Jeff Clark, Senior Precious Metals Analyst, GoldSilver
JAN 22, 2018
Can’t decide if you should buy gold now or wait?
Even though gold and silver have long-lasting qualities most other investments don’t, we all want the best price we can get. It’s only natural, and any good consumer will consider the timing of their buying decisions. It’s a question almost every investor asks: Even if I get a good price now, will I be able to get a better price later?
Well, history has an empirical answer for you.
I looked at the historical data to see if I could identify the best time of the 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 shows:
You can see that on average, gold tends to surge during the first couple months of the year. The price cools down through the spring and summer, then takes off again in the fall. This means that on a historical basis, the best times to buy are the beginning of January, early April, or mid-summer.
You can also see that the price of gold, 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. Obviously, there were years when the gold price did fall—but there were also years it soared. Smoothing out all those surges and corrections and manias and selloffs, investors will get their best price at the very beginning of the year, or the year before.
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 January low. The other best time to buy is in June.
As with gold, you’ll notice silver typically doesn’t come close to revisiting its prior year price, and that there were certain years when fell below where it started. But the historical data says that on average, investors will get their best price in early January or the prior year.
If you missed buying gold in January, when is the next best time to buy?
We broke the historical data down into months, and here’s what it shows:
Since 1975, the gold price has dipped the most in March. The daily chart above shows the price in April might offer a slightly lower price, but historical trends shows March is the month gold falls the most and is thus one of the best times to buy.
Unlike gold, March is typically flat. The best months to buy silver throughout the year are June, August, and September. Keep in mind, though, that the daily chart above shows that other than January, the lowest price point of the year is typically found in late June.
We also looked at which quarter of the year is the best time to buy gold.
Since 1975, the second quarter (April through June) has clearly been gold’s weakest and is thus the best time to buy. The third quarter (July through September) has been gold’s strongest.
There are a couple conclusions we can draw from the historical record. When buying gold and silver…
In the big picture, however, it’s less about snagging the exact bottom and more about how many ounces you own. Remember, gold is inversely correlated to other investments, including equities, so you want to have a meaningful amount of bullion before a stock market selloff takes place. If you don’t, the price of gold could very well leave you behind, forcing you to pay not just a higher price but a higher premium.
(If you’re not sure where to start, try the tips in this article.)
Mike and I and everyone else at GoldSilver continue to buy gold and silver regularly. We’re not waiting. We’ll buy more if it falls, but the point is, we’re prepared now for whatever the future may hold. I hope you are, too. If not, I encourage you to buy physical gold and physical silver now to protect your family’s wealth.