How Not to Buy Silver

How Not to Purchase Silver

Hey All-
Quick note for you.  Sorry I’ve been away, but it’s the last week before school starts and I wanted to spend a little extra time with the family before things get crazy again.
I recently wrote an article that will soon be posted on the Freedom Bunker website that talks about my brother’s interest in making his first precious metals purchase.  There’s nothing new or revolutionary about the information in the article – there’s nothing in it that isn’t posted at least a couple of times around this site, but as you know, my goal is to assist others in acquainting themselves with these markets.  I wanted to post a little extra something on my brother’s experience as a reminder to you about how not to purchase silver.
My brother’s in a bit of a rush to make this purchase.  He’s excited about the new venture, and he sees that prices are starting to pop a little bit.  Right there is a state of mind that we need to be aware of.  Whenever we find ourselves thinking that we’re going to be missing out on something and we believe we need to act quickly, we get distracted and our thinking gets unclear.  As I’ve written several times already, we never want to chase price in these markets.  We never need to because they’ll come back to us… almost always.  My brother is not a trader.  He wanted to make his purchase and hold it for a while.  He holds no silver or gold right now, and he’s not going to worry about purchasing at the exact bottom.  Even though we’ve had a nice rise off of the June bottoms, I think we’re close enough to them to establish an opening position.  He’s got about $10,000 to invest.  I’m not an “all in” kind of guy, so if it was me, I might do half now and wait for the next correction.  That next correction, though, could come $50 higher, maybe much higher.  We could see price blast off.  That’s the greatest danger in a bull market such as this – being out of it when price takes off. Take a look at the left side of the price chart below.  If we had waited for the pullback in 2010-11, we’d have missed out on a $30 move – ouch.
buy silver

We don’t want to buy into an uptrend… usually…

As I mentioned in my Cheap Gold article (when gold was cheaper!), as soon as you make your purchase, the price is going to drop anyway.  There’s some sort of metaphysical law at work here. I’m just kidding, of course, but it seems like that’s the way it often happens.  The bottom line is that though we never want to buy into price rises, I think now is still a good time to get your feet wet here.  There’s more to this story though…

Wheelers & Dealers

I just got off the phone with my brother.  During our last conversation, I recommended that he do some online research and find some local dealers near him.  I suggested that he check prices and reviews for several dealers, and that’s just what he did.  He’s a Glen Beck fan, and if you follow Mr. Beck, you know that Goldline is one of his advertisers.  Just for kicks, my brother gave Goldline a call and here is what happened:
My brother described the Goldline representative as “a used car salesman;” fast talking, fast moving, ambiguous and dubious.  He was quoting 1 ounce gold bars/coins in the $1600 range (that’s $200 above current spot!), he was attempting to sign my brother up for an account (not sure what for) and he told my brother to FedEx his check the next morning in order to take advantage of the excellent offer.  This is classic.  This is very similar to what happens when these companies call you with these “unbelievable” offers. You never want to do business like this.  You need to know current prices for the items that you’re interested in purchasing and you never want to be rushed into signing or sending anything.  You want to be able to look over any agreements.  If anyone is trying to convince you that you need to do it “right now,” it’s because they are a salesperson who knows that their best chance for making the sale is “right now.” These guys and gals are experts at what they do and they’ll have you standing on your head if you’re not careful. They prey on the uninformed and the meek.  Fortunately, my brother is neither.  He got caught up in the sales pitch, though.  He stated that before he knew it, he bought some gold that was too high in price and that he didn’t really want.  He did not send them a check though and does not plan to.  He is expecting some nasty phone calls from them because of it.  I’ll let you know what happens.
We don’t have to get into situations like this.  There is too much information available to us.  We can prepare ourselves to make wise and timely purchases.
So silver and gold are continuing their beautiful moves.  We’ve got a nice little rhino horn forming on the weekly chart, but that horn could grow longer and higher… or not.  There are dozens of sites offering multiples of forecasts out there.  Block out the noise and keep stacking.  More soon.  J.

Make Money for Me!

Should You Pay for Investment Advice?

So, I’m thinking I have this interesting idea for an article.  I kick it around for a few days; try to find an angle on it.  For the heck of it, I check the Webs to see if anyone’s done anything like it for a while, and wouldn’t you know it, TV-Radio-Internet’s favorite investment guru (with respect to Suze), Clark Howard just did an article on my topic about two weeks ago!  Well, it’s not exactly the same.  It’s similar and he’s got a salient point or two.  Don Stott of Colorado Gold fame also just wrote something on the topic.  Folks must be reading my mind. We’ll discuss both in a moment.  On with it…!

I’ve been in these precious metals markets for over 30 years now.  That seems like a long time, until I hear from guys like Dick who started out trading silver futures on an outdoor pay phone in the winter of 1971, or Jim Sinclair or Richard Russell who have been doing this I think even before gold and silver were invented.  I made my first silver purchase in early ’81.  I was in high school then, so it wasn’t a large purchase.  Nonetheless, it had been a long damned time before I broke even on that investment! — I’m still waiting if we’re going to factor in inflation.  It was a long bear to bear until things started to heat up in the late 90s.  At the same time, networked computing was revolutionizing information access and that included the information we could obtain related to our precious, precious metals.  A silver or goldbug such as myself was thrilled because I could connect with others, get real-time quotes instantly and could read articles and analysis about the markets, even on the job when I was supposed to be working.  There were only a couple of sites back then, so there was an element of anticipation.  Not so today.

The Noise of the Silver Market…

The communication process is defined simply by messages sent and received.  Reception is not always so simple, however, because noise becomes a factor.  That noise can be literal, audible noise that we hear, or it can be our incessant internal monologue that all of us must endure – or enjoy.  The state of our current precious metals information network could be described as a noisy situation.  When I look over the sites, and there are so many of them (mine included), and there is so much information, and so much analysis, and so many forecasts and most of it is free free free!  A couple of questions come to mind:  First off, is anyone making money off of these precious metals markets?  Second, is anyone making any money who is paying for investment advice in these metals markets?

I’m going to talk about my own challenging journey through these metals markets at another time; hopefully in the same place.  Today, I want to discuss the paid adviser (advisor is an alternate spelling, FYI).  Now, don’t get me wrong.  I don’t have anything against paid advisers.  Some of my best friends are precious metals advisers.  My son even wants to grow up to be one.  At one time or another, I’ve subscribed to most of the majors:  Russell, Rosen, Hamilton, Ackerman (2x), Casey, Nichols, Ski, Uncle Harry, Adens, Dines, Thomson… You name it, I probably subscribed.  I’ve seen plenty graduate from the forums into paid gigs, as well, and most of them had some serious talent.  In fact, everyone I ever subscribed to did an excellent job.  The thing is — I never made any money from them.  I joined several of them while they were in the throes of their “greatest-call-ever-that-didn’t-pan-out,” but aside from those exceptions, there always seemed to be something with the timing or something wrong… or was it… something else?

You Ain’t Seen Nothin’ Yet

I’ll say it again, that I never made any money paying for investment advice.  When I wasn’t paying for it, I was continually scanning the metals websites for articles looking for clues, or hints, or subtle innuendo about the next price move that perhaps even the writer did not realize he or she was communicating.  The thing I realized in hindsight was that I wasn’t actually looking for investment advice (paid or not), I was merely looking for someone to affirm my own belief of where the next move would head.  If I was short, I believed price would go down.  If I was long, I believed price would go up.  So my investment “strategy”, was not to follow what I saw in the charts or in the fundamentals or in what I was paying someone to tell me; my strategy was to follow not what I believed would happen, but what I wanted to happen – what I hoped would happen. And if I ran across an article by someone who disagreed with my desire, my want, I simply ignored it.  Even when I was paying for the advice!  I would fade the call if it didn’t fit my desire.  Of course, this is not an investment strategy.  I know it now, and I even knew it then, but there was something inside me that had be a cowboy; had to do it my way, even if my choices turned out to be wrong.  Even if those choices lost me money.  And when I was wrong and lost money, of course I was miserable.  Oh… those were some troubling years.  Getting back to the point, if this scenario sounds familiar, and I would imagine that it might because, as a contrarian, I know that the majority of investors are wrong and I would also imagine that this desire to “do it my way” is fairly common among the independent, freedom-loving gold and silver crowd.  Add to the mix this brutal last two years, and I wonder if anyone who didn’t buy-and-hold in the early ’00s is making any money?  And I’ll ask again, is anyone who is currently paying for advice making any money off the advice?

There are a few newsletter writers who are infamous for their calls.  In fact, they’re wrong so often and so consistently, that they’re accused on the forums of being paid shills who are aiding and abetting the manipulation of the metals (if you believe in that sort of thing).  How are these guys making money in this market, aside from the money they make from their subscribers?  Clark Howard says this: “Paying people to guide you is money well spent, not money spent poorly. If you are at a roadblock or you don’t know where to start, hire a fee-only financial planner and pay them for guidance.”  In that quote, he is comparing fee-only planners with advisers/brokers who work on commission. Well, that’s a no-brainer.  The bottom line is that no one, no one is going to look after your money like you will.  Not sure if Mr. Howard has dealt with PM newsletter writers or subscription services like these. He doesn’t address that in his article, so I’m addressing it here.  Don Stott is less sanguine to the thought of paying for professional advice.  He succinctly states, “Nuts to them all.” Judging from my track record with them, you’d think that I’d say the same thing, but I don’t because, of course, no one forced me to pay these people.  I signed up with them because it seemed like they had a pretty good system going and they could save me some legwork (chartwork), and I could make lots of money by following their advice.

Please pardon the obviousness, but I propose that to be a successful investor – in the metals or not – you have to find the strategy that fits your nature and that can be a pretty darned expensive search.  If you haven’t found your strategy, you’re not going to find it by paying someone else, so save your money.  I think that’s the bottom line to this discussion.  If you don’t know how to invest, learn how.  If you pay someone to teach you, listen to them.  Before you pay them, though, do some self-exploration.  Really look at yourself and ask yourself not what you think will happen with the market, but what you want to happen in the market, and see if you’re investing from that perspective. If you’re losing money, there’s a good chance that you are a “hopeful” investor.  Learn some money management techniques.  Stay away from dubious investment vehicles.  If this is just too much to consider, then just keep stacking your physical and wait for Jim Sinclair’s rhino horn(s).  You can make money and still be a cowboy.

In the next article, I’m going to go further into the “noise” of these markets and talk about how I found peace there.  Thanks so much for reading.  Please share your comments and ask your questions.  I’m really curious about peoples’ experiences in this market and with paid advisers.  Also, please link to the site and to this article on your favorite forums and social media.  Please subscribe to email/RSS updates as well.  J.