How To Dollar Cost Average Gold ?



For years now, investors and even retail investors have been dollar cost averaging their investments to grow their portfolio. This is a very popular method and can give a strong return on investment. We can commonly see this in TFSA or RRSP portfolios when we set up monthly contribution amounts. Many people like to contribute monthly, others weekly, others daily. It all comes down to what schedule you are comfortable with.


What is Dollar Cost Averaging? 

To put it in simple terms, Dollar cost averaging is a widely used investment strategy that involves regularly contributing a certain amount on a fixed schedule. Let’s say you want to invest in some stock today and you want to put down $10,000. But you don’t have the $10,000 on hand right now or you don’t feel comfortable putting down $10,000 in one go. Instead you develop a plan where you invest that $10,000 over a certain period of time but on a set schedule. It doesn’t necessarily have to be a set amount, maybe you just want to hedge against inflation and put a certain amount of your salary away towards these investments.


So how can I Dollar Cost Average Gold? 

There are a few methods you can use when Dollar Cost Averaging Gold. First method could be through investing in Gold ETFs or Stocks. You won’t hold any physical Gold, just ownership of the ETFs and Stock on the companies that actually hold Gold. This can be a popular way to Dollar Cost Average Gold as it is relatively cheaper to do so. However, be cautious that you’re not investing directly into Gold but rather investing into a company. So if something were to happen financially with the company, your investment could be at a loss.


The second method which we believe to be safer, is Dollar Cost Averaging in physical Gold bullion. This can be done through developing a plan to purchase Gold bullion perhaps every week, month, quarter or even daily. Again, it all depends on what you feel comfortable with and how much you want to invest. Investing in physical Gold is safer in the sense that you are actually investing directly into the metal and no other counterparts. 

We wrote a blog comparing these two investments, check it out here!


How Can I Dollar Cost Average Physical Gold? 

At this point you probably have decided you would feel more comfortable by holding physical Gold instead of paper Gold. So what’s next is deciding how often you would like to purchase physical Gold as well as in what quantities. Let’s go back to the $10,000 example. You would

like to put that $10,000 towards purchasing physical Gold this year, but you don’t put the full amount down all at once. To dollar cost average, you have decided that you want to contribute to your portfolio on a monthly basis. From looking at prices you have noticed that a 10 gram Gold bar would suit your investment strategy best. 

At the time of writing this, a 10 gram Gold bar is around $791 (CAD). With prices fluctuating, you may be able to purchase the same bar for a bit less or a bit more but relatively around the same amount. So in a year, you would have invested the full $10,000 or possibly less! 

If this sort of plan is something you feel like you would like to do to hedge against inflation and hold physical Gold, then check out our website to view the options we have for your next investment! We have a wide range of precious metals products for you to choose from. Maybe one month you don’t want to buy Gold but want to buy Silver or Platinum, we have got you covered. Check out today!