first majestic silver

Buy Gold Now Or Wait?

November 3, 2023

Should you buy gold now? Or, should you wait?

The pat answer is “it all depends”; which is true, but, it’s an inadequate answer.

A bigger problem might be the question itself. Why would someone who is planning to buy gold now decide to wait?

Some people might hesitate because they haven’t seen the price action they expected. For others, it might be a lack of commitment.

PRICE DEPENDENCY

The price we pay for something is an indication of its value. The value of gold is in its use as money. That value is constant over the centuries. The purchasing power of one ounce of gold is no different today than it was forty years ago or century ago.

With gold, however, its price is not an indication of its value. Its price is a reflection of the loss of purchasing power in the U.S. dollar.

Gold’s higher price over time reflects the ongoing effects of inflation that have previously occurred. If I expect inflation to continue and its effects to worsen over time, then I can buy gold today to preserve my purchasing power.

Another reason to buy gold is similar to the reasoning many investors use when they buy stocks. They expect the price to go up.

That begs the following question: What if the price of gold doesn’t go up? Or worse, what if the price goes down?

If you need see the price go up to justify your ownership of gold, then you are price dependent.

GIVE STACKERS SOME CREDIT

Some stackers buy gold with good intentions. They understand the fundamentals explained earlier and are content to save and accumulate gold, knowing that their savings are real money and a long-term store of value.

What becomes more important is how much gold you own, not what the price is. If the price goes up you buy some more. If the price goes down you buy some more.

SHOULD YOU BUY GOLD IF YOU THINK ITS PRICE MIGHT DROP?

Yes – if you are buying it with the intent of accumulating more gold as a long-term store of value.

No – if you are speculating solely on price appreciation in the short term.

SLOW TIME FOR GOLD?

So-called seasonal patterns in the gold price are a joke! Inflation never stops. Its effects continue to extract their toll on a shrinking U.S. dollar.

You cannot stop inflation or its effects. All governments inflate and destroy their own currencies.

What you can do is buy some gold; especially if you don’t own any. If you already own some, buy some more.

If you think the gold price is subject to seasonal behavior, try buying some in January or February; or March, April, May, June, July, August, September, October, November, or December.

WHAT IF THE GOLD PRICE DOES GO DOWN?

Great! Buy some more.  Unless, of course, you have all the gold you could possibly want or need.

In that case, you wouldn’t buy if the price went up, either. Do you already know how much gold you should own?

Likely not. And, for most people, they likely don’t own enough.

CONCLUSION 

If you have your eye on the gold price and it affects the decisions you are making with respect to whether or when to buy it, then you are price dependent.

If you need, or expect, to see the price go up a lot, especially in the short term, you are price dependent.

Expect more price volatility, including on the downside. Gold is notoriously slow about reacting to the effects of inflation; i.e., catching up in price to the loss of purchasing power in the U.S. dollar.

That being said,  gold is real money and a proven long-term store of value. What are you waiting for?

by Kelsey Williams for Neptune Global

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Neptune Global is a full service precious metals dealer serving individual investors, the wealth management industry, broker dealers and institutional investors. The firm’s platform of investment bullion includes all forms of traditional physical precious metals in conjunction with innovative physical precious metal investment assets which provide unparalleled diversification, transparency and liquidity. Their leadership in the market is documented with such official designations as being the recipient of a US Patent for the PMC Ounce (Precious Metals Composite). While dynamic offerings such as the PMC Ounce provide investors with many of the conveniences and benefits generally associated with mutual funds and ETFs, all of Neptune Global’s product offerings remain true to the firm’s core convictions related to the time tested value ascribed to physical precious metals ownership.


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