Historically, investors have increased their purchases of precious metal bullion during periods of market instability. In effect, precious metal bullion acts as a safe haven of value that preserves wealth during tumultuous times.
However, recently many market analysts and investors have expressed concern that we could be entering a period of even greater volatility. The Federal Reserve confirms this in its latest Financial Stability Reportwhich cites growing geopolitical tensions that could lead to supply chain disruptions, lower asset prices and significant losses for businesses and investors.
With such potential risks on the horizon, it's no wonder investors are keen to step up their investments in precious metals. In this article, we cover five strategies for buying precious metal bullion in 2024, focusing on how to use precious metals to protect and diversify your portfolio.
Staying informed about the factors that affect the purchase of precious metals prices is crucial, especially geopolitical developments and global economic indicators. Macroeconomic factors that influence the precious metals market include inflation rates, interest rates, industrial demand, and changes in currency values.
Concerns over the outcome of the 2024 presidential race are leading some investors to increase their purchases of gold and silver bullion as they prepare for potential market swings that could occur right after the election.
An anticipated change in interest rates is another factor that has caused precious metals prices to surge in 2024. In a recent speech, Federal Reserve Chairman Jerome Powell said the Fed could lower interest rates three times in 2024, but this is very unlikely to happen given recent inflation reports.
Regardless, the price of gold could rise even higher as yields on bonds and other fixed-income investments decline, making gold a more attractive investment option.
Plan the purchase of precious metals based on market cycles
As 2024 approaches, consider buying precious metals on a dip. As we have seen over the past 100 years, gold prices fluctuateeven in bull markets. Rather than trying to time the market perfectly, consider buying precious metals when prices experience a temporary pullback from recent highs. These retracements represent good buying opportunities for investors.
Look for another buying opportunity from the last week of June to the first week of July. Over the past 30 years, data shows that these two weeks sometimes represent the lowest points of the year and potentially a good time to enter the market.
One of the biggest benefits of investing in precious metals, such as gold and silver bullion, is the ability to diversify your portfolio. An allocation to precious metals in your portfolio can help reduce your exposure to stock market volatility.
Precious metals have other advantages, such as:
- Protection against inflation
- A safe haven investment in the event of war, political crisis or economic downturn
- A tangible asset that can be exchanged for cash if necessary
- An accessible marketplace that makes buying and selling easy
To get a diversified precious metals portfolio, focus on gold and silver bullion. Each asset reacts differently depending on market conditions, so holding both metals not only reduces risk but also provides the investor with additional growth opportunities.
Unless you are an experienced precious metals investor, we suggest avoiding platinum and palladium, both of which can be difficult to trade and carry significant risks.
If you are new to purchasing precious metal bars, you are probably wondering which product is best for you? Ultimately, your choice should be based on your investment goals and liquidity needs.
One of our favorite recommendations at CMI Gold & Silver is physical bullion in the form of gold and silver bars or coins . We prefer these investment-grade precious metals over digital investments (such as ETFs, mutual funds, or mining stocks) because of the tangible wealth protection they offer against rising inflation and falling dollar.
Your decision to invest in precious metal bullion should focus on its strengths as a long-term wealth preservation tool rather than a short-term speculative asset. When you buy precious metal bars, you benefit from protection against inflation and economic uncertainties. To get the most out of this protection, you should use a buy-and-hold strategy rather than trading quickly in the market.
A long-term investment in gold is also a good idea for anyone worried about the value of the US dollar. This is because gold is a historically stable asset that retains its intrinsic value due to the rarity of the metal. Compare this to the US dollar, which has lost 96% of its purchasing power since 1913.
You can use spread of costs in dollars(DCA) as a strategy to reduce volatility risk when purchasing precious metal bullion. The method involves purchasing fixed amounts of precious metal bars on a regular schedule, regardless of the current price.
DCA can lessen the effect of price fluctuations because you buy more precious metal bars when prices are low and fewer when prices are high. DCA is particularly useful for the new investor because it eliminates the worry of timing your purchases perfectly.
Invest in precious metals with CMI Gold & Silver
As we navigate the increasing political and economic uncertainties of 2024, the need to strategically purchase precious metal bullion will become more critical for investors concerned with preserving their wealth. To recap, in this article we have highlighted five key strategies that investors should consider when purchasing precious metal bullion:
- Monitoring trends: Start by monitoring market trends, such as geopolitical developments and economic indicators, that impact bullion prices.
- Diversification: Diversify your portfolio by investing in precious metals like gold and silver, both of which can help you mitigate risk and maximize your growth opportunities.
- Physical bars: Consider physical bullion in the form of bars or coins rather than digital investments to protect your wealth against inflation and a falling dollar.
- Buy and keep: Use a long-term buy-and-hold strategy to purchase precious metal bullion as a wealth preservation tool against inflation and economic uncertainties rather than as short-term speculative trading.
- Dollar Cost Calculation (DCA): Use the dollar-cost averaging method by purchasing precious metal bars regularly in fixed dollars to reduce the risk of volatility and eliminate the need for perfect market timing.
However, if market volatility increases, it may be difficult for investors to know which strategy (or combination of strategies) is best for them. This is why many investors look for a trusted ally to help them with their investment decisions.
With decades of expertise in the sale and purchase of precious metals, CMI Gold & Silver is uniquely equipped to guide you toward a gold and silver investment strategy that fits your financial goals.
With CMI Gold & Silver, you will benefit from:
- A family business with over 50 years of experience in precious metals.
- A team of 100% commission-free brokers who will help you buy the most ounces for the fewest paper dollars. We will never force you to complete a transaction.
- The ability to easily buy, sell and trade all popular forms of gold and silver.
- Selling prices that are among the lowest of all established dealers and purchasing prices that are almost always the highest.
- Free customer training to ensure you make informed buying and selling decisions.
Would you like to find out how CMI Gold & Silver can help you make the precious metals investment that’s right for you? Get started today by signing up for our email/app here.