By: John Fisher
The most important lesson I have learned…
There is one aspect of the physical gold and silver market that I have witnessed over and over and over again, more than any other. It is applicable to potential customers, and often times existing clients. They are attempting to time their purchases – in essence trying to time the market. New York’s largest mutual fund managers can’t do it, yet I witness it almost every day.
Here is typically what happens:
First, I will be speaking with a prospective customer or an existing client. Depending on their level of experience in the market place, they will have questions regarding pricing, premium, availability, terms, delivery, etc. Then, they will ask me what I think the market will do.
What I have come to learn is that what they are really asking is if I will validate what it is they are hoping the market will do. I will typically respond as I note below. Almost invariably they will share their frustration that they should have bought and didn’t do so earlier at some lower price.
They will usually state an exact dollar price, for instance $33 silver, where they had wanted to buy, knew they should have bought, didn’t and now find themselves at $36 silver. They are hoping I will reassure them that prices will fall back to that level and they should wait to purchase. We end our conversation with them not taking action – choosing instead to wait.
Now, one of two things happens – Fear or Greed.
First, the price moves up, say to $38, and now they are even further away from their original price target. Now, their purchase would not only be more expensive than their ideal $33 but even more expensive than their recent $36 opportunity. Few bite the bullet and buy – fear has set in.
Second scenario, the price does pull back to $33. But now that we are at $33, the prices are probably trending downward in a longer, “hoped for” correction. And, if they wait, they might pick up the silver for $32, or even $28! The problem is that they abandon what they said would be their action point. Why not, prices are declining and will probably continue to decline, right? Greed sets in. As with all bull markets, the trend is up, so the next day or week, the price has now risen to $34 or $35 or $38. Now they have missed the opportunity that was in hand. They have to wait – it will surely come down again only to go through the same gyrations.
All Things Considered – John’s Commentary
My prospect and customer list is riddled with individuals who were definitely going to buy when the price dropped to “x”. Pick any number for “x” and I have a well intentioned investor who was hoping to capture a few dollars on a dip.
Unfortunately, many of them today have little or no position. They wanted to try to buy a little cheaper, and now the market is 25, 50 or 100 percent higher. It is almost impossible for them to convince themselves that they didn’t blow their one and only chance.
Action to take: Precious metals investing axiom: DON’T WATCH THE PRICE! Buy incrementally in modest amounts over time. That is the one, single best action that my most successful investors have taken. Close your eyes and buy modestly and regularly. That is exactly what I do for my personal account.
Quote of the day: “Gold is a treasure, and he who possesses it does all he wishes to in this world, and succeeds in helping souls into paradise.” – Christopher Columbus
