Best time to buy gold

Gold and silver suffered a spectacular fall on Friday.

Silver, especially, suffered a one day fall in price of 15%.

That is one of the biggest silver price crash in history, since the price fell from more than  $40 per ounce of silver to just $30.

While the price of gold fell by more than $100, the overall percentage is still less than 10%.

Is now a good time to buy gold?  Is now a good time to buy silver?

Before we talk about the best time to buy either, let us examine the reasons for the market crash.

There are basically two factors that come into play.

First, the change in margin requirement.

CME group, the owner of COMEX trading platform, raises margin requirements for precious metal trading and bond.

The performance margin for COMEX gold future increases as much as 21%, and the performance margin for COMEX silver future increases by  15%.

This is not the first time that the decision of CME group has affected commodity pricing.

It comes at a time when the market sentiment is at the turning point.

That brings us to the second reason for the market crash in precious metals.

The second reason is that of rumors spooking the investment world.  The rumors talk of hedge funds moving away from gold and silver to cover losses for other investments.

This is partly based on the fact that many fund managers do not consider gold and silver as safe haven anymore.

The price per Troy ounce of either precious metal has increased too fast and too much.  The hedge fund managers have made a good profits if they had held the precious metals for more than two years.

It makes sense for them to liquidate some of the assets to realize profits.

The combined factor of fear, and margin requirement, brought about panic selling all over the world.

Based on these two factors, do you think now is the best time to buy gold or silver?

If you have the fund for investment, it is indeed a good time, if not a best time to start buying.

Better use just a third of your available funds for investment.

The market is still not stable.  People are fearful of uncertainty.  The roller coaster ride in stock market and commodities is a good reflection of the fear.

The main reason to buy now is that the factors driving gold and silver to record high are still valid.

That means the economy is not in good shape now.  The risk of US government printing more money to devalue the currency is still there.

The inflation is still eating up the buying power of people.

In short, as long as the economy is not doing well, and the US dollar will not strengthen, the price of gold and silver will still go up.

The current market crash may last a day or two.  It may last a week or more.  It may last for a month.

The only certainty is that gold and silver price will go up in the long run.  The only time to stop buying and start selling is upon economic recovery.

That means when you see formerly unemployed people gaining employment, and look like they have gotten good jobs, that is the time when gold and silver will fall for good.  That is the true market crash.