Click Fraud
  • FAQ
  • Cart
ABC Bullion

The best time to buy gold

01 December 2021


To manage your email preferences, click here.
  • Buy during the good times…
  • Don’t get caught up in FOMO
  • Save in gold – ‘dollar average’ your precious metals portfolio
  • The currency sweet spot
  • Remember, it’s about building wealth
Shae Russell
Shae Russell,
Group Communications Manager

Dear Investor,

When is the right time to buy gold?,’ people will often ask me.

My answer is, it’s always a good time to buy gold.

I don’t say that because I’m a raging gold bull that’s been kicking around this the industry since the dawn of the smartphone. It’s because I believe gold is money and therefore treat investing in gold like I’m saving cash each week.

Some people opt to ‘save’ frequently in gold. Others like to buy gold during festive seasons such as Diwali or even as a Christmas gift. A handful wait for gold to hit the headlines and then top up their precious metal positions. Alternatively, you can look for ‘sweet spot’ in the Australian dollar gold price and then buy gold.

There is no wrong way to buy gold or silver, but there are some things to know along the way which will help you decide the best time for you to buy gold.

Buy during the good times…

Gold doesn’t do much during the ‘good times’, which is precisely the point. It ebbs and flows with the market. Rarely newsworthy.

However, when global markets begin to show signs of stress — like when the severity of the pandemic became known in March 2020, or the subprime housing crisis caused major US banks to default in 2007 — gold prices tend to rise rapidly.

While economic uncertainty doesn’t always drive gold higher, market turbulence can see spot gold jump. Once the gold price starts to rise like this, buying gold is a bit like trying to jump on a moving train. When gold hits the headlines, suddenly everyone is trying to buy the yellow metal, causing investors to rush in.

If you’re interested in owning precious metals, look to buy during the good times. The times when the gold price is chugging along…not waiting for the economic picture to turn south!

Let me show you why…

Don’t get caught up in FOMO

The Australian media rarely discusses the benefits of physical precious metals ownership. You might see the gold price flash up on the nightly news. But that’s it.

When gold does hit the headlines, it’s because spot gold has jumped to new highs. New highs in gold sees people flock to the metal as they’re scared of missing out!

What if I told you, this is often the worst time to buy gold? Precious metals are excellent stores of wealth over the long term, but at heart they are still a volatile commodity that fluctuates with the market.

For this reason, if gold is in the headlines, you risk buying at elevated prices.  

Look at the chart on the top right. The US dollar gold price has varied all year. Since the start of 2021, spot gold is down US$175 per ounce. We started the year at US$1,959 and today it’s dropped to US$1,780.

However, if you bought gold at the March lows — roughly US$1,680 per ounce — you’d be sitting on a US$100 per ounce profit right now. Possibly even pleased with your decision to ‘get in’ then. But, if you’d bought gold on the first trading day of the year, your bullion position would be out of the money.

However, if you bought gold at the March lows — roughly US$1,680 per ounce — you’d be sitting on a US$100 per ounce profit right now. Possibly even pleased with your decision to ‘get in’ then. But, if you’d bought gold on the first trading day of the year, your bullion position would be out of the money.

Now, let’s look at the bigger picture. The decade long gold chart (above, bottom image) shows a strong uptrend for gold overall, but the yellow metal didn’t go up this entire time. In fact, it dipped as low as US$1,060 per ounce in 2015…only then to storm to a new high US$2,070 in 2020.

As you can see, spot gold often spikes higher — and hits the headlines — but regularly falls after a strong move up. You don’t need to get caught up in the fear of missing out (FOMO) and jump in with everyone else. Rather, wait for the furore to settle and then look increase your position.

Save in gold – ‘dollar average’ your precious metals portfolio

Another way to slowly increase your position in precious metals — without having to watch the market tick by tick — is the ‘set and forget’ Gold Saver.

This way you can ‘save in gold’ without having to think about it. When you open a Gold Saver account with ABC Bullion, you create an automatic direct debit and click the amount to deposit at the frequency of your choosing. It doesn’t have to be all gold either. You can ‘save’ in gold, silver or a mix of both!

Gold Saver is a good alternative if you forget to buy precious metals until they make the news. Plus, it’s a great way to ‘dollar-cost’ average your bullion position over time, which will leave you less sensitive to price movements.   

The currency sweet spot

Like all commodities, precious metals are referred to in US dollar terms. This is because the US dollar is the benchmark pricing mechanism for global commodity prices. A less complicated way of saying that, is that commodities are ‘priced’ in US dollars.

However precious metals may be ‘priced’ in US dollars, but odds are you’re buying them with your local currency. While the US dollar price of gold matters, for Australians the Australian dollar gold price matters even more.

Not only are Aussie investors ‘exposed’ (the amount of money you have in an asset) to the US dollar gold price, but you’re also up against changes in the Australian dollar/US dollar cross rate [AUDUSD], also known as currency price movements.

For those who take a more active approach to managing their investments, another way to ‘time’ your bullion, is looking for the currency sweet spot.
Quadrant 3: This quadrant can be your friend if you’re looking to buy gold. When the spot price falls and Aussie dollar rises, the Australian dollar gold price will often fall faster than spot gold. Providing an excellent opportunity to increase your gold holdings. Over the years I’ve used Quadrant 3 as my chance to increase my gold position.

Remember, it’s about building wealth

Everyone has a different approach to buying precious metals. The most important way of doing it though, is the method that aligns with your investment objectives.

Buying gold or silver (or even platinum and palladium) isn’t about trying to turn a quick buck in the market.

Any trader worth their salt will tell you, you can’t pick the bottom or the top of the market. If you do, that’s luck. Investing in precious metals is about building wealth that endures whatever the market will throw at us.

There is no wrong time to buy precious metals. What matters, is that you invest sensibly and work towards your goals.

Until next time,
Shae Russell
Group Communications Manager,
For ABC Bullion