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Jeff Clark, Senior Precious Metals Analyst, GoldSilver
FEB 13, 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.
I looked 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.
So, the lowest price of the year—and thus the best time to buy—is the second week of January. It’s also good in mid-March and early April. The second week of July is probably the “last train out” before gold takes off in fall.
*For more information on which months and seasons are best for buying gold, consult this article.
What’s also interesting is 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.
So your best bet is to buy gold at these low points during the year, and also to not wait for the following year.
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 during an upswing in the current year.
The conclusion is simple:
• On average, you’ll likely get the best price on gold in early January, mid-March, early April, and early July. You’ll also want to buy this year and not wait for next year.
We ran the same data for silver and here’s what we found.
It’s easy to see silver’s higher volatility. And that its annual low is clearly in early January. About the only other good time to buy, on average, is when it dips in June, though you’ll likely pay a higher price then than January.
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.
You are thus better off buying silver now than waiting for a dip the following year. If you wait, history says you will likely pay a higher price.
The conclusion here is obvious. While there are always corrections along the way…
• On average, you will likely get your best price on silver in early January, and in June. And like gold, you want to buy this year rather than waiting till next year.
Of course, any correction is a buying opportunity if you don’t have enough bullion to offset an economic or monetary crisis. In that type of environment—and one we think is inevitable—physical gold and silver are one of the few assets that will prevail.
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.