|
|
Over
the past 10+ years of this gold and silver bull, I’ve seen gold and silver “newbies” repeatedly make the same mistakes. So I’ve decided to write this short article to
help people more clearly understand
gold and silver price behavior. There are 3 solid rules to follow and understand when buying gold and silver bullion and or mining stocks. Because of the lack of understanding of these rules, many investors
unfortunately unload gold
and silver assets at the exact wrong time, at the bottom of long
corrections and right at the beginning
of huge new legs higher.
Back in mid-May, when I wrote that it
was a very low-risk, high-reward point to buy gold and silver assets, virtually no one outside of the very small circle of seasoned gold and silver investors were interested. Now that gold and silver have risen considerably since that point and time, there is more interest than just a few weeks ago, but again, some newbies will make the mistake of buying into gold and silver now, and on any slight pull back, listen to the
doubts disseminated by
the mainstream media, and panic sell
again.
I previously stated on August 16,
2012, the following: “The one thing I can guarantee,
however, is that when gold and silver finally make new highs, and they will, some
of the ferocious moves higher
are absolutely going to stun a lot of people.” And I still stand by this statement. In retrospect, I don’t consider the recent moves in
gold and silver to be
part of the “ferocious moves higher”. That hasn’t
happened yet and we’re still a bit away from the manifestation of
the scenario that will
trigger these moves. Still,
some of the moves higher
in gold and silver that will happen over the next 1-2 years will be so
rapid and shocking that
to most people, they will seem impossible given the psychological damage done by the past 18-month gold
& silver correction and consolidation period. And to those that pay too
much attention to the mainstream
financial press and not enough to the realities of the physical, not paper, gold and silver markets, these violent moves higher will be likewise
shocking.
Because gold and silver have been so suppressed for an extended period of time the consequent defensive actions of
exiting PM mining stocks
and re-purchasing them at solid re-entry
points has left many gold
and silver investors weary and with a negative outlook ahead. Though patience is a virtue when
holding and stacking gold and silver
assets, this virtue is much
more easily vowed than practiced, especially during volatile periods of price behavior upward and downward during an extended consolidation phase. However,
those that are able to see through the volatility games of banksters will see something entirely different – a solid base for gold and silver’s
next move higher to
escape the banking cartel’s
price suppression schemes.
Thus, even though it is
likely for gold and silver
assets to take a breather this week and for a pull back in prices
to happen before the upward trek continues, whether
gold and silver are rising
or falling, every gold
and silver investor needs to understand the top 3 rules when holding gold and silver assets. So here they are:
(1) Volatility Does Not Equal Risk.
Far from it. In fact
most volatility in gold
and silver is deliberately manufactured by
the banking cartel, and is
manufactured in fake paper derivative markets in which prices are set with absolutely zero regard for the actual physical supply and physical demand determinants of these two precious
metals. Furthermore, since banker cartel
manipulation of paper gold and silver
derivatives plays such a big role
in price volatility,
moves in gold and silver are often
just as violent to the upside
as they are to the downside
after long periods of
consolidation, as violent moves higher are often caused by short-covering of panicked hedge funds and banking cartel members that are forced to unwind shorts when the momentum to the upside becomes too great
for them to suppress. Furthermore, after brief periods of very quick rises, another short-term correction triggered by day traders taking profits and/or desperate
banking cartel members
actions in paper markets does not mean the uptrend has reversed back downward again…which bring us to Rule #2.
(2) Lack of Patience is the Greatest Enemy to Buyers of Gold, Silver and PM Mining Shares.
With physical gold and physical silver, bankers deliberately create massive volatility in paper prices at times to discourage the uninitiated from buying physical and to try to goad those
already in to mistakenly sell. With PM mining shares, the greatest mistake investors make with this asset
class is to let the bankster
created artificial volatility in mining shares discourage them into selling
out of all of their shares
right before the next great leg higher.
While it is true that
the vast majority of gold
and silver mining shares in the junior resource sector are junk and inflated pipe dreams, even cashed-up, solid junior mining companies will be taken down in price during bankster raids on paper gold
and paper silver and thus, patience with junior mining companies is essential to coming out on
top.
One of
the top performing gold stocks lost
more than 50% of its
value a few years before
the onset of the Great Depression
before going on a spectacular +1,258% run higher that ended
in1939. Those that were impatient because they were unable
to see the big picture of the importance of gold during
periods of severe economic instability sold out when this stock corrected sharply, locked in losses, and received none of
the spectacular gains. Many
today will repeat this same
exact mistake.
(3) Ignore the White Noise and Disinformation
Anti-Gold/Anti-Silver Campaigns
of the Commercial Banking Industry.
Clients
that allocate money to physical gold and physical silver purchases or PM mining share purchases translates into lost revenues for fee-based managed money commercial banking
and brokerage firms because this normally translates into money that leaves these
firms and never comes back. Thus, the vast majority of commercial banking/brokerage firm employees have great incentive to prevent their clients from purchasing any gold and silver assets of any nature, including even robust PM mining stocks.
Thus, when the most
robust PM mining shares are at super undervalued valuations and represent a low-risk, high-reward set-up, commercial banking/brokerage firm employees are likely to tell you there is ZERO opportunity in PM mining shares. However, when great runs
higher in gold and silver
assets occur, uninformed commercial banking employees are likely to inform you of this situation and goad you into purchases
right before the next steep correction, as was the
case when silver hit $50
an ounce last year. A sharp, rapid and significant correction in the first month
of buying gold and silver
is a lesson likely to keep many “newbies” from ever returning
to the gold and silver markets
in the future.
|
|
