What Happens To Gold And Silver Next? Look Out Below?

WOW.... lower.... lower....

Its the power of the downtrend :).....

For a long time the PMs had a very powerful uptrend, which has now come and gone.

As we hit fresh yearly lows, the selling strength continues to pick up and get stronger, as we are seeing with silver. I suspect gold will follow soon also.

For this reason I have stopped buying much in the way of coins as price continue to drop and I expect to see prices drop, if not now, eventually on all coins, whether bullion or numis.

For now, stay away from major purchases, if you want to buy, then nibble but remember the real risk is there.

yup7676

Other than some collectable bullion that I had to have, I saved a great deal of money by paying attention to your advice.
Once again my thanks to yup7676
respects,
Liverpool

I've been watching and waiting after you answered my questions many months ago. I will admit I was skeptical at first, but you definitely know your stuff.

This is teaching me patience and spending more wisely.

Thanks yup for your continued contributions.

-MV

@MeadowviewCollector

I appreciate your comments and glad I have been able to help you out and others. Thats the only reason I started this thread.. no other reason.

When I started this thread, it was only to be helpful, provide an unbiased narrative, based solely on price action, and nothing more.

I hope I have illustrated that price doesn't lie. Its the only true thing that tells what is really happening, everything else is just noise and distractions. The media is always a day late and you can't really trust the talking heads.

So yea, it is great to hear the positive feed back :) If you look at this thread way back when, there has been some scoffing, mocking and snarky comments, which I mean I find absolutely hilarious. Some have mocked the constant daily commentary, saying nothing has changed. Others scoffed at the power of a downtrend.

Some even went to the point of criticizing this thread because many times we saw prices in gold and silver make counter trend moves that basically put gold and silver right back in the same spot many times. They said it was useless to talk about each day because nothing had changed.

These comments are typical of those who are not familiar with trading, price action and how markets work. Many times important moves in markets need long time periods of sideways, do nothing boring price action.

So while the untrained eye may see this type of price action as meaning nothing, to an experienced trader such as myself, time periods and price action watched on a day to day basis is painting a masterpiece, or giving clues of a big puzzle.

.... and yes patience is MAJOR. No one would have guessed how long the uptrend would carry in the PMs. They had a nice long run. Can you imagine the naysayers of gold and silver, back when it was in an uptrend, who kept saying "its going down, its going down, there is no way it can go higher" and yet we had a steady grind up.. a very powerful uptrend that lasted for many many many MANY years.

Trends run in both ways and take their time. Therefore, I expect this price action to also take its time, this powerful downtrend will probably act the same way down as it did on the way up. There will be periods of boring chop, counter trend moves, and then more grind down. When the trend and momentum take hold, their grip is very powerful and it takes time, a complete process to undo.

So its going to take patience to let this downtrend play out. But see, this is how financial markets work. There is this notion that markets are constantly moving at a fast pace every single day... and that is not true. Things take their time, sometimes they start moving, sometimes they stop, other times they are locked in a range.

The very important moves take time and play out over an extended time period, so patience is very very very key.

We are seeing that with gold, silver and other metals.

One final comment I want to make is that, and I have not discussed this here because this is not the place, but most commodities have been breaking down since about spring. Just about all of them are in very strong downtrends and accelerating to the downside. In the metals, look at how even strong metals that were holding up have broken lower, including nickel, palladium.

@MontanaCMR

The best way to make sure you start off on the right foot when speculating and minimize risk is to always pyramid up as prices go higher, not down. This is not going to sound like the favorable thing to do, seeing that everyone wants a bargain and everyone wants a good sale. But when do we know we are getting a good deal or are we buying into a bad deal? can we be certain we are getting a good deal by dollar cost averaging on a declining asset?

Dollar cost averaging on any asset that is declining is the kiss of death. This is contrary to the notion that you should dollar cost average, or laddering in. The problem is that you dont know exactly how low it will go, nor will one have the ample cash or emotional capital to continue to put into a declining asset each and every time it moves lower. It is demoralizing to buy successive times and watch an asset go lower from ones initial purchase points.

Lets clear some things up first-

Dollar cost averaging can/has worked on buying stock indices. There are some instances where buying stocks as they decline results down the road in getting a good deal as they increase in value. But what about commodities?

Commodities are very volatile. They do not pay any sort of dividend while you hold them. Commodities are dependent 100% on the supply and demand ratio.

I cringe when I hear people on TV, paper or giving advice that you should "dollar cost average (insert asset class here) for the long term". Why is this not a good thing to do?

For starters, no one has unlimited amount of cash and time. The financial markets do not go around buying out of class assets, sock them away and then all of a sudden, sell them at a huge profit. No rather, the market is a study in cycles, leadership and of which assets are starting their movements, and in what direction. From there is where the major price moves and profits are made and where positions are taken.

Sure, there are many stocks over the years where buying them when they are dumped in panics or fire sales has resulted in long term price appreciation. In these cases, yes, if you bought when the stock was dropping and dropping, it would have worked out. Also, buying simply the S & P indice over the long haul, as an example, despite its up and downs, would right now result one having a positive return. But those dont happen as much as you think they do.

questions arise when dollar cost averaging-

1- will I be able to withstand the long time period where things look bleak? Can I emotionally hold my wits and not sell?

2- what do I know with a certainty about this specific asset? A lot of times we hear about some investor that was buying shares of a certain company when price were falling, but stop and ask yourself, do you know what he knows? Even the big funds and investors make mistakes and lose money averaging down. For this reason they dont buy all at once nor do they keep adding if they already are showing a loss because the the lack of profit from the start is saying that this is not going well and wont end well.


Ok, so I am getting away from the PMs here but I wanted to address the concept of dollar cost averaging.

Now, why do I say dollar cost averaging in PM's is a terrible idea?

For starters, you cannot compare stocks and commodities and lump them together, they are completely different asset classes. Therefore you have a completely different type of investor in commodities versus those in stocks. Commodities are not valued by book value, or p/e rations or other metrics that are found in stocks. Furthermore, they are highly volatile. Finally, it always comes back to the old supply and demand scenario with commodities.

Furthermore, as I have stressed, right now commodities like silver and gold are in very strong downtrends. Dollar cost averaging into a strong downtrend leaves absolutely no margin for error. As soon as you think it has gone down enough or couldn't go lower, guess what, it does.

So rather than trying to find a bottom, which is a fools game or throwing good money after something thats declining, the wisest thing is to wait until the decline is over and allow the downtrend to be broken with real buying which supports price, therefore lessening the great risk of seeing your purchases sink.

Granted, there will be those who will insist that you missed a bargain, but really you haven't. Instead, one has missed carrying the great risk of seeing a speculative investment or trade start underwater and/or go lower on you.


Again, has dollar cost averaging helped those who started buying silver at 30, thinking a 10 point drop was big. What about at 25? At 20? Surely if they have bought at 30, 25, 20, they should still be buying in large amounts down to where we are at now right?

Most likely those who have been buying at higher levels have been put off by seeing their purchases slip each time.

Of course, everyone is entitled to buy as much and how much they want. Its not my money, however I do want to go on the record that dollar cost averaging commodities is the kiss of death for one's hard earned cash.

Thanks for the detailed response Yup.

Although I wasn't into coins in early July, I noticed the price went from like $18 - $21 or something like that.

I guess there is no way to know, but I guess that wasn't the break out you are talking about. I agree it is a strong downtrend. However, I don't think technicals are really great at predicting the future - they do a great job of describing the past.

Most of what I have bought so far has been like steamboat mickey or orion curved star coins. I actually have no idea if these are even tied to the silver market, I just like them.

However, I will admit I bought some junk silver for the first time this week, as the prices at $17 seem pretty low to me. Will I buy all the way down? I don't know.

Part of me is saying this: If I buy at $17, what is the downside. I guess it is about $10 and the lowest price silver goes is $7. However, I also ask myself what the upside of silver is and lets say it is $37 in the next 5 years.

This leaves 10 downside and 20 upside.

I admit I have no idea how to determine the downturn is over and because of this, I will probably buy in increasing amounts from 17 to 7. If it does start going up, or beyond 17, I will stop.

It's funny, because I look above and laugh about how illogical my strategy is. Oh well, its mine and I'll own it.