Dollar-cost averaging (DCA) is the practice of investing a fixed dollar amount at regular intervals, regardless of the current price. Applied to precious metals, it means buying a set amount of gold or silver each month, quarter, or year.
How It Works
| Month | Gold Price | $500 Buys |
|---|---|---|
| January | $2,000/oz | 0.250 oz |
| February | $2,100/oz | 0.238 oz |
| March | $1,900/oz | 0.263 oz |
| April | $2,050/oz | 0.244 oz |
| **Average** | **$2,012.50/oz** | **0.249 oz/month** |
Benefits
- Eliminates the stress of timing the market
- Smooths out price volatility over time
- Creates a disciplined accumulation habit
- Particularly effective in volatile markets
DCA with Precious Metals
Many investors set up regular purchase programs with their dealer, buying a fixed dollar amount monthly. This approach works well with both coins and bars.