As anyone who follows the markets knows Gold and Silver have had a horrible week. Silver is down over 25% in 2 days. Volatility like that is hard to stomach, and can be crippling mentally. But to be succesful in life and investing you must remain psychologically vigilant. The fundamental reasons for owning precious metals have not changed. Here are several quick reasons why gold and silver are crucial to have. 1) All fiat currencies eventually go to zero. No exceptions. 2) Since all currencies are fiat, it is up to you to become your own central bank, putting your personal finances on the gold standard and backing whichever percentage of your net worth in precious metals as you deem neccesary. If you do not do this you are 100% at the mercy of helicopter Ben. 3) There is no conventional way out of our debt crisis, it is a statistical impossibility to ever repay what we owe without devaluing the currency, just look at the debt clock. Being a succesful investor requires mental fortitude, your resolve cannot be shaken and you cannot allow your emotions to dictate actions. If you have done your homework as you should, and understand why you bought precious metals in the first place, than the rest of this is noise and you must acknowledge it as such. Investing in things like gold and silver are very different than equities. For example if you bought into a company which went down 25% in 2 days, it is probably a sign of major internal problems. However if precious metals move down in the same time it must be seen as a buying oppurtunity. The pshycological problem stems from a fundamental misdirection, which is pricing gold in dollars and not dollars in gold. It is the dollars becoming worth less in your pocket not gold gaining value and vice versa as we have seen this week where money comes into the USD, dollar rallies and as such things priced in dollars go down. This needs to be seen for what it is, an anomaly as this chart proves.
If you go to the grocery store and all the food was suddenly 25% off would you walk away, and say “dang I shouldn’t have bought food last week” or “something is up, I’m going to wait till I see other people buying food” or would you say, “I was just paying full price for this food last week and now it is 25% off, I’m loading my cart.” I have been investing in precious metals long enough to know that it doesn’t matter if you buy silver at 30 and next week it is at 25, if several years from now it is 75. I remember buying silver a few years ago at 14 bucks, it got to the high teens then low 20’s and I was on the sidelines waiting for a pullback, which came thankfully, but the point is at this point it doesn’t matter one bit if I had bought at 18 or 20 or 22, those prices are a steal now. And as I said if you understand why you are doing it than you must keep your head when those around you are losing theirs. For great information on why silver crashed this week check out the following links. http://traderdannorcini.blogspot.com/2011/09/gold-chart-comments.html http://traderdannorcini.blogspot.com/2011/09/cme-hiking-margins-on-precious-metals.html http://traderdannorcini.blogspot.com/2011/09/detailing-monthly-silver-chart.html