Investors who got accustomed to a consistently rising gold price in recent years have had to readjust slightly in recent weeks as the price of the metal has declined. After surpassing the $3,400 price per ounce record in April, just weeks after breaking through the $3,000 price milestone in March, gold on May 19 was listed at $3,238.88. While not dramatically lower than what it had been, that marks an almost 6% decline since late April. And it opens up new opportunities and, perhaps, closes off others for investors and beginners considering gold now.

In this climate, then, and understanding the broad, long-term dynamics of gold investing, it helps to know what to do when gold's price drops and, perhaps more importantly, what not to do when this happens. While this can be specific to the investor in question, generally speaking, there are specific tactics to take into account. Below, we'll detail six of them.

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What to do (and not to do) when gold's price drops

Here are six things gold investors should consider doing (and avoiding) when the price of the metal declines, as it has this May:

Do: Re-evaluate your gold holdings

A decline in the price of gold could impact your wider portfolio. While the amount of gold is typically recommended to be kept at a 10% limit, a decline in the price could impact that threshold, so use the price decline to re-evaluate your gold holdings. You may want to use this time to buy more or, if worried about broader trends, sell off a portion. Only you will know what's right for your investment goals. Use this time, then, to do a closer evaluation.

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Don't: Panic

Remember that the recent gold price decline is minor, so there's no need to panic. And, more importantly, remember the historic trends in gold prices, specifically that a decline in the price usually precedes a rise, perhaps to a significant degree. Avoid making any hasty, panic-induced decisions for your gold investments. Instead, take a broader look and evaluate ways in which you can potentially exploit the price decline in your favor.

Do: Consider buying more

A lower entry price point offers both current and new investors a rare opportunity to buy below cost. Consider buying more, then, to take advantage while the opportunity is available. Several factors that have recently driven gold's price down could easily reverse course and make buying the metal more costly. Don't wait for that to happen, then. Consider buying more now instead.

Don't: Forget gold's long-term benefits

Constant discussion around gold's price developments can understandably cloud the judgment of even the more seasoned gold investors. In times like these, the long-term benefits of gold mustn't be forgotten. Remember that gold is less reliable as an income producer and more dependent as an income protector, used ideally to hedge against inflation and diversify portfolios thanks to a steady value in turbulent times. That's no different now, so don't invest as if that's changed, even with the price a bit lower.

Do: Explore alternative types

There may have been a gold type that you were avoiding when the price was high, like 1-ounce gold bars or coins, that you feel more comfortable pursuing now that the price is a bit lower. On the other hand, gold types that you bought just to get involved in the gold market, like fractional gold coins, could be less advantageous if you can buy in at a higher weight now. It's important, then, to explore alternative gold investment types besides the ones you're invested in currently during this price decline.

Don't: Rush to sell

In any market, when the price of an investment declines, some investors may be inclined to rush to sell. But that's often a mistake, particularly when it comes to gold. As mentioned, gold price declines are natural and somewhat predictable as they often come right before a price surge and, potentially, a new record price high. Avoid the temptation to rush to sell now, as the next price increase and, thus, profit-earning opportunity is likely soon to come, perhaps even earlier than you'd expect.

The bottom line

While the above dos and don'ts can help gold investors navigate this drop in gold prices more carefully, it's not exhaustive and the optimal approach will be largely dictated by your specific investor profile and your short and long-term goals. Consider the above carefully, however, as it can better inform your approach both now and to gold investing over time.

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