Silver Sentiment: Is It (Your) Friend or Foe? / Commodities / Gold & Silver 2019
The gold and silver bull markets have beenon a roller coaster ride for almost two decades. Gold came to life in 2000, withsilver crawling along between $4 and $5 until late 2003, making its first printabove $10 in March 2006.
Thenext two years saw the last part of a 400% up-move for those who "kept thefaith," before silver dropped below $9 during the 2008 global financialmeltdown.
Thenit was up, up and away, as silver rocketed to nearly $50 by April 2011. Bythen, "everyone knew" it was going to $100.
Ablogger announced he had sold his house to buy silver and advised others to dothe same.
Silver's "sandpaper decline," 2011-16.
Holding physical metal was no fun, but some did have the courage to buy more,scale down. Mining stocks were a devastating proposition, with 80%-90% declinesthe norm.
The2016 run up shocked just about everyone... Weeks and weeks of prices moving upalmost in every trading session. Until June, that is. Then a two-year declinewiped out most of those gains and kicked to the curb more than a few long-termsilver stackers who finally threw in the towel.
This writer understands how they – and you –feel.
I've been involved in the silver market since 1972 and have pretty much seen itall. I experienced it dropping from $50 an ounce in January 1980 and waited for22 years to see it begin a new bull run from below $5 an ounce. I remember theeuphoria of the near-$50 print in 2011. And, like everyone else, I've felt thepain since then.
What Now?
I think the most common reason that a plan fails, or doesn't even start, is dueto not carefully working through the OODA Loop – Observe, Orient,Decide, and Act.
Butthere's another powerful factor standing in the way of success for so manyinvestors.
Ithas to do with allowing Sentiment todrive investment decisions. In other words, when the overall market tone isnegative, there is a tendency to either wait until the coast is clear, or untilsome magical "lower price point" arrives on the charts.
Theproblem is that instead, either the price moves up to where you thought itwould – for a bigger risk and lower profit potential – or if it does drop, youdecide to wait for even lower prices. Either way, it almost guarantees that youwon't act.
Thereality is that going against sentiment is a great way tolower risk and increase the odds of a bigger payout down the line.
There's Power in the Rule of Three
Reduce anxiety by mentally dividing your physical metals' holdings into threecomponents: Insurance, Investment, and Speculation.
Sincemetals' prices move counter-cyclically to most other financial categories likethe stock market and bonds, your Insurance portion is meant tobe held indefinitely, helping offset a major decline in another category.
Holdthe Investment portion through what you believe to be themajority of the secular bull run.
Forexample, when silver topped in May 2011, you might have decided to sellthe Speculation component, which may have been purchased at,say, $20... giving you a 100% profit. Then, over the next seven years, youcould have bought it back into declining prices at perceived chart supportlevels.
Thepsychological benefits of such a strategy should not be underestimated. Some ofthose who gave up the ghost during the last year or so may have held ontotheir silver for two or three decades, and never sold an ounce!
Don't quit!
Navy SEAL Marcus Luttrell, of LoneSurvivor fame says,
If you never quit, you'll never know how to... Never, nevergive up. In that last second, you may get the card that you needed.
Sodon't quit on Silver. Run through the OODA Loop again. Rework your Plan. Addanother tranche of bullion. Get some gold too.
Read(or re-read) David Morgan's and my book, Second Chance: How to Make (and Keep) Big Money from the Coming Goldand Silver Shock-Wave.
Andget a copy of Bob Moriarty's new book on Amazon, Basic Investing in Resource Stocks: TheIdiot's Guide. These two titles can take you to – and keep you at – thenext level.
Fishingfor Success, Safety and Profit? Go Against Sentiment!
Iwas cold and wet, casting flies in 60 mph winds for giant Rainbow trout onArgentina's remote Jurassic Lake.
The day before, while releasing a 10 pounder from arock ledge, a wave and high winds had blown me into the lake. The guide somehowgrabbed onto my vest so I could claw my way back up the side, breaking 8fingernails in the process. Talk about negative sentiment!
Thenext and last day of the trip was drawing a blank. Finally, our guide said itwas time to go, and my fishing partner started taking down his rod.
But I made one more cast,and after a hard strike and a wild fight, I released a 15-pound Rainbow – mylargest of the trip. All because I was willing to "push through thedoubt" and take that last cast.
Silveris building up a head of steam for its next big run. India and China's buyingcontinues to increase, even as several big silver miners fight decliningproduction.
Don'tbe fooled by the market's negative sentiment. Stay in the Game, and take one morecast.
Sella little on the way up.
Decide you will claima seat at the Winners' Table in a few years, when this mega-trend has run itscourse. I'll see you there...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.
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