Gold and Silver Are Still Locked and Loaded... Don't be Out of Ammo / Commodities / Gold & Silver 2020
In military terms, the phrase "locked and loaded"refers to "locking" a magazine or cartridge into a firearm andloading a round into the gun's chamber. A variant is to "lock thesafety" and then load a magazine into the weapon.
The analogy in his essay is that from a technical (chart)standpoint, the price of gold and silver arebuilding energy to the point that they are getting closer and closer tobreaking out of a consolidation pattern and beginning the next impulse in thebullish sequence of higher highs and higher lows.
The pullback this week does not negate the outlook forhigher prices in the coming weeks and months.
All sorts of factors are contributing to being"loaded" into the launch chamber so that when the "hammer"is dropped, the two metals can burst out of the gate like a couple ofthoroughbred racehorses.
How many regular people, let alone most of the expertsgot it right when silver, which was supposed to spend weeks if not monthsworking its way through chart layers from $20 to $22.50, instead cut throughthem like a knife, stopping just below $30?
It doesn't much matter even if gold and silver firstdecline below $1,800 and $22 respectively. Sure, it might be"painful" but what's been happening so far is that when prices drop,physical (and miners') buying volume increases. Yet when prices rise, buyingstill goes up!
You may be "on board" now but get left behindlater.
As prices advance, it will become more and morecompelling to "take a tidy profit" – either with the idea that youmight be able to buy back on a correction, or by selling on a double andgetting what in the trade has become known as "a Casey (or Katusa) FreeRide." The thinking is that once you've done this, only the market's money(representing your remaining position) will be at risk.
During"normal" runs this is often a good idea, because sustained trendstend to be relatively rare, whereas choppy sideways patterns are the norm.
But in a strong, enduring run, which we believe formetals and miners will be the case during at least the next 2-3 years, if yourgoal is to go for a larger portion of the bull's total profit potential, thistactic can end up being self-limiting.
Don't forget this critical strategic planning piece.David Morgan, at The Morgan Report, has performed extensiveresearch on what the end of a secular metals' run looks like.
David determined that as much as 90% of the profitpotential comes during the last 10% in time of the entire bull market! Thisconcept is further supported by a fascinating quote recently from Incrementum.They state that:
"One can see that every (gold and silver) bull marketalways ended with a parabolic upward trend that lasted 9 months on average, andat least doubled the price...presenting us with a potential once in a lifetimeopportunity."
We know there are no guarantees in life, but do you wantto take a chance on missing such an opportunity if things play out that way?
Occam's Razor works for a reason. William of Ockham, atheologian and philosopher from the medieval period posited that, for solving agiven problem, the simplest solution is usually the best. "Cutting"away unnecessary details gives it the "razor" designation.
Acquiring and holding physical gold and silver doesn't have to be complicated.
Just make sure you're buying from a trusted source, staywithin a budget you've decided on beforehand, find a safe place to store yourmetal, and don't tell friends and neighbors.
Complexities can detract from your bottom line and limitthe upside:
Trading the Silver/GoldRatio. In addition to getting hammered by volatility when oneor both metals changes position while you're making a switch, there's the issueof spreads, high premiums and possible tax issues.Selling some core holding for "a tidyprofit." Coming out ahead once or twice may convince youthat you're smarter than the market -but you're not.Buying more after a big rise and gettingshaken out on a decline. David Morgan's dictum that "silverwill either wear you out or scare you out" is never more true than duringtimes like we're seeing today.Not buying "less than is rational." Placinga large order on a breakout day - either up or down - can cost you a lot interms of money and emotions if you're wrong.Getting hooked into purchasing"limited-edition," "proof," graded, or special eventbars/coins.Most of the premium paid at the store goes away as soon as you take delivery.Know your limitations, and almost always stay away from graded coins.Not having a big enough picture, andsuffering from "palladium dysfunction." Think you can call the topat, say $50? Maybe, but what if you're off by another $100 an ounce or it jumps$20 just after you sell out? Are you willing to buy back at that higher price?Should you?Palladium tripled in price from its "top" – andalmost three years later is still miles above the 20 year"resistance" breakout point - who would have guessed? Could silver dothe same thing?
Not having a good exit plan – and beingprepared to follow it. Riding prices all the way up and all theway down may offer a lot of thrills at the time, but looking back, you're notgoing to be happy. Start coming up with some kind of exit strategy that fitsyour temperament, risk tolerance and financial goals.So... are you going to finish working your plan andconsider adding to physical metal holdings during this time of uncertainty and possibleprice retracement, or will you step out onto the financial battlefield laterwith an empty magazine and nothing in the chamber?
David Smith isSenior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com aswell as the LODE Cryptographic Silver Monetary System Project. He hasinvestigated precious metals’ mines and exploration sites in Argentina, Chile,Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sectorobservations withr eaders, the media and North American investment conferenceattendees.
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.
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