What Is Going On With Silver?
If I could summarize the thoughts of silver investors over the last five days it might be: What is going on with silver? Is the run over? Do I sell? Do I buy more? Do I curl up in the corner and just cry and wait until it's over? If gold and silver were in an insane asylum, gold would be mumbling to itself walking down the halls and silver would be in a straight jacket locked up in a padded room.
In other words, silver can act crazy sometimes...
like a 170% move up in the past eight months or a 60% fall in 2008 or what it is doing now, a 30% correction in five days and counting.
Silver is much easier to kick around than gold.
If silver were a company it would have a market cap of about $35 billion.
Compare this to gold's market cap of about $4 trillion.
Silver has always had a history of volatility.
And this is part of the allure IF the investor has a good understanding AND strategy on how to invest in it.
Notice I didn't say 'trade'.
Trading silver is a fool's game.
But investing in silver can make investors hundreds of thousands of dollars and even millions in a very short time period.
We are STILL in a long-term physical bull market in precious metals.
We are about ten(ish) years into this 18 bull market run.
There are going to be many hair-raising moments during this time period.
One of those times is now.
But know this, understand that the foundation of every country is its currency.
And when the stewards of that country purposely devalue and inflate it away, smart investors know that ultimately one of two things will happen.
1) Silver (and gold) will continue to rise as the only secure place to hold, store and maintain purchasing power; 2) Other countries' central banks will be working their fastest to get their own holdings out of that currency.
Both are happening right now.
Where will silver go? When the bull market has run its course and the Main Street investor finally wakes up - silver will be a three digit metal.
When this whole bull market runs its course silver will be priced anywhere between $150 to $312.
50 an ounce.
And where will gold be? Gold will be anywhere between $5,000 to $10,000 an ounce.
It's hard to understand what these numbers mean.
For 17 years in the late 60's and the 70's the Dow Jones Industrial Average never broke above the 1,000 mark.
At that time, no one said, "I think the Dow will rise 1200% in the next two decades.
" In fact, it did do just that from 1982 to 2000.
The point being, markets move much farther than we can ever imagine.
So when hard working people are paid in a currency backed by a government that prints trillions of its dollars AND runs trillion dollar deficits as far as the eyes can see AND continues to increase its debt by the trillions AND continues to act like the Roman Empire in the third century conquering lands in far off places backed by debt and printed currency while having 15% of its population on food stamps AND has over 50% of its citizens be net-receivers of the government AND perpetuating a crumbling education system one has to wonder why silver isn't at $500 an ounce? What should you do? You should get a system...
a strategy...
an approach that can handle the volatility of these markets so you don't have to decide each day what to do.
Why? Why would you sell some of your silver but not all of it? The algorithm that indicated to hold tight and keep hoarding the metals has been producing a 21% compounded annual gain for the past 10 years.
It's smarter than I am.
But I am smart enough to follow it and not my emotions, because if it was up to my emotions I would have sold all my silver years ago at $14 an ounce.
One thing we need to understand that the human brain is a flawed investment advisor.
The point is that we humans need external systems and strategies to help us do what is best for our money.
Look to see what investment strategy you have.
Take a hard look at your returns.
If you do not like what is staring back at you, you might want to get some outside advice.
Ultimately, if you cannot sleep at night because you are worrying about the markets, your money is in the wrong place.
Bottom line: silver and gold are going to go much higher.
Maybe not this week, but over the next many years they will.
And in five years, when you look back on 2011, the question will be, "How many ounces did you accumulate under $50 an ounce?".
After all, silver is the only investment in the world that is still below its 1980 price.
What could stop this trend? Ben Bernanke could start aggressively raising rates.
The Fed could start selling off assets to shrink its balance sheet.
The government could slash a third of its employees.
The government could cut its military budget by 50%.
The government could start spending only what it collects in taxes.
The economy would have to consistently add 300,000 jobs a month for a year.
Banks could mark their assets to what they are really worth.
Banks could allow all of their shadow inventory of houses to hit the market.
China and India could decide gold and silver are silly to own and return to buying dollars like it was 1999.
There are reasons these things are called bull markets.
Hold on and smile.
Together, we are growing and protecting your wealth, RC Peck, CFP
In other words, silver can act crazy sometimes...
like a 170% move up in the past eight months or a 60% fall in 2008 or what it is doing now, a 30% correction in five days and counting.
Silver is much easier to kick around than gold.
If silver were a company it would have a market cap of about $35 billion.
Compare this to gold's market cap of about $4 trillion.
Silver has always had a history of volatility.
And this is part of the allure IF the investor has a good understanding AND strategy on how to invest in it.
Notice I didn't say 'trade'.
Trading silver is a fool's game.
But investing in silver can make investors hundreds of thousands of dollars and even millions in a very short time period.
We are STILL in a long-term physical bull market in precious metals.
We are about ten(ish) years into this 18 bull market run.
There are going to be many hair-raising moments during this time period.
One of those times is now.
But know this, understand that the foundation of every country is its currency.
And when the stewards of that country purposely devalue and inflate it away, smart investors know that ultimately one of two things will happen.
1) Silver (and gold) will continue to rise as the only secure place to hold, store and maintain purchasing power; 2) Other countries' central banks will be working their fastest to get their own holdings out of that currency.
Both are happening right now.
Where will silver go? When the bull market has run its course and the Main Street investor finally wakes up - silver will be a three digit metal.
When this whole bull market runs its course silver will be priced anywhere between $150 to $312.
50 an ounce.
And where will gold be? Gold will be anywhere between $5,000 to $10,000 an ounce.
It's hard to understand what these numbers mean.
For 17 years in the late 60's and the 70's the Dow Jones Industrial Average never broke above the 1,000 mark.
At that time, no one said, "I think the Dow will rise 1200% in the next two decades.
" In fact, it did do just that from 1982 to 2000.
The point being, markets move much farther than we can ever imagine.
So when hard working people are paid in a currency backed by a government that prints trillions of its dollars AND runs trillion dollar deficits as far as the eyes can see AND continues to increase its debt by the trillions AND continues to act like the Roman Empire in the third century conquering lands in far off places backed by debt and printed currency while having 15% of its population on food stamps AND has over 50% of its citizens be net-receivers of the government AND perpetuating a crumbling education system one has to wonder why silver isn't at $500 an ounce? What should you do? You should get a system...
a strategy...
an approach that can handle the volatility of these markets so you don't have to decide each day what to do.
Why? Why would you sell some of your silver but not all of it? The algorithm that indicated to hold tight and keep hoarding the metals has been producing a 21% compounded annual gain for the past 10 years.
It's smarter than I am.
But I am smart enough to follow it and not my emotions, because if it was up to my emotions I would have sold all my silver years ago at $14 an ounce.
One thing we need to understand that the human brain is a flawed investment advisor.
The point is that we humans need external systems and strategies to help us do what is best for our money.
Look to see what investment strategy you have.
Take a hard look at your returns.
If you do not like what is staring back at you, you might want to get some outside advice.
Ultimately, if you cannot sleep at night because you are worrying about the markets, your money is in the wrong place.
Bottom line: silver and gold are going to go much higher.
Maybe not this week, but over the next many years they will.
And in five years, when you look back on 2011, the question will be, "How many ounces did you accumulate under $50 an ounce?".
After all, silver is the only investment in the world that is still below its 1980 price.
What could stop this trend? Ben Bernanke could start aggressively raising rates.
The Fed could start selling off assets to shrink its balance sheet.
The government could slash a third of its employees.
The government could cut its military budget by 50%.
The government could start spending only what it collects in taxes.
The economy would have to consistently add 300,000 jobs a month for a year.
Banks could mark their assets to what they are really worth.
Banks could allow all of their shadow inventory of houses to hit the market.
China and India could decide gold and silver are silly to own and return to buying dollars like it was 1999.
There are reasons these things are called bull markets.
Hold on and smile.
Together, we are growing and protecting your wealth, RC Peck, CFP
