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When should you buy gold?

Close-up of gold bars
Gold can hedge against the rising costs of inflation. Getty Images

More than one in four Americans age 65 and older don't have $500 in savings to cover medical bills, according to a 2021 study. Many older Americans also face additional financial challenges, including a lack of steady income, unforeseen medical bills and rising inflation.

Not surprisingly, some older adults may be considering options like reverse mortgages, cash-out refinancing and other methods to help make ends meet. Buying gold may be one option worth exploring since gold has historically been a solid hedge against inflation. When the cost of living rises, the price of gold tends to go up as well.

If you're interested in this unique form of investing you can easily get started today.

Is now a good time to buy gold? Are there times in your life, or this year, when buying gold is more beneficial? Let's take a closer look at gold as an investment and when you should consider buying it.

When in life should somebody buy gold?

Many investors add gold to their portfolios as a hedge against inflation and a store of value (an asset that retains its purchasing power without depreciation). Gold has also historically been a strong hedge during times of financial crisis. Many experts cite the best time to buy gold as when inflation or a recession is looming since the value of gold tends to rise during these times. 

Research from the World Gold Council states that when the inflation rate outpaces interest rate increases like we're seeing, commodities like gold may outshine some traditional financial assets. When the value of the dollar decreases, people seek out gold and other safe and stable places to put their money to hedge against inflation.

Consider this: The 1970s was a decade of inflation, starting with an average interest rate of 5.84% in 1970 and ending with a whopping average rate of 13.58% in 1980. During the same period, the gold value soared from $35 per share to $850 per share, according to NASDAQ data.

Should young people buy gold?

Traditionally, gold buyers have been older investors, but investing in gold may make sense for younger investors. For example, if you're in your twenties to mid-thirties, you have roughly 30 years before you can retire. With plenty of time to save for retirement, you can risk more than an older person might, so gold may be a more attractive investment option.

Is it better for older people to buy gold?

Despite the appeal of gold as a safe haven, gold may be too risky for retirees who need income-producing investments, according to AARP. Additionally, gold can experience wild fluctuations in value within a short period or limp along for years. Older investors may benefit more from income-generating investments, such as stocks that pay dividends, municipal bonds and real estate investment trusts. On the other hand, some investors may consider a small amount of gold as part of a diversified portfolio and as insurance against a severe market crash, catastrophic economic problems, or even war. 

Not sure if gold is right for you? Explore your options now to see if this investment makes sense.

What time of year should someone buy gold?

According to GoldSilver, an online precious metals dealer, the best times of the year to purchase gold are in early January, March and early April, or from mid-June to early July. These conclusions stem from GoldSilver's analysis of the average performance of gold for every day between 1975 and 2021.

Notably, the research found there are seasons to buy gold before its price rises. On average, gold prices rise during the year's first two months. Gold prices then drop off over the spring and summer before climbing again in the fall. 

If you want to buy before the price of gold increases again then get started today.

Remember, supply and demand determine the price of gold. That means if you're buying during an active buying period, all that competition drives up the price.

Another key finding from GoldSilver is that historically the low for the calendar year is in January, making early January the best time to buy gold.

An alternative strategy to timing the market

Gold prices constantly fluctuate, as seen on any gold price chart. The price rises and falls in response to real-time trading behavior, so pay close attention to market movements online, looking for price dips to time your buy.

If you're looking for the best time to buy gold, understand that timing the market for the lowest price is difficult. A better approach may be to buy gold in small quantities regularly. By portioning out your gold buy, instead of making one large transaction, you might be able to buy at a lower average price to maximize your returns.

Still not sure about when - or if - you should buy gold? An online financial adviser can help steer you in the right direction.

Other options to explore

When considering the pros and cons of buying gold, it helps to understand what your goals are. If it's to diversify your portfolio or to hedge against inflation, then gold makes sense to pursue. But if you're an older American who is looking for income-producing investments or, simply, alternative sources of income, then gold may not beneficial.

For older Americans who need reliable forms of cash, reverse mortgages and cash-out refinancing may be worth looking into. 

reverse mortgage allows homeowners 62 and older to use the equity they have in their home to pay off their existing loan balance. They can then use the remaining amount as they see fit. It needs to be repaid, however, if the homeowner dies or elects to sell the home. Still, it may be worth pursuing if the cash is needed. 

Cash-out refinancing, an alternative to traditional mortgage refinancing, allows you to take out a mortgage loan larger then the one you currently own. You can then use the new loan to pay off the old loan and keep the difference between the two. You can potentially get up to 80% of your home's value.

One note here: the advantages of either option is specific to your individual circumstances, financial health and goals. It helps to speak to a personal financial adviser who can direct you toward the most beneficial option. 

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