The Best Gold Investment Strategy: Identify the best months in historical years

It could be time to reevaluate your investments after a year of stock market volatility, high inflation, and other economic and global upheaval. No matter what has happened recently, it is always a good idea to occasionally review your assets to make sure they still meet your goals and that you are not overexposed to risk.

Given that the precious metal is sometimes seen as an inflation hedge, gold is one investment that is worth looking into. If you are thinking about increasing the amount of gold in your portfolio, historical data indicates that there may be particular months of the year that are preferable to others for purchasing gold.

The best months for investing

According to past trends, some months of the year are favorable for investing in gold. A precious metals investment firm called GoldSilver examined daily variations in the price of gold from 1975 until 2022. 

Their data shows that the average rise throughout the first half of the year is merely 0.6%. Yet, the third quarter typically sees a plus 3.6% rise in price while the fourth quarter sees a 1.5% price gain. This information suggests that the first half of the year is a better time to purchase gold because that is when the metal performs the best.

If we further examine the data, we can observe that the price of gold often falls in January before rising in February. The biggest price declines of the year, on average, occur in March (-0.8%), June (-0.2%), and October (-0.3%), according to the site’s study. 

The best times and months to buy gold are therefore typically January, March, early April, mid-June, and early July.

Further considerations

As previously noted, the lowest price occurs in January before a price increase. If the trend continues, it would appear that February is a bad month to invest because that is when gold prices peak. 

Yet, traditionally, prices tend to increase again in the third quarter and as the year draws to a close. To “catch the dip” and get a better deal, you might have to wait until prices start to drop in March.

Timing the gold market, however, is difficult, if not impossible, as with any investment. While keeping in mind that past performance never ensures future performance, looking at these historical tendencies can be helpful.

The ideal time to purchase gold historically has been in late December or early January, right before prices rise in late January and February.

Considering that September typically sees the most annual price increase (1.8%), it is perhaps the worst month to buy in. Typically, the price experiences a small decline in October (-0.3%) before gradually increasing in November and December, respectively, by 0.7% and 1.1%.

It is just a historical trend

The aforementioned patterns are only projections based on historical data that will probably evolve in the future. Similar to the majority of assets, gold prices are continually volatile and alter in response to changes in the market. 

While you can use prior trends as guidance, it may be more valuable to keep an eye on market moves throughout the year, regardless of the month or season.

Consider buying gold in little amounts frequently rather than all at once rather than attempting to time the market. This tactic can result in a reduced average price. 

Remember that financial professionals frequently advise keeping your gold holdings to 5% or 10% of your portfolio. Of course, before investing in gold or other assets, always get advice from your financial advisor.