Kapitola 8 One-time or gradual purchase?
When is the best time to buy gold and silver? Is it better to shop gradualy or try to time the one-time purchase? Let's take a look at the different approaches to buying precious metals.
At the beginning, we need to say the unpleasant truth: No one has a crystal ball to determine further price developments over the medium term. What does it mean? It is very difficult to predict where the price of silver or gold will go today, with very little certainty it is possible to predict the development of the price of precious metals even in days or weeks. The price of gold and silver is more easily predictable in the longer term. Why?
The price of gold will always be influenced by the fact that gold is perceived as a coin metal. Gold is used to preserve values, so the demand for gold will continue to be stable in the future. Investment silver is also perceived as a value preserver, but silver is also perceived as industrial metal, and therefore industrial demand will increase demand for silver in addition to investors' demand.
Returning to the prediction of the price development of gold and silver, it is possible in the long term to expect the price of precious metals to rise. The reason for this is the demand for the above-mentioned reasons, secondly the steadily rising inflation of money, the third the gradual decrease of natural resources of gold and silver. In the short term, however, predicting price movements is difficult.
So the question is, when and how to buy precious metals? Technically, we can choose between a one-time purchase or a regular gradual purchase of a precious metal. In terms of price, we can accept the current price, or set a limit price for the purchase. Or we can try to time the market and look to find price bottoms. Let's take a look at these alternatives in more detail.
As a rule, a one-time purchase of investment gold or investment silver is carried out by the investor in a situation where it needs to protect large amount of savings against inflation. A typical example is when an investor first sees the benefits of investing in gold and silver. The investor is aware that it is not secured by precious metals against inflation and therefore will make a larger one-time order of precious metals. We talked about the appropriate proportion of investment distribution between gold and silver in the previous chapters.
The gradual purchase of precious metals is a more frequent option of buying gold and silver. The vast majority of investors builds their investment portfolio gradually and over the long term. As a rule, the investor does not care much about the current price, he just needs to protect free funds against infation. Therefore, he buys investment silver and gold at a current price in the precious metal market.
Often, the investor is looking to invest at the most convenient price, he is trying to time the market entry and looking to purchase for as low price as possible. Possibly, a qualified investor who knows the market very well and can monitor all the necessary factors can be a little bit more successful, but what we have said before applies: no one has a crystal ball to predict the price in 100% cases! Typically, an inexperienced investor cannot handle the market timing well. Typically, if the price falls, he does not buy. The price is falling! He expects, often very irrationally, to buy even better tomorrow.
Ultimately, it pays to accept the current price on the market and not try to market the market. Why? In the long term, gradual shopping usually averages a solid price: once the metal is purchased, the second is cheaper. In the long run (and investing in silver and gold in the long run should always be!), Yesterday's price seems good anyway.
The last approach investors use is to set their own price limit prices for purchases. The principle is simple. In short, the investor tells you how much he is willing to pay for an ounce of gold or an ounce of silver at the moment and keeps it. Price fluctuations are not addressed. He buys at the price he has set for whatever prediction and other expected market developments. This is similar to when an investor enters a limit order to buy one or the other when buying on the stock exchange. It sets an acceptable price level for itself. But the logical second step in this way of investing in gold and silver is the occasional customization of the acceptable price level of the investment metal: for example, today, set a price limit for buying 1 oz gold at $ 100 or $5 dollars an ounce silver is meaningless.
As we see, there are many approaches to buying gold and silver. The question of when, what and how much to buy can therefore be answered in many ways. It depends on how the investor is knowledgeable about precious metal markets, how he has the opportunity to track the price and fundamental development of gold and silver. The purchase of investment gold and investment silver is simply not just a question of what the price of gold is today, or how much an ounce of silver costs. If the investor does not have enough experience and knowledge, then he should not try too much about market timing.