Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Precious Metal Investors Battered by Gold and Whipped By Silver

Commodities / Gold and Silver 2012 Jan 04, 2012 - 08:56 AM GMT

By: William_Bancroft

Commodities

Best Financial Markets Analysis ArticleAs we enter the New Year only the firmest of gold and silver investors are holding with serene assurance, as the gold and silver prices have been trending down for a couple of months.

Prices have softened again since our latest update on this issue, and thin markets over the festive period allowed relatively low levels of market activity to have an un-naturally significant effect on price direction. These things happen.


Gold has sold off by nearly 13% since it recovered to $1,800/ounce in early November. The mainstream media has been pronouncing the death of the gold bull market, and CNBC even suggested gold be re-rated as a risk asset.

Bumps in the road for gold investors

Considered investors should note that such sell offs have been commonplace on this now 12 year gold bull market. The chart below from Casey Research shows exactly this, and puts recent price declines in context.

All these price corrections have occurred in what has proved a very rewarding trend for gold investors.

It is no wonder that Brian Hunt refers to a chart of gold’s performance over the past 12 years ‘The Chart of the Millennium’.

Silver price corrections are routine

Silver prices have also disappointed precious metal investors. Gold’s more volatile cousin has lost 20% in value from its own early November recovery to $35/ounce.

Such price drops do get us thinking, an investor can never fall idly in love with a position, but are they again part and parcel of silver investing this last 12 years?

Well, thanks to Jeff Clark and Casey Research, the chart below suggests the affirmative.

Plenty of notable investors have made their voices heard beyond what we continue to urge are continuing bull markets for owners of gold and silver bullion.

The silver price has undergone many corrections en route to gains of over 560% over the last ten years.

The fundamentals driving the precious metals are stronger today than ever. As Jeff Clark reminds us:

“Have the reasons for gold’s bull market changed in any material way such that we should consider exiting? Instead of me providing an answer, ask yourself some basic questions: Is the current support for the US Dollar an honest indication of its health? Are the sovereign debt problems in Europe solved? How will the US repay its $15 trillion debt load without some level of currency dilution? Is there likely to be more money printing in the future, or less? Are real interest rates positive yet? Has gold really lost its safe haven status as a result of one bad week?”

But what does this all mean for our two favourite ways to invest in gold and silver?

Averaging into gold and silver investment

Our favoured means of investing in gold and silver for most people, is for individuals to steadily buy a little each month in what would be called ‘averaging’ into a position.

Dollar cost averaging, or for UK investors, pound cost averaging, has been promoted as the best way of building a position for ages. We find the best advocacy of it by Benjamin Graham and David Dodd, the Godfathers of value investing, in their books ‘Security Analysis’ and ‘The Intelligent Investor’.

All this really means is that you invest a certain amount each month and buy gold and/or silver regardless of the current price.

When the gold price is high you buy less, when it is low you get more for your money. As a result your average cost per unit of gold bullion can be lower. The same applies for silver. Averaging into a position reduces your exposure to price volatility.

This form of investing does require the identification of a trend to invest into, but can be a steady and considered method for the average investor.

Gold and silver investors who are steadily building their positions will find that this recent softness in the gold price and silver price means they are currently getting more bang for their buck. They also benefitted in this way at the very end of 2010 and January 2011.

Keep averaging in and enjoy the current weak prices.

Buying dips in the gold price
More speculative or professional investors might chose not to buy each month but instead to try and buy the sell offs in gold and silver prices as they occur.

There have indeed been dips to buy, just look at the last two years for gold.

Could you have picked these moments to buy?

Many have tried and failed.

Buying the dips successfully is much easier imagined than done, as this introduces a proprietary trading element to your investing.

If you are a good enough trader to do this consistently the chances are that this is your job and you stand to make a pretty penny.

The danger with trying to trade gold and silver in this way is that you call it wrong when trying to judge when the bottom is in and a good time to buy is there.

Which investment technique works best

We mention a number of notable analysts and traders in our ‘Research & Analysis’ section, but few of even these market heavyweights can consistently buy the dips effectively.

This is why most commentators advocate steadily accumulating gold and silver bullion, in the knowledge that these tangible assets are the ultimate form of money and stand independent of the creaking financial and monetary systems.

Wishing you a successful 2012.

Regards and good investing,

Ready to buy gold and silver? Get started in minutes…

Will Bancroft

For The Real Asset Company.

http://therealasset.co.uk

Aside from being Co-Founder and COO, Will regularly contributes to The Real Asset Company’s Research Desk. His passion for politics, philosophy and economics led him to develop a keen interest in Austrian economics, gold and silver. Will holds a BSc Econ Politics from Cardiff University.

© 2011 Copyright Will Bancroft - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in