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The sheer range of complicated investment opportunities is vast nowadays. The average man in the street now has access to anything from investments into car parking spaces to speculating on the return of green oil plantations. But regardless of the investment’s makeup, the old mantra of buy low, sell high still remains true.
So it’s interesting that we tend to see a higher volume of buyers of physical gold when the price is soaring versus times when the gold price is low. Let’s compare this mentality with one of gold’s close investment cousins – property. Like physical gold bars and coins, property investment is a tangible asset in limited supply. Indeed, we note that a huge proportion of property investors are also keen gold buyers as it holds a similar appeal and simplicity.
Now, if you were keen to start a property portfolio, would you prefer to start
accumulating flats and houses at their peak price or in a price dip Sticking to the buy low, sell high mantra, most of us would want to obtain the properties at the lowest possible price to maximise returns. Most people, if asked, would say that they would expect UK properties to rise in value in the medium to long term so any price dips should be capitalised on.
So let’s draw this back to gold. It too has finite supply and throughout history has more than kept pace with inflation so most observers envisage the price of gold to rise in the medium to long term – just like property. The fact that the price has come down 35% from its 2011 peak means that you can now pick up much more of the same gold for your money. If you’re considering buying gold as a hedge or portfolio insurance, then the cost of that protection is now a third cheaper!
During the recent gold price adjustments, one of our most popular products has been our Gold Savings. This removes the need to question ‘Is it a good time to buy gold’ It’s a simple saving plan to commit a modest monthly amount to gold to gradually accumulate coins rather than aimlessly putting any spare cash into the bank.
This method works particularly well with the current price volatility as your gold holding increases month to month regardless of the price. If the price does fall, then the price at which you buy that month’s gold also falls, so the cost of your gold averages out over time. So these canny investors are currently enjoying picking up gold coins at prices not seen for 2 years.
Regardless of the way you want to buy gold, the recent price drop demonstrates that it is a long term hedge, not short term speculation. So when you ask yourself, is it a good time to buy gold, remember the old adage still remains relevant – Buy Low, Sell High!
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.