Archive for February, 2017

February 23, 2017

The Best Time to Buy Gold and Silver in 2017 is…

https://goldsilver.com/blog/the-best-time-to-buy-gold-and-silver-in-2017-is-in-2016/

Can’t decide if you should buy gold now or wait?

We all want the best price we can get on our gold and silver purchases. It’s only natural, and any good consumer will consider the timing of their buying decisions. It’s a question almost every investor asks: am I getting a good price now, or will I get a better price in the future?
Well, history has an empirical answer for you.

I looked at the historical data to see if I could identify the best time of year to buy. I suspected January would be best, but what I found was interesting.

We calculated the average gain and loss for every day of the year since 1975 (when it was legal to buy gold again in the US) and put it in a chart. Here’s what it looks like.
You can see that on average, there’s a nice surge the first couple months of the year. The price then cools down through the spring and summer, and takes off again in the fall.goldchart1

So, the lowest price of the year—and thus the best time to buy—is the second week of January. It’s also good in mid-March and early April. The second week of July is probably the “last train out” before gold takes off in fall.

What’s also interesting is that the gold price, on average, does not historically revisit its prior year low. The low of the year is indeed in January—but it’s the low of that year, not the prior year.

So your best bet is to buy gold at these low points during the year, and also to not wait for the following year.

Obviously there were years where the gold price did fall. But there were also years it soared. Smoothing out all those surges and corrections and manias and selloffs, investors are, on average, better off buying the prior year than waiting for a downturn the following year. Prices are indeed seasonally weaker in the summer, but they still don’t touch the prior year’s price. Meaning, you are likely to pay more even then than during an upswing in the current year.

The conclusion is simple:

• On average, you’ll likely get the best price on gold in early January, mid-March, early April, and early July. You’ll also want to buy this year and not wait for next year.

We ran the same data for silver and here’s what we found.
It’s easy to see silver’s higher volatility. And that its annual low is clearly in early January. About the only other good time to buy, on average, is when it dips in June, though you’ll likely pay a higher price then than January.

What also sticks out is that historically, silver doesn’t come close to touching the prior year’s price.silver-chart2

As with gold, there were certainly years where the silver price fell below where it started. But the historical data says that on average, it rises more often in the following year than it falls.

You are thus better off buying silver now than waiting for a dip the following year. If you wait, history says you will likely pay a higher price.

The conclusion here is obvious. While there are always corrections along the way…

• On average, you will likely get your best price on silver in early January, and in June. And like gold, you want to buy this year rather than waiting till next year.

Of course, any correction is a buying opportunity if you don’t have enough bullion to offset an economic or monetary crisis. In that type of environment—and one we think is inevitable—physical gold and silver are one of the few assets that will prevail.

Mike and I and everyone else at GoldSilver continue to buy our gold and silver regularly. We’re not waiting. We’ll buy more if it falls, but the point is, we’re prepared for the future now.

I hope you are, too. If not, I encourage you to buy physical gold and physical silver for you and your family on any dip. And now you know when those dips are likely to occur.

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February 1, 2017

Not chump change: rare coins could outperform as investments this year

http://www.marketwatch.com/story/not-chump-change-rare-coins-could-outperform-as-investments-this-year-2017-01-31

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Coins typically have a higher correlation with inflation than other asset classes. Coin collecting isn’t just for nerds anymore.

With inflation expected to rise this year, and a concurrently strengthening U.S. dollar seen eating into any gains that might be made by pure gold, investors may want to consider a niche asset class as a protection against market turbulence: rare coins.

While such a strategy may seem akin to putting your money in baseball cards, coins have long been used as an investment, and one that could be particularly beneficial in the current economic climate.

“Rare coins deliver a higher annual return than gold, and they provide an excellent hedge against inflation,” said David Beahm, chief executive officer of Blanchard and Company, a rare coin and precious metal investment firm. “We believe that with President Trump and some of the policies he’s set forth, that we should see inflation, possibly double-digit inflation, in the very near future.”

Trump has proposed massive corporate tax cuts and fiscal stimulus, both of which are expected to stoke inflation this year. That could increase the appeal of gold, which has traditionally been viewed as an inflation hedge.

Invest-able coins are defined as ones minted between the late 1700s and 1933, when gold ceased to be an ingredient in their construction. Prices are determined both by their scarcity and their condition, and they’re scored on a scale of zero to 70, with Blanchard focusing on the ones graded above 50.

Between 1979 and 2014, the most recent year for which data is available, coins with a minimum score of 65 posted an average annual return of 11.9%, according to a study by Penn State University. That’s near the average annual return of 13% posted by equities SPX, -0.09% and more than twice the 5.5% average annual gain of gold bullion GCZ7, -0.27% Coins with a lower score, between 63 and 65, had an average annual return of 10.1%.

Coins posted a higher correlation with inflation than other asset classes, according to the study, with the relationship about twice as strong as for gold. The correlation between coins and inflation is 0.58 (perfect correlation would be 1.0). It’s 0.27 for gold bullion and 0.15 for stocks. The higher the correlation, the better it works as a hedge.

“The rarity factor builds on the actual value of the gold, increasing it’s value,” Beahm said.

He added that the more common rare coins, such as Morgan dollars, could be had for as little as $20, while the scarcest ones, including Brasher Doubloons, the first gold coin minted for the U.S., have sold for more than $7 million.

“There’s a wide range, so this is really for everyone,” he said.