Photo Courtesy: Fabio Venni
The best time to sell gold is when the price of bullion peaks, but who can identify this in real time with a high degree of certainty? Nobody, of course. Gold prices fluctuate on a constant basis, so nobody can pinpoint the most propitious time to sell gold as it happens (if they could, they perhaps ought to be investing their time and money in the lottery).
In order to buy or sell gold, the gold market price must be considered very carefully if investors are to maximize their profits. Buying too high and selling too low are cardinal sins in the world of gold investment, not the least because major price fluctuations are usually gradual. No one should be forced into a position where he or she feels that the only appropriate action is to lose money on a gold investment, but jumping ship if necessary ought to be kept in mind at all times.
Minimum Sale Price
It is perhaps not especially helpful to view the buying and selling of gold in traditional terms. Stocks and shares are altogether different and hedge-fund managers specializing in high-profile portfolios will seek maximum short-term gains at relatively high risk. Gold investment does not function in the same way at all.
Gold is more of a long-haul investment commodity. Prices can spike, as they did between 2006 and 2011, but most dips occur gradually and the overall trend tends to be one of sustained growth. So an investment in gold is an investment in the future. If investors need short-term returns, they will have to face up to the high-risk nature of stocks and shares.
A wise investor can make huge returns on gold investment, but bullion needs time to mature. In 1970, gold could be snapped up at an affordable £14 or so an ounce. In 2011, the price topped £1,100. Obviously an investment lasting forty years is somewhat unusual, but the potential returns during this period were truly enormous.
So, when might a long-term gold investor have chosen to sell?
When prices hit £265 in January 1980?
£318 in February 1983? or £360 in May 2006?
Perhaps £1,089 in September 2011?
The Right Time To Sell Gold
The best time to sell is always at the peak (in this case, September 2011), but not all investors have the patience or financial security to wait forty years. To identify the right time to sell gold, investors must first decide whether they are ready to purchase at a certain price. Buying bullion at £1,089 (the price has since dropped to just above £1,000) is hardly sensible if the investor plans to sell within a few months or years. Gold must be purchased at the right price and sold either as it is dropping from a spike – but crucially before the investor’s minimum sale price – or at some point in the distant future when inflation and other economic factors have driven prices up even further.
If you’re considering a position in the gold market then you may want to trade via a spread betting platform. Daniel Whitman authored this article and also runs a website comparing accessible spread trading companies and their respective offers.