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Jeff Clark, Senior Precious Metals Analyst, GoldSilver
JAN 6, 2017
Can’t decide if you should buy gold now or wait?
We all want the best price we can get on our gold and silver purchases. It’s only natural, and any good consumer will consider the timing of their buying decisions. It’s a question almost every investor asks: am I getting a good price now, or will I get a better price in the future?
Well, history has an empirical answer for you.
In preparation for the new year, I thought I’d look at the historical data to see if I could identify the best time of year to buy. I suspected January would be best, but what I found was interesting.
We calculated the average gain and loss for every day of the year since 1975 (when it was legal to buy gold again in the US) and put it in a chart. Here’s what it looks like.
You can see that on average, there’s a nice surge the first couple months of the year. The price then cools down through the spring and summer, and takes off again in the fall.
You can also see that the gold price, on average, does not historically revisit its prior year low. The low of the year is indeed in January—but it’s the low of that year, not the prior year.
All this means that you are likely to be better off buying in 2016 than in 2017.
Obviously there were years where the gold price did fall. But there were also years it soared. Smoothing out all those surges and corrections and manias and selloffs, investors are, on average, better off buying the prior year than waiting for a downturn the following year. Prices are indeed seasonally weaker in the summer, but they still don’t touch the prior year’s price. Meaning, you are likely to pay more even then than now.
The conclusion is simple:
• On average, you’ll get a better price on gold now than in 2017.
We ran the same data for silver and here’s what we found.
It’s easy to see silver’s higher volatility. What also sticks out is that historically, silver doesn’t come close to touching the prior year’s price.
As with gold, there were certainly years where the silver price fell below where it started. But the historical data says that on average, it rises more often in the following year than it falls.
We are thus much better off buying silver now than waiting for a dip in 2017. If you wait, history says you will likely pay a higher price.
The conclusions here are obvious. While there are always corrections along the way…
• On average, it is cheaper to buy gold and silver the year before.
Whatever you want for 2017, you will likely be better off making those purchases now than waiting until next year.
Combine this data with the current correction and you have the perfect Christmas gift for yourself: gold and silver on sale, with much higher prices coming over the next few years.
Mike and I and everyone else at GoldSilver continue to buy our gold and silver regularly. We’re not waiting. We’ll buy more if it falls, but the point is, we’re prepared for the future now.