When Is the Best Time to Buy Gold?

When Is the Best Time to Buy Gold?

Any time is a good time to buy Gold. That is, physical Gold.

Unlike Fiat money (any money declared by a government to be legal tender that is not backed by some precious element), precious metals such as Gold and Silver will always have value.

While acquiring Gold as a future protection against the inevitable erosion of currency (due to inflation) is always a good idea, naturally it is better to buy Gold at the lowest price possible.

To do this, you will need to learn a little bit about Market Timing.

Most investors of Gold rely on the fundamentals to determine when to buy and sell Gold. Such fundamentals would include following the actions of the Federal Reserve as respects dollar printing, mining operations as to annual harvest quantities, even the relationship Gold may have with Oil.

In the case of oil, it can rise in value due to the dollar losing value (thus requires more dollars to buy the same amount of oil), or the value of the dollar can lose value in relation to the rise in price of oil (due to embargoes, production issues, politics, etc.).

If it costs more for oil, it will cost more for food and goods since all these things rely on oil (fuel) to get to produce and get to market.

So if the price of goods goes up, that means the value of the dollar has gone down, and you can bet it will take more money to buy Gold as well. Thus when oil rises, Gold rises.

Understanding this fundamental, it is well known that Oil can only get so cheap before it gets too expensive to produce domestically. Thus the Gold trader could watch the price action of Oil and keep an eye on when prices start to get to a certain base price level.

At the time of this writing, it is said that oil must sell for at least $80 per barrel. Below that level and oil companies start to lose money.

As a Gold investor, when you see Crude Oil get too low, you may start planning for the buying of Gold after Crude Oil starts to recover. Due to the fact that they do not track day-to-day but that there is a lag of weeks, the Gold trader can usually afford to wait for Crude Oil to put in a confirmed bottom and recover a few weeks before expecting Gold to start appreciating in value as well.

The other approach to market timing Gold is using Technical Analysis. Here you do not follow production reports or news about oil or inflation, but instead you place indicators on a price chart.

An example would be to place moving averages on a weekly chart of Gold. A 10ema, 21ema and 50 ma is one suggestion to plot on a weekly chart. When the 10 is above the 21, and both above the 50, the trend is bullish and may be a good time to add to your Gold cache. If you are not interested in holding as a future hedge but are trading more for speculative reasons, you might consider liquidating when the 10 is below the 20 and both below 50.

There are other ways to use Technical Analysis on a Gold chart. This was just one possibility.

Whether you decide to go the Fundamentals or Technical Analysis route, the goal is to buy low and sell high (or hold). Either way, you must decide on a market timing method.

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