TIME TO BUY SILVER & GOLD? One expert recommends patience!


Okay, I admit it, I find myself asking if now is the best time to add more physical metal to my 10-year-old stash.  Also, I admit paying little attention to what motivates silver and gold, short-term speaking, since most short-term influences are beyond me. We both know Europe is in the death throes of financial hardship as good currency chases after bad. We both know the smallest spark could send PM (precious metals) skyward with little warning. Yes, we both know a limited supply of physical metal could disappear overnight too.

But today’s investment writer makes a good point to wait and I won’t argue with the valid points he makes.  I’m very appreciative that Precious Metals Digest founder Jim McCraigh is willing to share his opinion on why now might not be the best time to buy physical metal.

Jim McCraigh Q & A

Question: Jim, tell us a little about the motivation behind Precious Metals Digest and where you see the site going from here?

Jim M. –I have been interested in investing since first going to work for a commercial bank in 1971, especially in the real estate and precious metals markets. Precious Metals Digest was created to sift through the avalanche of articles, videos and blogs on PMs…some of which is very good and some of which are not so good… and present the best to readers in an engaging and informative fashion. The site will eventually feature more vetted guest writers to offer a diverse set of viewpoints. I’m personally not a gold bug… per se, but I am an investor who wants to make money by either buying or selling different PMs. We will also cover some of the miners, along with platinum, palladium and rhodium going forward.

The mission of the site is to serve investors by helping them navigate the world of PMs. We’ll do this by sharing with readers the things that I would want to know myself as a PM investor. The site is designed to be an alternative to mass media noise and present the facts so that the reader can decide for themselves. We won’t be a news site as such since there are already some good ones out there. However, we will include focus on global and US macro-economic issues and other markets (equities, bonds and currencies) to the extent they affect PM prices.

Question:  I take it from reading your posts over the last month that you would advise those on the PM sidelines to patiently wait to see how this dip shakes out, is this correct and why or why not?

Jim M. — I ‘m glad you asked that question. There is likely some more volatility ahead for at least the early to mid summer period. I’m still preaching patience for both buyers and sellers here, but we might better substitute the phrase “disciplined approach” for patience here. For sellers, that means not trading out of positions in an emotional or fear-based way, but hanging tough until we begin to see the hint of a decent volume-based uptrend again. The only exception to this might be if someone has carefully considered trailing stops in place that are crossed and they sell as part of their overall trading discipline. What I want my readers to understand is the back story for precious metals is still intact… politicians globally will choose to react to deflationary pressures and sovereign debt issues by massive money printing measures.

Buyers should realize that gold is in a secular bull market, and that some attractive entry points may present themselves this summer because of anticipated volatility. As things continue to deteriorate in Europe, we could see more short-term strength in the dollar that puts pressure on prices…. But on the horizon for late summer are some potential market movers like a QE3 that could spike PM prices upward. Gold’s moves will be big in the coming months and years. There is no need to try to time the market here. Sometimes investors feel that they have to DO something. Being patient (and disciplined) IS doing something!

Question:  I’ve noticed at TPS my readers lose interest during times of PM dips. In your opinion, are we as investors too concerned with short-term PM fluctuations?

Jim M. –Unless an investor is a day trader (I wouldn’t recommend it unless you are a true expert) short-term price movements should mean very little to most folks. What’s important is the longer term trend line measured in weeks, months and years… not daily or weekly closes. Reacting to short-term price moves is like driving while only looking at the road a few feet ahead of the car. Sooner or later you’ll rear-end a slow-moving truck ahead that represents the trend line and there will be some serious financial damage.

It is interesting you mentioned that there is often an apparent loss of interest during dips. The smartest investors will strategically buy those dips (read opportunities) in a disciplined way while the herd will wait too long and pay too much. If we pay too much, we will rarely make any money or even worse lose big chunks of principle. For me, investing in PMs (or equities or bonds) is a year-round endeavor, not a one month on and two months off kind of thing. If an investor is not willing to be active, they should engage a licensed professional financial advisor to help manage their money.

Question:  Can you share with our readers what other assets (investments other than gold/silver) you see as solid considering today’s economic volatility?

Jim M: –What I can tell you is that I own some agricultural commodities right now… As the world prospers, the first thing people want with their new-found money is more and better food. This will cause some demand based price inflation. So I would want to own some of those here and ride them up over the long term.

I am long GLD, SLV, PHYS, NEM and RJA

Thanks Jim and we look forward to following you at Precious Metals Digest.

News Worthy:

Slate: The Coming Global Recession

America is still recovering from the Great Recession and Europe is melting down, yet from a global perspective, the economy has never been as healthy or prosperous. The world economy enjoyed amazing growth from 2002-08, took a small dip in 2009, and then went back to growing. Sadly the good news seems to be coming to an end in Brazil, China, and India, and that’s horrible news for us.

More alarmingly, both China and India are running into trouble. Catch-up growth, in which a poor country improves its public policy, begins importing foreign production techniques, and gets rapidly richer is a time-honored Asian tradition. We saw it in Japan, then South Korea, then Taiwan and other Asian “tiger” economies in the 1980s and ’90s. China and India are so large that their catch-up growth was able to raise the entire worldwide rate of economic growth. That’s why the world economy kept growing through the 2008-09 financial calamities. Read it here.

TPS adds, what this article lacks to mention is even emerging countries were beneficiaries of the U.S. bubble economy.  In other words, the world recession was postponed by a consumer based economy dependent on debt and deficit spending. Credit tightened and now recession becomes more obvious. Sounds like a good time to be vested in gold.

News Worthy:

The Gold Report: Will Gold & Silver Fall All the Way With the Euro?

What we’ve seen lately is gold and silver prices moving with (and often faster, both ways) than the euro, but the link remain solid. With concern for the future gold and silver prices in mind, it’s time to examine this relationship to see where it’s taking these precious metals. With the Eurozone crisis moving to potential ‘runs’ on Greek and Spanish banks, the future of the euro is now on the line. A look at a precipitous fall in the euro and the potential for gold and silver to follow is warranted. Investors should be prepared for very volatile and surprising gold and silver price moves. Read it here.

News Worthy:

The Gold Standard Now:  2012 –Good Money & Jobs vs. Easy Money & Stagnation

The 2012 presidential election is shaping up to include an argument over opportunity versus equality.  The American economy has been stagnant for a decade.  Income for working men has been stagnant (or even contracting) for 40 years.  Why?

40 years ago is when America started abdicating its classical high-growth monetary policy, the gold standard.  We abandoned good money to chase after a chimerical improvement of easy money — ostensibly to promote job growth.  But as 40 years of wage stagnation has shown, easy money has failed. Read it here.

TPS adds, since releasing Why Silver & Gold Will Go Higher,I often hear questions that lead me to believe many who own PM don’t truly understand why they are so necessary. The last forty fiat years are proving to be more disastrous than most realize but this oddly works in favor of real money holders (yes, even with today’s meaningless dips). Please take time to gain a basic monetary understanding before trading currency for silver or gold.

Comments & Questions:

Question: I just started reading TPS and new to silver and gold investing. Any pointers for someone new?

TPS Reply: Very cool and welcome aboard. You are taking the necessary steps to first educate and then decide if silver and gold makes sense to you. Your question is a common email we receive several times a week, here is my advice. Read everything related to physical gold. Don’t rush into buying either metal. Do begin a plan how to relocate wealth from declining paper assets and into real assets like silver and gold.

Be sure to read First Steps to Buying Gold & Silver posted last Fall on TPS.

Comment: In my opinion, the derivatives market collapse could make the housing and stock market collapses look incidental!

TPS Reply: Yep, I 100% agree and will also bet less than 10% (invested) have a clue the risk of derivatives. Some experts estimate the derivative total exceeds an astonishing $700 trillion, can you imagine.  The run to real money, like PM, comes when the average working guy realizes his retirement is layered in piles of paper promises, like derivatives. I will roll the PM dice any day over piles of paper. Thanks for the comment.

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