When is the best time to buy gold or other precious metals?

Gold has been main form of money for 6 thousand years and fiat currency has been around for less than 50 years. When I first started buying gold back in 2005 it was just under $500 an ounce, today it is just under $1300. The price of Gas, rent, food and everything else has risen along with price of Gold. Buying gold is not a get rich quick scheme, simply a store of wealth or purchasing power. Your main reason for using Gold Money should be as a saving account. True unlike a bank here in the U.S you will not gain any interest but in a bank you would have less than 1% interest with a rate of inflation of 2% which I believe is very under calculated and far from the true rate of inflation. IF you believe inflation IS only chipping away at your saving at 2% a year this means if you work and save for 40 years you have lost 80% of the value of your savings to inflation alone. This is bad enough assuming you have had steady work and never had to jump into the savings due to job loss, medical condition or some other emergency. A Gold Money debit card should not be what you buy coffee or lunch with. I should be a store of wealth, a emergency fund or maybe when traveling abroad to save on conversion fees. To answer the main question the best time to buy Gold for you Gold Money account, physical bullion or mining stocks is when you have the money to do so. This is especially true whenever there is a big drop in the price where the market has shaken out speculators or people who don’t understand the different between money and currency.

Comments

  • PinkdogPinkdog Posts: 511 Silver ✭✭✭✭
    The best time to buy gold is when you have the money available.
  • TimKTimK Posts: 90 Bronze ✭✭✭
    That's how I use or think of my account Tom. I also don't look at it as owning gold. I own it when it's sitting in my jar at home in front of me. Until then it's a bank account with a gold standard.

    I keep and use fiat on an everyday basis. I just can't help but think that if their is some kind of computer or network shutdown all these debit cards would be useless.
    I was thinking this the other day how I can go weeks or months now without any physical cash. How little of it I see anymore from anybody.
  • TomSwiftTomSwift Posts: 47 Copper ✭✭
    You don't spend your gold, Goldmoney doesn't make any money. :)
  • GoldStandardCanadianGoldStandardCanadian Posts: 148 Bronze ✭✭✭
    Hi Tom,

    In my view this question seems like one that someone new to gold would ask. If that's not the case, it sounds like it could also be a question that someone who is looking to profit from gold price changes would make. In either case, I will explain tidbits that can put your question into perspective.

    Profiting from gold price changes is tempting when you see so much volatility, and possibility. You look at gold charts that move in only one direction: UP! However, predicting gold price changes in the short term is gambling. For example, recently when Trump was elected president, speculators such as a well-known gold advocate and author Jim Rickards, who successfully predicted a Trump victory, expected the gold price to go up as high as $100 in his speculative scenario, partly due to Trump's criticism towards the federal reserve and also in Trump's comments on the merits of the gold standard. As it turns out, the gold price did spike momentarily the moment he was elected, but no one predicted how quickly gold, or the stock market, dropped only moments later. Even after a successful prediction of President elect Trump, the gold price is in bear territory again. This is because people are seeing the US protectionist policies as being favourable to strenghening the US dollar. Now consequently, the stock market has been making gains with US dollar strength in their outlook, but gold is still down.

    So how should a trader, or someone looking to capitalize on short term movements of gold invest?

    First change your perspective. Short term predictions of the gold price is gambling, plain and simple. Even if you succeed at predicting future events, you are still likely to fail to predict gold prices due to infinite possible factors that simply can't be predicted.

    Second, gold itself is valued in its scarcity, amount of labour involved to produce it, and in external factors used to value it. Inherently, gold is valued as a constant. Proof that gold's value is constant is this: Use one ounce of gold throughout much of history, and you can roughly buy a tailor-made suit at nearly any point in history after you convert it to dollars. So as the dollar amount of gold goes up or down, gold generally maintains a constant purchasing power. Just because the dollar price of gold goes up doesn't mean that gold is becoming more valuable; in reality it simply means that the currency used to value it is becoming worth a whole lot less (because you need more fiat currency to buy it).

    So is gold still attractive when you can most of the time always buy the same amount of things with it? Yes. Because money is not supposed to have "interest" combined with inflation, and monetary policy so confusing no one can properly interpret it fully, not even the Federal Reserve who prints the stuff and sets rates of inflation. FIAT currency has become a science experiment in how well currency can be manipulated while serving its masters' request. But gold value, measured in weight and purity, cannot be manipulated and is protected against inflation. If you keep your FIAT dollars in a regular bank account, you will see the numbers go up when you make interest, but you would be foolish to believe you're actually gaining purchasing power, because you aren't. Inflation is invisible in your bank account, but always visible when you go out to the store to buy products. The rates of inflation is exceeding the rate of interest, so you actually lose purchasing power with a regular savings account. Tell me, would you honestly keep money in a savings account if no inflation existed, but you lost 4% or so every year? I certainly wouldn't. There are other economists like Harry Dent who argue that due to demographics, baby boomers, clean technology (electric cars, machines replacing workers, anticipated future price decreases in electricity, etc) that we are likely to see natural deflation. And it's true that these factors will have an effect. But inflation will not be impeded, and if anything the natural deflationary factors we can expect in our future economy will likely lead to a "stag-flation" condition; stagnated economic movement despite currency being inflated. In my opinion, this will lead to the end of confidence in the US dollar, and along with US debt being an impossible thing to control, we are likely to experience a stock market crash during the Trump presidency, and when this happens we'll likely see the death of the US dollar as we know it and enter a new global currency called the Special Drawing Rights. At this point in history, your original question would probably change more to "Is gold a good way to protect myself against inflation and currency collapse?" And the answer would be yes. Just keep enough fiat for practical transactions while we're still living with US dollars as our base currency - but certainly be wiser with how you invest.

    OK, I realise at this point I've probably overwhelmed you with information that you'd have even more questions about, but I'll go back to your original inquiry.

    When I speak to people who have no education on gold, one of the first reasons they use not to buy it is: "It's too expensive" they say, or "It just went up again, I think this is a bad time to buy it."

    And to the point of valuation, let me further explain why this is an excellent time to buy gold.
    1/2


  • GoldStandardCanadianGoldStandardCanadian Posts: 148 Bronze ✭✭✭
    2/2

    America has $20 trillion in debt, and well over a hundred trillion in unfunded liabilities. The debt cannot possibly ever be re-paid and the US dollar is absolutely, 100% going to default to its own demise - we just don't know the exact time when. Enter President elect Trump, with a further $1 trillion FIAT spending plan on national infrastructure. We're very likely to see even more inflation, which will cause the dollar price of gold to go up drastically. Because FIAT money is just printed out of thin air, it's not backed by anything. That's why you always need more of the stuff to get anything done, exponentially. Monetary policies are supposed to be responsible, but they aren't. Paper money holders are losers, by virtue of its managers.

    While what I'm about to say isn't reality, it's worth considering the possibility of what a currency collapse would mean, and what gold would be worth if we were to assign it Money Supply in Circulation value. If we took the entire supply of gold ever produced, and divided it by the amount of US paper currency in circulation today, gold would have a value of $50,000 per ounce - or higher. Of course, we don't live in a world where gold has that valuation, because people aren't treating gold as the money supply. Also, people can also hedge money supply with other commodities such as silver, platinum, or even tulip bulbs (if faith extends to such, as it once did). But given the fragility of the economic system, buying gold will protect your wealth. "Buy the things that last" is a tip used by successful economists with long-term outlooks. FIAT money is like empires, they always fail eventually, as any historian would know.

    If you are an institutional investor, such as a stock trader, it is recommended to have 10% in precious metals holdings at any given time. The reason for this is because if the market crashes, the 10% gold is expected to offset losses. In reality, most institutional investors tend to hold only 1-3% gold. If you are successful at trading and are actually making good money from trading, perhaps this is justifiable. For the rest of us, gold should be held not only to offset losses when markets or currencies fail, but also to act as an insurance policy.

    I highly recommend reading Jim Rickards' book called The New Case for Gold. He is an author with expterise in markets and actually consults with the global elite - he was there in 2008 when world leaders were trying to protect themselves from a total currency collapse. Most people are clueless how close the US came to FIAT failure. But after each recovery, the fundamental problems only grow larger and larger. The next time we have a failure, likely during Trump's presidency - also because stock crashes have historically happened every 8-10 years, what will happen is the IMF will bailout the central banks. Guess where your money is now? With the central banks. When the IMF bailout happens, the banks will use legal power which is already written and ready to execute, to shut down bank ATM's and your access to money will be limited. This is when we are likely to be introduced to a new global currency. And this will happen because the IMF are the only people with the capacity (a clean balance sheet) to bailout the banks. The transition can only be speculated to be rough over the 6-12 months it takes to adjust to the new currency and having a backup plan is important. More about this topic in particular can be read in Jim Rickards' newest book The Road to Ruin.

    I recommend reading The New Case for Gold and then read The Road to Ruin, and I can guarantee after you do that you won't be asking that question again. In fact, when you educate yourself and hear others ask the same question, you will look at other person for a moment with a blank stare of seriousness. And then hopefully give a substantiated answer. Keep asking questions though, I like it.
  • Tom_BaccoTom_Bacco Posts: 47 Copper ✭✭
    @GoldStandardCanadian actually I was trying to answer the question I wasn't asking but I agree with your comment. I would like to add that Trump is talking about building a wall, increasing Social security payments, building and repairing infrastructure as well as lowering taxes as well as accusing the Chinese or devaluing there currency AKA weakening due to inflation. All of these things mean huge deficits that are also good for gold but bad for our standard of living. I hold bullion, mining stocks and a gold-money account for the long haul and advise everyone to do the same. I have to say I like this forum, many comments I read are like someone was reading my mind. :)
  • GoldmattersGoldmatters Posts: 4,020 Admin
    I think @Pinkdog says it best here.
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