5 Smart Strategies to Take Advantage of Falling Gold Prices

Over the last few months, investors have been flocking to the gold market to try and capitalize on the precious metal’s seemingly endless uptick in price. The price of gold began climbing earlier this year but went into overdrive in March, with the price of gold hitting its first record of the year on March 8 — prompting more investors to buy in. And, that trend continued into April, with gold’s price ascending to another high on April 1 before outperforming the prior record once again in late May. 

The upward price trajectory for gold didn’t stop there, though. On July 18, the price of gold climbed to over $2,472 per ounce, its latest record high. However, the price of gold has moderated somewhat since that point, dropping from nearly $2,500 an ounce to where it sits today at $2,371.45 per ounce (as of July 26, 2024). That’s a decline of about 4% in just over a week.

And, with the cooling inflation rate and the upcoming Federal Reserve meeting, gold prices could continue this downward trend, at least over the short term. That’s not necessarily a bad thing, though. While some investors may be wary of today’s falling gold prices, this could be a good entry point. 

Find out more about your gold investing options and get started here.

Gold prices are falling. 5 smart moves to make now

Here are a few moves to consider in the current gold market climate.

Seize the opportunity to acquire physical gold

One of the most significant moves to make during a price downturn is purchasing physical gold. As prices fall, the cost of entry for physical gold ownership decreases, presenting an opportunity to acquire tangible assets at a discount. This strategy is particularly impactful for investors who believe in gold’s long-term value as a hedge against inflation and economic uncertainty.

While this approach requires more hands-on management than some alternatives, it also offers direct ownership and control over your investment. So, you may want to consider buying gold coins or bars — but make sure you do so from reputable dealers while ensuring proper authentication. And, storage and insurance costs should be factored into your investment strategy, as these can impact your overall returns.

Learn about the benefits that gold can offer to your investment portfolio.

Open a gold IRA for a tax-advantaged approach

Opening a gold individual retirement account (IRA) is another strategic move you may want to make during this price dip. These specialized accounts allow you to hold physical gold and other precious metals as part of your retirement portfolio, combining the benefits of gold ownership with tax advantages.

By funding a gold IRA when prices are low, you can potentially benefit from long-term appreciation while enjoying tax-deferred or tax-free growth. This approach is particularly impactful for those looking to diversify their retirement savings and protect against potential currency devaluation or economic instability.

Focus on a dollar-cost averaging strategy

If you’re wary of trying to time the gold market bottom, dollar-cost averaging can be a prudent and impactful strategy. This approach involves regularly investing a fixed amount in gold, regardless of its price. By spreading purchases over time, you can potentially lower your average gold cost per ounce and mitigate the risks associated with market volatility.

This matters right now because dollar-cost averaging is especially effective during periods of falling prices, as it allows you to accumulate more gold for the same dollar amount as prices decline. This strategy also helps remove any emotional decision-making from the investment process.

Consider gold mining stocks and gold ETFs

If you would prefer exposure to gold without the complexities of physical ownership, investing in gold mining stocks and gold-focused exchange-traded funds (ETFs) can be a highly impactful move right now. That’s because, during price slumps, gold mining company stocks often experience even steeper declines than gold itself, potentially offering greater upside when the market recovers.

Gold ETFs, on the other hand, provide a more diversified approach to gold investing, tracking the price of gold or a basket of gold-related securities. A big benefit of these investing instruments is that they offer the liquidity of stocks combined with exposure to gold prices. And, this strategy allows you to benefit from gold price movements without the need for storage or insurance.

Diversify your portfolio within the precious metal sector

Diversifying into silver, platinum or palladium can also be a smart move during a gold price slump. After all, these metals often have different price drivers and industrial applications, providing a hedge against gold-specific market fluctuations.

By spreading your investments across various precious metals, you can potentially reduce risk while still maintaining exposure to the sector. Other metals may also be undervalued relative to gold during a gold price slump, offering the potential for outperformance as market conditions shift.

The bottom line

Falling gold prices may seem like a sign to avoid the gold market, but these types of price dips can present significant opportunities — especially for more strategic investors. By focusing on the strategies outlined above and maintaining a long-term perspective, you may be able to turn the current gold price slump into a golden opportunity for portfolio growth and diversification. Just make sure to do your homework first and ensure that any steps you’re taking fully align with both your investment goals and your needs.