Several readers have asked about buying more physical silver or gold since the April decline. My answer today will surprise many and this is why I’ve stepped up my blog posts since the great metal meltdown. It is important for each person to create a level of comfort within PM, regardless the price at any particular spot in time. With that said, let’s dive into the $64,000 question.
QUESTION: I know what you will recommend but asking anyway. I suppose it is recommended that I buy silver and gold with both hands, correct?
TPS Reply: Thanks for the question; I will answer it with one word. “NO”, this is 100% not what I recommend. In your case, like several others I’ve talked with lately, I’m not an advocate of adding more physical metal until you fully understand what is happening and why.
A lower than yesterday price is not reason alone to run out and join the buying frenzy. Personally, I’ve purchased metal since the meltdown but no more than I had planned to buy anyway. Your decision to buy more must find justification from knowledge over recommendation.
Let’s step back a moment and process the PM (precious metal) carnage. Silver, gold, oil, copper, and other commodities rapidly and unsuspectingly declined last week/ first of this week. Not one “expert” warned of such a commodity reversal, not one. This means 99.99% of us singing PM praises missed the boat.
Creditability is at play here, not just mine but everyone else willing to make a stand for PM (each person has their own motivation; some have good intentions and some by profiting from selling PM). In my case, I have an Amazon #1 bestseller (inflation category) that proclaims silver and gold will go higher. It is in my best interest, monetarily, for metal prices to rise, obviously, and I 100% truly believe they will.
But this is not to say the same volatility soon to influence prices higher over the long term won’t push them drastically lower over the short term.
Here is my take on the recent metal meltdown, for what’s worth. I believe someone yelled fire. This was probably a conspired effort to short the paper PM market and the result was a quick price drop that led to panic paper PM selling. It is no secret than most PM investors invest in metal by way of paper; they often trade within the futures market. Once prices dipped to a level most are not comfortable, automatic “stops” triggered even more selling; the rest is history, sort of.
My belief is that metal prices would have dropped lower if not for the bombing in Boston.
Like it or not, the paper market still affects those of us who own physical silver and gold. Until you understand that today’s price offering means nothing, then don’t add to your anxiety by buying more.
We are living in an age of great geopolitical and economic volatility. Politicians and world leaders try to downplay this fact but it is now undeniable. This volatility will lead to historical declines far beyond what we’re living with today, and I’m not just talking about PM. Wait till the DJIA does the same thing. Can you imagine the chaos if today’s DOW suddenly dropped to 7000?
This type of volatility should be expected because this is what happens when a currency based on fiat reaches a breaking point. We cannot print our way into a prosperous economy. We can’t print jobs, we can’t print industry, and we can’t print physical precious metal. Until we accept these economic truths great volatility will become the new normal.
Now, let’s go back to silver and gold as we wrap this up. Soon (nobody truthfully knows when), the same fear that punished PM will reward them. This fear will drive remaining wealth and liquidity into safe havens because, honestly, many folks will have nowhere else to turn. At such time, and not a moment before, metal prices will rapidly rise. Until then I recommend pulling the big boy pants high and tight while understanding we’re in for a wild ride.
If you can wrap your mind around the belief of ounces over the dollar value assigned to metal, then buy more. If not, then please wait. Thank you for following TPS.
QUESTION: How low will metal prices drop before rebounding?
TPS Reply: Thanks for the question. Silver and gold are limitless. They can rise and fall without limits. This means the same metal that could reach $75,000 per ounce could decline to $.75 per ounce. This is why I store most of my wealth in precious metal and not fiat currency.
Fiat currency has no chance of long-term gain; it always becomes the victim of abuse (over creation) and therefor always declines in value. This decline is hard for most to see because the dollar NUMBER PRINTED ON paper dollars remains the same, regardless a loss of buying power.
I don’t worry about a declining PM market like most do. I’m into PMs for the long term and my goal for 2013 is to acquire more silver while I educate the world on why. I won’t change my plans if precious metal rises or falls. This is why it’s called a long-term financial plan.
Hope this helps and feel free to email over any other questions that come up.
DC Carlton is founder of The Prospector Site and author of the Amazon Kindle #1 Bestseller Why Silver and Gold Will Go Higher. If you’re looking for trustworthy PM assistance feel free to contact DC regarding his personalized consulting service. TPS doesn’t sell silver or gold; we represent you, the buyer, looking for affordable precious metal from honest trustworthy sources. Feel free to register here for his free online newsletter that provides precious metal insight rarely mentioned from mainstream media sources.