The gold market has seen some significant dips in recent weeks. The market’s lack of upside follow-through combined with a breakdown below previous support levels has some pundits looking for further downside. As discussed in a recent post, large declines should not be feared but rather welcomed.
A simple yet powerful strategy may look to buy heavier on any significant dips in price – say 5% or more. Although adding ounces on a regular basis is a great thing, buying heavier on such dips can have a powerful effect on a portfolio.
Dollar-Cost Averaging Holds True for Gold
The concept of dollar-cost averaging is nothing new, and stock investors have been using such a strategy for a long time. The premise is simple: Buy shares of company ABC on a regular basis. Sometimes you might pay a little more for those shares and sometimes you might pay a little less. Over time, dollar-cost averaging can lower the total cost basis of the position. For example: If an investor bought 100 shares of ABC at $50, bought another 100 shares at $53 and bought another 100 shares at $45, his or her cost basis would $49.33 per-share.
The same concept holds true for gold: If an investor bought five ounces at $1250, bought another five ounces at $1260 and bought another five ounces at $1225, then his or her cost basis would be $1245 per-ounce.
Here’s where it gets really interesting: Using the above example, suppose that the investor now bought five ounces at $1250, another five ounces at $1260 and then bought 10 ounces at $1225. His or her cost basis now goes down to $1240 per-ounce. Although the $5 lower cost basis from the previous example may not sound like much, it has the power to add up over the long haul. By simply buying more-even double or more-than your usual purchase following any significant dips in price you can lower your total cost basis.
Not only can total cost basis improve, but you will have more and more total ounces of gold. The more gold you have, the more of a potential hedge you have against lower stocks, rising inflation, a weaker dollar and other economic and geopolitical risks.
Dips Can Signal the Right Time to Buy Gold
If you haven’t done so already, or if you are just now considering an allocation in gold, now may be the ideal time to buy and to buy big. Adding this key asset class to your portfolio has never been easier, and arguably never more important.
To add more gold to your portfolio or to start building an allocation, simply pick up the phone and speak with an Advantage Gold account executive today. Our associates are here to answer any questions you may have and can even show you how easy it is to build a significant allocation using an IRA account.
Don’t wait for the next major stock market collapse or for further dollar weakness to erode your purchasing power. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, alternative asset classes, best way to buy gold, buy gold, declines, dips, dollar-cost averaging, gold, hedge against inflation, now is the time to buy gold