Investing in precious metals depends above all on the investor's profile, investment horizon and risk tolerance. Three categories stand out: speculative, sensitive to timing; far-sighted, attentive to downturns; and patrimonial, focused on long-term holdings. Although gold sometimes experiences sharp corrections, these are statistically less frequent than missed upswings due to excessive expectations. Time remains the main risk-reducing factor, rather than the search for a perfect entry point.

Should you invest in precious metals now, or wait for a more favourable entry point? And, if so, how can you optimize your investment?

Many investors are wondering whether they should invest in precious metals at this early stage. The steady rise in the price of gold over the last few years, and more generally over the last decade, is fuelling legitimate expectations.

Against this backdrop, one question frequently comes up: should you invest in precious metals now, or wait for a more favorable entry point? And, if so, how can you optimize your investment?

1) What's your investor profile?

The importance of the right time to buy precious metals depends above all on the investor's profile. This profile is based on several key parameters:

• The reason for the investment, whether it's speculative, a future project, preparation for retirement, or overall wealth diversification.
• The investment horizon, which can range from a few months to several years, or even be indefinite.
• The level of risk tolerated, often linked to the structure of the financial assets. This risk is generally better accepted when the investor already holds diversified financial assets.

2) Strategies to suit your profile

There are three main categories of investor.

• Speculative investors look for short- to medium-term gains, over a few months or a few years at most. Their main objective is performance, often based on market expectations.
• Forward-looking investors have a longer-term horizon, generally ranging from a few years to ten to twenty years. They invest in precious metals to diversify their wealth, prepare for a project or retirement, or hedge against certain economic risks.
• Religious investors adopt an indeterminate, often very long, time horizon. Their approach is patrimonial. Gold is perceived as an asset for the transmission or long-term protection of capital.

Each profile responds to a different logic. The speculative investor is particularly sensitive to the moment of purchase and current events, while the religious investor attaches little or no importance to them. The longer the holding horizon, the more the impact of the entry price tends to diminish. The probability of a lasting loss diminishes exponentially over time. The strategy of each profile must therefore be adapted accordingly.

• Speculative investors keep a close eye on the market. They may legitimately defer their investment if they believe that a more favorable entry point will present itself in the short term.
• The far-sighted investor is already less dependent on timing. They may, however, adjust their purchases according to price levels, for example by strengthening their positions more significantly during downturns.
• Finally, the believer is almost entirely insensitive to the moment of purchase. As their holding horizon is very long, or even indefinite, their priority is not the entry price, but long-term holding.

This typology reminds us that, in precious metals, time remains the main risk-reducing factor, far more so than the search for a perfect entry point. So there is a cost to delaying your purchase of precious metals.

Finally, every investor has a preference for a particular investment medium: coins, ingots and bullion, or numismatic collectibles. Each format responds to a specific rationale and corresponds to a clearly identified investor profile, depending on the holding horizon, the liquidity sought and the wealth objective pursued.

3) Some statistics

The sharpest correction in the price of gold since 2000 was seen between 2011 and 2015, when the price fell by over 45%. For an investor who bought at the peak in 2011, it took until the new record high in the summer of 2020 to regain his initial investment level. This episode clearly illustrates the occasional volatility of the gold market, even for an asset with a reputation for defensiveness.

However, such sharp corrections are relatively rare. Most gold price consolidations do not last more than a few months. When declines are long-lasting, they often reflect gold's ability to follow long-term trends, sometimes spread over several years.

Most consolidation phases are short-lived, generally lasting less than six months, and moderate in scale. This observation leads to an important observation for investors: the risk of missing an uptrend is statistically more frequent than that of avoiding a significant downtrend.

However, this reasoning needs to be qualified. The main issue is the potential scale of the correction when the investment is made at a market peak. In some cases, the downturn may be so severe as to require a long holding period before equilibrium is restored.

Ultimately, the trade-off between waiting and investing depends on the consistency between the chosen investment medium, the investment horizon and the investor's ability to absorb temporary phases of volatility.

This preference for delaying or not delaying investment can be illustrated by the scenario presented above. The greater the concern about loss, the more rational it is for the investor to wait. However, this caution comes at the price of a generally diminished potential gain. Investors therefore need to know their profile in order to situate themselves in this scenario.

Conclusion

Should you wait to invest in precious metals?

This seemingly theoretical question is in fact based on clearly identified factors. Every investor needs to be able to clarify his or her preferences in terms of the reason for investing, the investment horizon and the level of risk he or she is prepared to accept.

The difficulty, for many investors, lies in being able to position themselves clearly: am I a speculative investor, a far-sighted investor or a believer? Yet this distinction is essential.

Delaying an investment in gold can prove costly in the long term, as the investor exposes himself to the risk of missing out on bullish phases. On the other hand, this approach reduces the risk associated with a lasting decline in precious metals.

However, this reasoning loses its relevance as the investment horizon extends beyond a few years, and gold is considered as a long-term asset.