempting to time the market in order to make the best bet.

Here’s an example:

Imagine three different investors buying $2,000 worth of gold every year, each at a different time, between 1970 and 2019.

Every year, Warren, our first investor, buys gold at the highest price, Cathie at the average price, and Elon at the lowest market price.

By choosing to invest using the DCA strategy each of them invested $98,000 over these 49 years.

in 2019, their choice of a regular investment brought them six-figure returns each:

Warren: $366,014

Cathie: $411,658

Elon: $476,255

Even Warren, who kept investing at the worst possible time every year, still turned a profit of over one-third of a million dollars.

So what’s the bottom line?

We guess you already know the answer 😉


The Spotlight

The free newsletter helping you understand how to build your wealth.


Get the Spotlight

The free newsletter helping you understand how to build your wealth.