Should you buy gold and silver in one go or in steady amounts? Here is how each works, a worked example and the honest answer on which one wins.
Short answer: neither always wins. A lump sum buys at one price, so it does best if prices then rise. Dollar-cost averaging buys a fixed amount each month, so it spreads your risk and gives you more metal in cheaper months. Choose based on how you handle risk and when you have the money.
With a lump sum you buy everything at once at that day's price. With dollar-cost averaging you buy the same amount on a schedule, whatever the price.
Suppose you have 1,200 to spend, and the spot price per ounce is 2,000, 1,900, 1,800, 2,000, 2,200 and 2,100 over six months. Buying 200 each month buys more ounces in the cheaper months, and your average spot price comes to about 1,992, slightly below the simple average of 2,000. Buying all 1,200 in the first month at 2,000 would have given you a price of 2,000. In this run DCA was a little better, but if prices had only risen, the lump sum would have won.
Enter your own prices in the DCA calculator and compare. The result depends entirely on the path prices take, which nobody knows in advance.
Many small purchases can carry higher premiums and shipping per ounce than one large purchase. Include them when you compare, using your average cost.
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