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Hat tip to @AgCoinAu. He is spot on and I appreciate his taking the time to show an actual breakdown.

I would also add that emotionally and mentally,,, as someone is putting their OWN money into a downtrend, it becomes extremely difficult to continue to average in lower. Why? When it is your own money, you start to sweat it, it becomes uneasy as you, for an example, put money on a monster box of silver and watch it plunge thousands of dollars on you. Will you have the mental toughness to add yet another monster box after you know you already have a large loss on your hands? I highly doubt it. Will you do it a 3rd or 4th time? Highly unlikely as you will become wore out by the mounting losses.

Its super easy to say "average down" but I highly doubt these same individuals would publicly say "look this is tough, I am underwater by several thousands". So think, if you dollar average cost down you have three things against you-

1- each purchase one makes is always going to be underwater

2- the emotional setback and disappointment that one didnt "nail the low " or " it cant go lower"

3- one has no idea if, where and when the downtrend is done. One could be waiting a long time waiting for it to change. What IF one needs the money with an emergency? How will one feel cashing out at a major loss, heaven forbid you have to do it....

Clearly it is wiser to wait for confirmation that the downtrend is done and to buy when prices move higher outside of the downtrend. THAT is your insurance that you dont start underwater.

Again great job by AgCoinAu to breakdown why averaging down in a downtrend is really a losing proposition with a commodity in a downtrend.

Very interesting. I have to start checking his forum more often. For me, I buy the coin.

I agree that averaging down an asset in a downtrend is not financially wise. However, the really hard part is knowing when an asset is on a downtrend (beware the falling knife) or is just temporarily dipping before continuing an uptrend. I think it's pretty clear at this point that gold and silver have been on a downtrend for the last three years, but it took a lot of time for many people (including me) to acknowledge the downtrend and stop expecting them to leap up to even higher than before.

20/20 hindsight is a wonderful thing when it comes to predicting the past. I'm not sure anybody here can really claim to be able to spot future trends, however, so there's no real answer to the question "is now the time to buy or sell"?

For me, personally, I was so utterly convinced that gold and silver were going to hit the stratosphere that I took every dip as an opportunity to buy more since it would "obviously" all work out in the end when prices went back up. And my strategy could still pay off down the road since I was collecting for the long run with no desire to sell anytime soon. We're talking retirement in 20 years or assets to pass down to my son. The funny thing, though, is that I kept thinking how sad it was that I hadn't been in the game back when gold and silver were significantly cheaper and that I'd surely back up the truck if prices ever did fall again. Now that prices have fallen quite a bit, however, all I can think of is what a bad time it is to buy since prices are likely to keep falling for a long time to come. I utterly failed to predict the end of the last big uptrend and will likely utterly fail to predict the end of the current downtrend. Good thing I'm not doing this for a living...

I know a guy, his philosophy is "You can wait forever for someone to buy a collector piece or sell it all as scrap". I buy scrap from him and pick out some nice au/ms pieces all the time for date sets.

I am technically buying scrap but they are numismatic pieces. With silver dropping why buy it as it falls? When she starts to walk back up buy some SML then.

I am not as well versed as most guys on here but as a collector first and foremost what I want to do is sell off all my silver when it hits 30 again or when 50 ounces will get me an ounce of gold. Trade out so I can buy some Newfoundland 2 dollar pieces.

O really,so the Market will not react to FOMC,really and have not in the last few Meetings. Total hog wash,Yup. Hog wash.

The statements made are yesterday's news,really. That's why most are waiting to see if she is going to stay's Dovish or Hawkish. Most likely she will be hawkish more then Dovish and yes her statement along with others it will be trade on. You all can count on it.

Reports are yesterday's news to so to speak,no sorry the market you trade in is reacting every day to Reports and Meeting and Sell outs.

You all buyers/traders are reacting to sell outs the last few years,when it comes to Silver/Gold. Your whole trading day/week is react to yesterday and today's sell outs.

I just can not understand your logical. The market for Silver/Gold are going back to 2005-06 levels that simple. Count on it.

Anybody that did not see a fall in price for silver at its last high did not look at history high's for silver or did not care.

You are taking credit for a no brainier that most just did not want to see. To bad. History in Market Highs and Lows count big time.

How long will it take to get back to 2005-06 who cares.1 year 4 years,does not really make a difference. Unless you want to trade short or looking to get a pay out within months or a year. That is not what buying silver really has ever lived up to. So funny.

If you want Silver/Gold buy it. If you want a quick buck without risk then do not buy it. If you want to spend your extra Fiat and turn your back on Fiat then buy Silver/Gold. Its simple at this point.

I have spend years working with reports and meetings to know what will happen with Silver/Gold then Charts then trade patterns. Why do I do that. Because I like to. It works very very well. If anything trade action is yesterdays News.

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Yup"Its unfortunate to see that many did not sell at or near the highs" This statement I have seen from Yup way to many times in his thread.

Another jab,jabbing.

You have no idea what people did. No real idea.

If you care so much,why don't you ever say I wish I was there to help them.

But what has gone on for 3 years in your Silver/Gold price thread of which goes on to say over and over watch it,its going lower do not buy,maybe buy. I do not get it. We all should know its going down now and then. Why would it go up yet?

Okay... here's where I will go on a bit of a tangent...

1) I don't think we will see a rise in prices of silver back near the $30 dollar range for a long LONG time.. I think the drop we have been experiencing can be attributed to a correction in price.

- Paper trading of silver is a relatively new thing. The issue was that all the paper was being trading and one or all could actually request payment in form of silver. Then because of rules that there actually had to be a % of physical silver that had to be held as a physical holding to account for any paper traders that wished to receive payment in physical form. This created a large industrial demand, one where price wasn't an option as much as the necessity to gain physical assets. Hence the bubble. When reserves were met.. the demand subsided and you're seeing the reflection of that mass demand subside...

By my rudimentary charting skills if you look at the long term price of silver .. a price point between $12 and $18 is where I see silver settling into for awhile....

I also believe the same could be said for gold.

Now which would I buy right now... the answer is easy silver... My philosophy has always been... make your money in silver and turn that profit into gold.. win/win!

Now if you can buy "numi" silver at spot prices.. you're doing just fine! It's really the bread and butter to a basic operation... buy PM's at basic melt prices... turn and flip.. if you can find a numi in the lot.. flip that for greater return or put it into your personal collection.

Silverworld:

For me to take you seriously... you would have to read what I write and stop internalizing it as some rhetoric that's against your principles.

At no point did I mention shorting silver.. not in my examples.. and not in any follow up post. The $12-$18 price point is the range of value I personally see silver being in for the next little while... Ohh and we're already IN that range so arguing that is mute.... Saying that's not the true value of silver and we just need to wait for it to show it's true value is nonsense... Look at spot price and that's the true value of silver.

And if you believe that the american dollar is going to collapse and the world will trade silver instead... I encourage that dream! I really really do. Unfortunately as a realist I see that if the U.S. dollar tanks, there are going to be a whole lot more sociological issues to consider, and if I honestly were to believe that the U.S. dollar were to fail, I wouldn't be bothering myself with buying silver, gold or any numismatics.. I would be buying a very large plot of land and installing a bunker, because chaos would rein for a long time.... Think lord of the flies but a really ticked off population with a whole lot more access to guns and ammunition with very limited resources.

The very fact that the U.S. dollar is gaining strength is a sign of the global times that other governments and banking institutions around the world have their faith in the USD.

I am perhaps a peon.. a lemming if you will.. I simple take from my own observations and derive the simplest commonality and meaning to them.

If you wish to claim that I'm shorting silver until you're blue in the face.. fine so be it... I never said such a thing... It is you that looks like the smurf... and I'm okay with that.

If you want to talk historical charts.. that's fine too... but understand that just because something happened in the past does NOT imply that it could, would or should happen again.. And it is EXACTLY that type of thinking that gets people to double down on a depreciating asset... "Hey it used to trade at $20 an oz!! It most certainly will again!" ..... and if you go by that logic then you must be in a conundrum because "hey it used to trade at $3 and oz as well... (so by the very same logic)... it must do that again!!"

The market, value of the dollar, inflationary rates and industrial uses for silver were quite different at $3 silver as much as they were when silver was $20 and higher. Will global and market conditions ever repeat to the point where silver will once again be priced in at $20 an oz... perhaps.. .then again.. perhaps not... I can't tell that.

What I can say is that it's ALWAYS a bad idea to follow a loser. As a coach I have a phrase I tell my athletes... you either soar with the eagles or your just chasing turkeys....

Silver at this point is just a depreciating asset.. and until the market and price point prove otherwise you can't argue that. It's as clear as looking at those historical charts you so lovingly will reference.

I love silver and gold as much if not more than most. I LOVED the run up we had... (main emphasis is on the word HAD) the run up is gone and smart money is onto other investment vehicles to yield a return. With any luck gold will find a baseline and then gradually increase in dollar value at the rate of inflation and cost of living... Silver hopefully will follow the same/similar trend with a bit more erratic highs and lows as there are industrial uses and times where it may be in more/less demand. That scenario is what I would love to see.. a return to what was.... will it happen.. *shrugs* I really don't know... But I certainly have no plans on chasing turkeys... let alone getting into some sort of back and forth with one that gives very poor financial advice and is a heretic of the financial institution. Keep the discussion and delusions between you and your disciples on your own thread that's just fine.. but to spread misinformation all over here... I figured I should give some examples of how exactly buying a depreciating asset doesn't work well... by the way that example works for almost any investment vehicle.. any stock or bond or REIT.. etc etc....

It's already the dawn of St. Patricks day and I grow tired and weary of evangelisation, be it of your banter of silver and where it SHOULD be .... or that which now links the spread of one faith and has twisted it into an alcoholic debaunchary.

I am done now.. I appologize for the banter.. but felt it was a duty to speak up.

AgCoinAu, thanks for the post.

If you look at silver over the past 100 years, it appreciates on average about 3.8%. Based on this, I though this amounts to about $18 (or somewhere around there) today. This is the number I use as a max value to buy silver. I do like your post about history not necessarily repeating itself. This notion would be a potential flaw in my logic that anything under $18 right now is value long term.

This is not a criticism of anyone else's approach (i.e., meetings, moving averages). In fact, my $18 is something of a 100 year moving average.

Again, thanks for your well articulated and thoughtful post. It has me questioning my under the 100 year adjusted average rule of $18.