Since 2024 began, interest in gold investing has increased significantly, driven largely by the metal’s price surging over the last few months. Over the last ten months, gold’s price has risen to new highs while attracting even more investors and breaking prior records. Some analysts forecast that the metal’s price may hit $3000 an ounce before the year ends, based on its current trajectory.
However, it is also important for investors to keep in mind that the price of gold can just as easily start dropping. This month, the precious metal’s price has dropped to $2560.90 an ounce, quite a decrease from its high of $2736.35 an ounce.
Given that fluctuations in price are a part of investing, here are some smart moves investors can make while gold’s price continues to drop.
- Rebalance your portfolio
Market corrections offer investors an opportunity to rebalance and reevaluate their precious metal holdings.
If the price of gold continues to decline, investors can consider diversifying across different types of gold investments, including gold exchange-traded funds, mining stocks, and physical bullion. Each investment vehicle provides different advantages while maintaining a balanced approach that can help optimize the performance of one’s portfolio across varying market conditions.
During this time, investors can also assess their precious metals allocation in their portfolios. One should ensure that the % allocation given to gold aligns with their investment objectives and risk tolerance. The standard allocation for gold in investment portfolios lies between 5% to 15%.
- Implement a dollar-cost averaging strategy
This strategy allows investors to purchase a fixed amount of gold at regular intervals, meaning one can accumulate the precious metal gradually.
By consistently investing in gold, investors can automatically purchase less of the metal when prices are high and vice versa, helping decrease the influence of short-term market fluctuations on one’s investment.
As time goes by, this approach averages out the cost of gold per ounce in one’s portfolio, possibly reducing the overall price used in comparison to lump-sum investing.
- Look into mining stocks at discounted prices
This allows investors to be exposed to the precious metal’s market without directly purchasing physical gold. To start with, investors should explore mining firms that are well-established with solid balance sheets and strong track records.
Focus on firms with mines in regions that are politically stable, have low levels of debt, and use efficient methods of production. This can decrease some of the risks linked to mining like regulatory issues and disruptions in production, which can influence profitability.
It is important to keep in mind though that the recent decline in gold’s price doesn’t automatically signal a long-term trend. Exploring several gold stocks like Torr Metals Inc. (TSX.V: TMET) could give you a practical feel of what it means to select firms in which to invest in order to benefit from gold’s price movements.
NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET
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