When you’re looking to buy more gold or silver bullion, it’s wise to aim for the best price possible. Lower costs mean higher returns in the future. Predicting the price of gold is tough – it can be challenging to catch the lowest point. Gold is a go-to asset during times of global crisis or uncertainty.
Many gold buyers wonder if there’s a specific time of the year that’s better for buying gold or silver bullion. They want to make sure they’re buying when prices are low and can later sell at a higher value.
Some data suggests that the time of year might impact gold prices. Keep in mind that various factors influence gold prices, so research the market conditions that drive these changes. If you’re looking to time your bullion purchases, it seems the calendar could have a role.
When to Buy Gold
Looking at historical trends, gold prices usually slow down in spring or summer and start picking up again in the fall. The best times to buy gold tend to be in January, March, and from mid-June to mid-July. On the flip side, the fourth quarter tends to be the most expensive time to purchase bullion.
However, it’s important to note that some data may be influenced by January consistently offering the lowest prices for that particular year. When gold prices are on the rise for an extended period, it makes sense that the first month of the year would still have the lowest prices, even if they are significantly higher than the previous fall.
While January typically sees the lowest prices, March often sees the most significant drop in price during a calendar year.
Timing your gold investments isn’t an exact science, and not every year will follow historical patterns. Staying informed about news and price changes is crucial if you’re waiting for the right moment to make a purchase.
Why Are Gold Prices Cyclical?
The gold market is quite complex, but one factor in the cyclical demand for gold is likely tied to global holidays where buying gold is a tradition. For instance, festivals like Diwali in India, which occurs in the fall, contribute to increased demand.
India and China, the two largest gold markets globally, significantly impact gold prices due to substantial demand for jewelry and bullion. Together, they make up over half of the global gold jewelry demand, with nearly 270 tonnes in 2019.
While Western investors often turn to gold during economic uncertainty, in countries like India and China, economic growth can lead to higher gold demand. People may convert more savings into bullion wealth during times of growth.
Interestingly, there’s also the “January Effect” in the stock market, where there’s typically increased interest in January. As people invest year-end bonuses in their retirement portfolios, the higher demand for stocks may lead to a decrease in gold demand during this time of year.
When to Buy Silver
For those interested in investing in silver, the timing can be crucial for getting the best price. Similar to gold, silver prices typically hit their lowest point in January for the calendar year. However, it’s worth noting that January is also a month when prices can rise quickly.
Outside of January, silver prices tend to slow down in June and August. Unlike gold, March is not particularly known as a cheap time to buy silver.
Silver prices generally exhibit more volatility than gold, with broader price swings throughout the year. Buying earlier in the year is often a strategy for securing a better deal. Although there are years when silver revisits its low point from the previous year, the trend suggests that the best prices are usually available earlier in the year.
Other Ways to Reduce Your Costs
Timing the market for precious metals can be challenging, and there are various strategies to consider for optimizing your investment. Here are a few approaches:
Dollar Cost Averaging
Dollar Cost Averaging (DCA) is a method that spreads the risk of purchasing precious metals over time. Instead of investing a lump sum at once, you make smaller, regular investments. For instance, rather than putting $6,000 into gold in one go, you might choose to invest $1,000 per month over six months. DCA helps mitigate the impact of price volatility by spreading out your investments, reducing the likelihood of investing a large sum during a price peak.
However, one drawback is that DCA may not take advantage of potential savings on premiums, which are often lower for larger purchases.
Buying RRSP Gold
In Canada, gold can be included in your Registered Retirement Savings Plan (RRSP). RRSPs provide tax advantages, allowing you to deduct your investment from taxable income, offering protection from bankruptcy proceedings, and enabling certain early withdrawals for specific purposes like buying a house or returning to school. While you can’t control gold prices, using an RRSP can be a tax-efficient way to invest in gold and maximize your income.
Buying Large Volumes
When purchasing gold or silver bullion, there’s typically a premium above the spot price to cover manufacturing, transportation, and insurance. Buying in larger quantities often allows you to pay a lower premium, reducing the overall price per ounce. While it might be challenging for gold due to its higher prices, buying silver coins in larger quantities can help you secure a discount, making it an effective way to cut costs regardless of market prices.
Market Factors Affecting the Price of Gold
Broader Market Factors
Bullion prices are influenced by various market factors, often more than the time of the year. Understanding these factors can help you seize opportunities during market downturns.
Rising Stock Prices
Gold is considered a safe-haven asset, usually sought during bear markets or high market volatility. In times of economic stability and low volatility, investors tend to keep their money in stocks, reducing the demand for gold and, consequently, its prices.
Strong Dollar
A robust U.S. dollar can also lead to lower gold prices. Investors typically turn to gold when there are concerns about the stability of the dollar. Therefore, when the dollar performs strongly against other currencies, the demand for gold decreases.
Best Time to Invest
The optimal time to invest in gold is often before a crisis occurs. Being positioned before market uncertainty arises allows you to benefit from the rush towards safe-haven assets during disruptive events.
Supply
Supply shortages play a role in precious metal markets, especially in silver, which has significant industrial use. Increased annual metal production can lead to lower prices. While the overall trend is toward dwindling new supplies of silver and gold, the discovery of new yields and the opening of new mines can temporarily impact this trend.
Is Now the Time to Buy Bullion?
Navigating Gold Investments
Gold prices have shown resilience in recent years, and with looming recession fears and geopolitical tensions, they may rise further. However, predicting gold prices remains challenging.
For investors eager to expand their gold holdings without waiting for the perfect time to buy, there are alternative strategies. These include purchasing gold within an RRSP (Registered Retirement Savings Plan) or buying gold and silver in larger volumes.
If you’re new to gold or silver investing, consulting with your bullion dealer is a wise step. They can provide insights into these precious metals, recommend suitable products aligned with your goals, and guide you on selling gold investments when needed.
At Global Bullion Suppliers, we prioritize ensuring your confidence in your investments. Book a free bullion consultation to engage with an expert who can clarify the nuances of buying and selling gold, explain premium dynamics, and highlight product differences.
