{"id":1604,"date":"2011-12-19T20:29:59","date_gmt":"2011-12-19T20:29:59","guid":{"rendered":"http:\/\/www.itmtrading.com\/blog\/?p=1604"},"modified":"2012-03-27T00:03:26","modified_gmt":"2012-03-27T00:03:26","slug":"dollar-cost-averaging-gold","status":"publish","type":"post","link":"https:\/\/www.itmtrading.com\/blog\/dollar-cost-averaging-gold\/","title":{"rendered":"Dollar Cost Averaging Gold"},"content":{"rendered":"

\"\"<\/a>When acquiring gold it is normal to think of it in terms of dollars per ounce.\u00c2\u00a0 Many buyers of gold will make a one time purchase as the price is rising and then wait for the price to go up before selling.\u00c2\u00a0 Very few investors will actually buy when the price is falling as it is scary.\u00c2\u00a0 Fortunately for anyone buying gold over the past 11 years, it has been in a bull market and the previous strategy probably worked.\u00c2\u00a0 Anyone who has invested in stocks, bonds, gold etc knows that prices rise and fall frequently, even if the asset is in a bull market.<\/p>\n

Fortunately there is a way to capitalize on these price fluctuations, and it\u00e2\u20ac\u2122s called dollar cost averaging.\u00c2\u00a0 The way this strategy works is to buy at regular intervals (or irregular intervals) regardless of price.\u00c2\u00a0 This way you can average the price paid over time.<\/p>\n

Here is how it works.\u00c2\u00a0 Let\u00e2\u20ac\u2122s say that you had money set aside in your portfolio for gold and you bought 10oz of bullion gold coins<\/a> in September for $1,900\/oz ($19,000), and then you bought another 10oz of gold November for $1,680\/oz ($16,800).\u00c2\u00a0 Your average cost per ounce is $1,790\/oz.\u00c2\u00a0 If this month you decided to buy another 20oz when gold hit $1,580\/oz ($31,600) then your new average cost would be $1,366\/oz (19k+16.8k+31.6k\/40oz).\u00c2\u00a0 Now you would own 40oz of gold at $1,685\/oz.<\/p>\n

If you would have bought all 40oz at the beginning you would own all of them for $1,900\/oz, but by dollar cost averaging you now own them al at $1,685\/oz.\u00c2\u00a0 If gold only was rising, this strategy would not work very well as you would be paying higher and higher prices.\u00c2\u00a0 But in years where there has been extreme volatility it can bring down the overall cost of your investment, essentially reducing risk.<\/p>\n

It is very difficult to time markets.\u00c2\u00a0 Therefore buying low and selling high can be difficult to do.\u00c2\u00a0 But if you can buy on a weekly, monthly, quarterly basis or even when you notice prices falling, you can reduce your risk over time.<\/p>\n

This strategy is employed all the time by average investors.\u00c2\u00a0 Think of a 401k, the most popular investment vehicle out there.\u00c2\u00a0 401k\u00e2\u20ac\u2122s are contributed to typically every paycheck, this by nature dollar cost averages automatically.<\/p>\n

If you bought gold when it was at $1,900\/oz it would make sense to buy more gold today when it is at $1,592\/oz as it will bring down the overall cost per ounce of your initial purchase.<\/p>\n","protected":false},"excerpt":{"rendered":"

When acquiring gold it is normal to think of it in terms of dollars per ounce.\u00c2\u00a0 Many buyers of gold will […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1207],"tags":[33,35,1421,86,97],"class_list":["post-1604","post","type-post","status-publish","format-standard","hentry","category-blog","tag-bull-market","tag-bullion","tag-gold-prices","tag-invest-in-gold","tag-performance"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/comments?post=1604"}],"version-history":[{"count":1,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1604\/revisions"}],"predecessor-version":[{"id":11070,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1604\/revisions\/11070"}],"wp:attachment":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/media?parent=1604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/categories?post=1604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/tags?post=1604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}