Buy low, sell high. It’s a market truism everyone is familiar with. Incorporating this into your regular investing routine is another matter.
A growing number of savvy individual investors today are diversifying their investment portfolios with physical gold. There are many arguments in favor of diversification with a hard, physical asset such as gold, including perhaps most importantly a negative correlation to the stock market.
That simply means:historically when stock prices plunge significantly gold generally rises as investors flock to the yellow metal as a wealth preservation vehicle. Physical gold is the best way for investors to have long-term exposure to gold because they own the actual commodity not a paper contract or derivative.
Take out some insurance.Gold is a hedge against stock market declines and also as a vehicle to protect and grow wealth.This paid off for gold investors after the 2008 global financial crisis when gold went from $700 to $1,900 per ounce.By owning physical gold, an investor is diversified providing a better performing portfolio, especially during times of uncertainty that is the world we live in today.
Recommendation:diversify 10-20% of your total investment portfolio to physical gold.
Use dollar-cost averaging:This is an easy and regular method for individual investors is to builda physical portfolio of gold coins.Savvy investors can improve overall purchase points with a “dip-buying” approach layered on top of dollar-cost averaging.
1. Dollar cost averaging is an investment approach designed to invest money as you receive it, for example, through your monthly income flow. Designate a specific amount to invest in gold each month. Smaller monthly purchases caninclude bullion fractional coins.Example: a 1/10 oz. Gold American Eagle currently trades at $152.54.
For investors implementing portfolio diversification:this could mean selling some equity assets and directing the funds to physical gold purchases, in order to increase gold exposure toward the desired 20% target.
2. The dip-buying approach seeks to enter a market on price pullbacks remember smart investors buy low. As any market moves higher, whether it is the price of Apple or the price of gold, all trends have squiggles, retracements and pauses. During an uptrend, or bull market, the price of any investment does not go in a straight line. Savvy buyers can use price charts to identify price pullbacks, which can offer buying opportunities.Monitor the daily spot price of gold and other precious metals here.Blanchard clients can receive an email or text alert when a precious metal spot price goes below a price point you choose.
Throughout 2016, gold buyers have emerged consistently on price pullbacks. Dip buyers have been a major support to the market this year.
Since December 2015, the price of gold (measured by December Comex gold futures) climbed from a low around $1,052 an ounce to a high in early July above $1,380 an ounce, over a $325 gain since the start of the year. The price of gold has surged 25% through early September and the uptrend remains intact. However, movement in the market trend created price pullbacks that can offers savvy gold buyers better buying opportunities.
Significant upside potential:Even though gold prices have been rising in 2016, the long-term price charts show significant upside potential. Gold is well off its all-time highs seen at above the $1,900 per ounce level in September 2011, which makes the current price point cheap on a historical basis.
Use This Approach for Your Retirement Savings Too
Combine a dollar-cost averaging approach with a dip-buying approach to gain better value on monthly purchase points. Investors can also diversify their IRA account with physical gold. Blanchard Gold can help you through three quick and easy steps to add gold bullion to your IRA, which will be held in an IRS-approved custodian bank.Learn more here.