You Should Be Dollar-Cost Averaging Your Gold Purchases

September 3rd, 2015
in gold

by Peter Coyne, Daily Reckoning

"I'd like to buy gold" says one reader, "and my friend told me to 'dollar-cost average.' What does that mean?"

Here's our short answer...

Follow up:

Dollar-cost averaging is a "set it and forget it strategy." You're simply committing to pay the average cost for gold per ounce over time. That way, you don't need to worry about timing the market.

All you have to do is buy a set dollar amount of gold regularly, no matter the price.

You'll be able to buy fewer ounces when the price is high... but you'll be able to buy more when the price is lower. This saves you from overthinking things... and from worrying about whether you're getting a good price.

Here's a fictional example to explain how it works (these gold prices will seem silly):

Suppose you commit to buy $2,000 worth of gold every single month.

In the first month, gold sells for $1,000 so you're able to buy 2 ounces.

What is the Income Play Rich Investors Love? (Hint: It's Tax-Free)

In the second month, gold trades for $500, so you're able to buy 4 ounces.

In the third month, gold sells for $800, so you're able to buy only 2½ ounces.

At the end of three months, you own 8½ ounces at an average cost of $706 per ounce.

By dollar cost averaging, you didn't have to guess which way the price of gold was going or whether you're missing out on a better opportunity.

The strategy smoothed out the price you paid.

We hope this helps,

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved