Mar 2024

When is the Best Time to Buy and Sell Gold

By StoneX Bullion

Many new investors are curious about when are the best times for buying and selling gold. If you’re waiting for an opportune moment before you make your gold investment, or you’re wondering how long you should hold onto your assets for, keep reading.

In this article, we look at the best times to buy and sell gold.

The best times to buy gold

Generally, the best times to buy gold are:

Before a market crash or recession
Earlier in the year
Around the daily LBMA fix
When the Dow/Gold ratio is decreasing
At the beginning of a bull market
When nobody else is.

Below, we discuss each of these in more detail.

Before a market crash or recession

It can be tricky to predict market trends, but if you can - buying gold before a market crash or recession is one of the best times to do it. History has shown us that during periods of economic downturn, gold’s price soars. The worse the downturn, the more gold's price will increase.

Knowing this is the easy part. The hard part is actually recognizing when a financial catastrophe is about to take place. If you keep up-to-date with financial publications, you’ll likely hear one side touting signs of an upcoming crisis while another side dismisses it as paranoia. Generally, signs of an impending recession include massive national debt and international economic uncertainty.

As many people say, when it comes to recessions it’s not if, but when. If you can keep your eye on the market and move resources from stocks to precious metals as soon as you spot signs of a downturn, you’ll be investing in gold at just the right time.

Earlier in the year

Generally, the lowest price of gold occurs in the second week of January. From there, gold’s price tends to slowly increase with a slight dip during the summer months. Of course, there are many macroeconomic trends, market fluctuations, and various influences that will affect gold’s price, but if we were to call out a single time of year when gold’s price tends to be at its lowest, it’s January.

Around the daily LBMA fix

Now, this is unlikely to make a massive impact on your gold investment unless you’re putting in a lot of money, but some experts believe that the live gold price tends to increase just before the daily LBMA fixes at 10:30am and 3pm. Others claim to observe a slight dip just before the daily fix happens. Depending on which theory you choose to believe, you may want to buy gold just before the 10:30am or 3pm fixes - or completely outside these times.

Other experts say that gold’s price tends to move when the Asia or US markets open. Considering that major economies, in particular the US, impact the gold market the most, this theory makes sense. If you choose to go with this route, gold prices will likely move the most in the London afternoon - particularly if the US reveals important economic data that day.

See more: What are the Best Gold Bars to Buy?

When the Dow/Gold ratio is decreasing

They say a good time to buy gold is when you’re worried about your financial future, but the best time is when others are worried about theirs too. Going with this statement, you can choose to buy gold depending on the collective ‘risk’ sentiment of all investors by comparing stocks (the Dow Jones) to gold.

The Dow/Gold ratio is a measure that compares the value of the Dow Jones Industrial Average (a stock market index) to the current gold price. This ratio allows you to see how the two assets are performing relative to one another. A decreasing Dow/Gold ratio suggests that gold is outperforming the stock market, indicating a favorable environment for gold investment.

Here’s how to use the Dow/Gold ratio to find a good time to buy gold:

If the Dow/Gold ratio is moving up, it means that stocks are outperforming gold. In this case, risk is high.
When the Dow/Gold ratio is lower, gold is outperforming stocks. This marks a risk-off environment.

The ratio moves up and down in long-term cycles that last around 10 years, with long periods where stocks are outperforming gold. So, what’s the situation like in 2024?

In 2024, the Dow/Gold ratio is about 19. This is higher than the historic mean of 9.7 or median of 5.5. If this trend were to continue, the ratio is likely to revert back to a level below the historic median of 5.5. When that happens, it means gold will be outperforming the stock market.

It’s hard to say when this will happen - or even if this will happen. The ratio might decide to continue rising and reach new all-time highs. However, it’s more than likely that it will revert back to the mean. Here’s the fun part: it’s up to you to decide when you think that will happen. And if you think that’ll be soon, then it’s a good time to buy gold.

At the beginning of a bull market

The best time for any investment is before a bull market, and gold is no exception. Bull markets in gold are usually characterized by rising prices driven by economic uncertainty, inflationary pressures, and geopolitical tensions. Buying gold early on in a bull market allows investors to benefit from the upward momentum and potential price increase that comes with these market conditions. Enter the market early, and you’ll likely capture maximum gains as the bull market unfolds.

See more: How to Invest in Gold as an Inflation Hedge.

The biggest bull market we’ve seen in recent history happened in the 1970s and was followed by a two-decade-long bear market. If we compare the economic environment of that period with today’s, we appear to be in the phase just before the one where historical surges are seen. This tends to be in the final third of a bull market when buying mania increases and prices skyrocket.

Should history be repeating itself (and it often is), then now would be a great time to invest in gold.

When noone else is buying

One strategy for finding the best time to buy gold is to embrace the ‘contrarian approach’. Instead of following what everyone else is doing, buy gold at a time when it’s out of favor with other investors.

Investing during a bull run might be a good idea, but it usually also means that gold’s price is high and premiums are inflated. When gold is in heavy demand, the supply of gold coins and bars might be tighter than usual and premiums can be excessive. For example, during the COVID pandemic and the subsequent economic downturn, gold demand increased and supply struggled to keep up. As a result, we saw premiums on second-hand gold Sovereign coins inflating to crazy heights.

If you choose to follow this strategy, buy at a time when supply is abundant to get the best prices. This could be when gold is unpopular, stagnant, or even decreasing in price. During these times, precious metals dealers tend to offer better prices, making it an opportune time to add gold to your investment portfolio.

Best times to sell gold

So, when should you sell your gold? Generally, the best times to sell gold are:

When the gold/silver ratio is high
When gold's price is high.

We discuss each of these in more detail below.

When gold/silver ratio is high

The gold/silver ratio is a measure that compares the current gold prices relative to the price of silver. More exactly, it measures how many ounces of silver you need to buy one ounce of gold. You can find the gold/silver ratio by dividing the current price of gold per ounce by the current price of silver per ounce.

The gold/silver ratio fluctuates over time depending on factors like supply and demand, economic conditions, geopolitical events, and investor sentiment. Generally, a high ratio suggests that silver is relatively undervalued compared to gold while a low ratio suggests the opposite. Historically, the gold/silver ratio has varied anywhere from 15:1 to 100:1, meaning 100 ounces of silver were worth one ounce of gold.

The best time to sell gold (and buy silver) is when the gold/silver ratio is high. For example, let’s say you sold one ounce of gold when the gold/silver ratio hit its peak at 100:1. This means you could buy 100 ounces of silver with your gold. When the ratio dropped back to 50, you could sell your 100 ounces of silver for two ounces of gold, doubling your initial investment.

Keep reading: Gold vs Silver Investments: Which is Better?

When gold’s price is high

While gold’s price tends to be relatively stable, it can still experience significant price fluctuations in response to the market. For example, in 2011 gold’s price soared to nearly $2,000 before it settled back down to prices close to today’s spot price.

If you experience gold soaring to crazy dollar values, it may be worth selling your investments and re-investing in more gold when the price settles back down. The tricky part is knowing when to hold and when to sell - as it is with all investments.

Tips for buying gold at the right time

To wrap up, here are some final tips to help you find the right time to buy gold:

Buy gold during economic downturns, high inflation, and geopolitical tension: Gold’s ability to act as a hedge against inflation makes it an attractive investment during these times. When other assets tend to decrease in value, gold’s performance increases.
Don't let your emotions rule and make you buy gold for fear of missing out: Gold's price can sometimes experience significant fluctuations, prompting investors to want to buy during a time when its price has just soared. However, buying at a high out of excitement might mean your investment will drop in value as the price corrects. Generally, as with all investments, try not to let greed or fear play a role in you purchases.
Take advantage of Dollar Cost Averaging and buy small amounts of gold regularly, despite its price: Dollar Cost Averaging involves buying small amounts, often. This helps reduce the risk by spreading out your purchases, removes the need to time your purchases with the market, and can smooth out the highs and lows in the average purchase price of your gold investments.
If you want to buy gold, buy it now and don't wait for a moment where you wish you'd bought it: In the end, buying physical gold is mostly about offering security and protection rather than making huge returns. It allows investors to own a physical asset with intrinsic value, unlike paper investments that can lose their value overnight. Buying gold now can ensure you're protected before a 'black swan' event happens and you regret not having made the investment.

Buy gold bullion securely online

The best time to invest in gold is now. If you’re ready to start preserving and growing your wealth, you’re in the right place. As one of Europe’s largest precious metals dealers, we stock a wide range of investment-grade gold bullion bars and collectible coins from the best-known mints in the world.

Of course, holding a diversified portfolio is the best way to grow your wealth so we also sell silver, platinum, and palladium bars and coins. Whether you’re after simple gold bars or drawn to the numismatic value of gold coins, we have options for all investors of every budget. Browse through our range and start investing today.