I have been in the gold coin industry for decades. I started off helping people with old coins figure out what they had, then I learned about authentication and grading and I even worked in the wholesale and retail sides of the gold coin market for awhile. In all my years working with gold coins, one thing has always struck me as odd. More people seem to buy gold coins, and the volume of their purchases increases, when gold coin prices are going up.
Let me begin by stating that I understand why this happens. Gold coin values rise, the media writes positive articles about precious metals, investors read the news and decide to buy gold. However, savvy investors use a strategy called “dollar cost averaging” to save money on investments that they have already decided are wise.
For example, let’s say that you are an investor who is fed up with the incessant printing of money by the Federal Reserve, and you feel like gold could be confiscated to keep our economy from crashing, just like in 1933. You want something safe, and you’d like to turn a profit in 10-15 years down the road. Most likely, you are going to invest in a common-date certified gold coin like a PCGS-certified Saint Gaudens Double Eagle. You want to put $100,000 into the gold market. With a dollar cost averaging strategy, you might put $10,000-$20,000 into the market at a time, and then increase your position each time gold drops. This way, the average cost of the entire position is less, and you have avoided getting emotional about an investment you already decided was best for you.
Dollar cost averaging works with any investment, and with the high level of fluctuation common in the gold coin market today, it could pay handsomely to use this strategy in your cold coin investing.