Buying Gold- Investment strategy.

How to buy at lower price.

As I have already explained in one of previous article why gold should be part of portfolio. So here’s I am sharing you a strategy to invest in gold using technical chart. Timing is very important in the market, but it is extremely hard to time the market. Here I have made attempt to time the gold buying.

Chart: Candlestick

Timeframe: Monthly

Indicator: RSI (Relative Strength Index), Period-3

If you are beginner and not familiar with terms like candlestick, RSI, how to plot a chart. Please see the link I have provided above. It becomes difficult to explain this concepts here.

Buy when RSI dips below 20 in the monthly timeframe. I have illustrated this in the Gold futures chart. (Please don’t buy futures without assessing the risk.) Buy Gold ETF or SGB whenever RSI dips below 20. Read about how to buy SGB. Remember, this is an investment, so don’t go all in. We are buying into pullbacks. According to your risk appetite, divide the allocated money when there is a buy signal. If we calculate the CAGR from the 2015 futures price, we get 9.9%. However, if we buy on pullbacks, the CAGR rises to around 11.5%. In the monthly chart, you will get very few opportunities to buy (only three opportunities from 2015). So, if you want to increase more opportunities to buy, use the weekly timeframe and follow the same rule exactly; the result won’t be much different.

I would prefer to buy SGB from secondary market whenever there is buy signal in monthly and weekly timeframe. Read this news on SGB issued in 2016 delivered a massive return of 13.1%. There is not capital gain tax on gold price appreciation if held till maturity.

Always prioritize risk management and proper position sizing to ensure you stay on track towards your goals. While analysis is valuable, it’s important to acknowledge that it may not always yield the expected results. Be prepared to adapt if things don’t go as planned, and maintain a resilient mindset throughout your journey.

Disclaimer: – I am not SEBI registered advisor. Please consult a professional advisor before taking any decision. This is not buy/sell recommendation.