The worst gold and silver investment strategy also happens to be the most common one by far among household investors: wait and see before you buy.
Waiting to see what happens next focuses attention on the undecipherable daily volatility rather than the long-term trends – and is a surefire way to miss out on great opportunities.
For example, when gold broke $1400 last year it got people’s attention, but most investors chose to wait and see if it was just a fluke. Two months later the price passed $1500. Investors perked up, but still they wanted to wait one more month or two, just to be sure.
Finally the first brave souls started to buy gold. Those who had waited, saw, and now wanted in. The stampede was on.
Gold took off like a funny car with a deafening roar. Tires smoking, it rocketed upward. Even with big-money triggers dumping gold all over the place the feeding frenzy drove the price to $1900 before a sudden loss of appetite set in. The exodus was on.
There was no need to wait and see. After all the fuss, gold finished the year OK as far as corrections go. But even though all of the signals said buy, the selloff wasn’t over.
A much more effective – and simple – strategy would have been to regularly buy gold as long as the price kept below the trend. Those who did so until the price broke sharply upward had a very good year.
Gold and silver are incredible bargains today, but they can’t stay put much longer. How fast they will rise is anybody’s guess, but one good shock could kick in the afterburners. Nothing would do that more dramatically than a stock market crash.
The stock market is ripe for a panic. It would take very little for investor jitters to bring the market down faster and deeper than in 2008. Gold would probably get dragged down some in the initial scramble, but that’s just drawing back the slingshot.
Investors who had steadily bought gold and silver while they were still well undervalued will be in for a very pleasant ride.
On the other hand, investors who chose to wait and see might never even notice the golden opportunity to buy gold and silver rocket past them when the slingshot is released.