The Right Time to Buy Physical Gold and Silver?

There are times I trade gold and silver, and times when I buy physical gold and silver. In the throws of an advance is when both trading and buying the physical metals become popular, yet I’m not a fan of that approach.

During rapid advances or declines, trading is where the money is. Low transaction costs and the ability to enter and exit a futures contract, CFD or ETF (such as SLV or GLD) for quick profits–hopefully–is a hard proposition to beat.

When the price of gold and silver falling though, is when I look at buying the physical metals. I do this for two reasons:

1.When investing in gold or other physical asset, I’m fronting the whole cost of the transaction–so a cheaper price means I can buy more.

2. I think everyone should have at least some physical gold and silver holdings…but it’s not something you will likely need today. Physical gold or silver is something you can accumulate as the market cycles up and down.

Don’t get trapped into thinking that you need to own gold when it’s skyrocketing higher. If you want to be involved in gold or silver when a rapid advance is occurring, trade the metal, but avoid the temptation to buy physical gold or silver along with the rest of the financial herd. When the price pulls back, that is the time to buy a bit of physical gold or silver.

When there is a decline, you also don’t need to buy all your physical gold at once. With sites like Bullionvault.com–that make buying physical gold and silver very easy, with low rates and costs–you can accumulate bullion over time. In the latter part of 2011, Gold sold off from near$2000, back down toward $1500 by mid-2012. This presented an opportunity to buy some gold. 2013 saw the metal sell off further, to below $1300. This presents another buying opportunity.

I know that some will say “But how do you know it will drop?” or “What if I buy and then it keeps dropping?”

Those are excellent questions. Even as a professional trader I don’t know where gold and silver are going to be trading at next week, next month or next year. So when the price sells off more than 20% from a recent high, I look at buying a bit of gold and/or silver. If it keeps dropping, that’s okay.

I don’t buy all my physical gold or silver at one price. By picking up a little bullion on one sell-off, and then a little more on the next sell-off, you can accumulate a position, and in the end your price will average out anyway. Also, since I want to own gold and silver, and I don’t know what they will be trading at in the future, I buy a little when the market sells off and don’t concern myself too much with the minor daily price fluctuations.

Get out of the trading mindset when you’re buying physical gold and silver. Accumulate physical gold and silver slowly as the market price cycles up and down.