The One Personality Trait that All Gold & Silver Investors Need to be Profitable

The author of the article wants anyone planning on buying gold and silver to be sure that they understand that the precious metals are volatile in prices every year. Many buy at the wrong time, just when prices have soared, not while they are low and then not having the patience to benefit from the long-term price growth.

Submitted by smartknowledgeu
07/23/2012
Zero Hedge

Before one every buys a single troy ounce of gold and silver, one should ensure first and foremost that one understands that gold and silver are volatile in price every single year. Many people commit the same mistake in buying gold and silver that they commit when buying into the stock market - they don’t buy assets when asset prices are low, and only buy them after prices have soared and news of a steep short-term climb in price has been reported by the mainstream media news. However, an even bigger mistake gold and silver purchasers make is not having enough patience to benefit from the long-term trends higher. So to sum up the mistakes people make when buying gold and silver they are:

(1) Not understanding that volatility in gold and silver markets does not equal risk when one knows how to interpret the volatility in these specialized assets correctly; and

(2) Not having enough patience.

These two concepts go hand in hand for the following reasons.

As the fraud of the global fractional reserve banking system is now beginning to be understood by more and more people for the first time in a century, the volatility of gold and silver prices will increase due to the war that is going on between (1) the people that wish to protect themselves against the ongoing fraud of the global financial system and (2) the banking cartel, for the simple reason that these two segments reside on the opposite sides of the price spectrum for gold and silver. The people wish to purchase physical gold and silver as a means of protecting their purchasing power, while the banking cartel wishes to suppress gold and silver prices as rising gold and silver prices expose the fraud of their fractional reserve banking system. Thus, bankers periodically manufacture steep declines in the prices of gold and silver through their naked short positions in the gold and silver paper derivatives market that include futures and very likely the GLD and SLV ETFs as well. This constant tug of war between good and evil causes massive volatility in the prices of gold and silver as these two precious metals are the kryptonite of the global banking cartel, and low prices in gold and silver are essential to the perpetuation of banking fraud.

Though there has been lots of volatility every year during the current 11-year bull market in gold and silver, lots of people every year never wait for low-risk, high-reward entry points and always get on board the gold and silver bulls, not during the quiet periods, such as the one that has existed for the past few months, but only after they have already generated lots of momentum. And when this happens, we witness lots of retail clients buying gold and silver at or near the annual peaks every year, behaviors that make them ripe for the plucking by the banking cartel. Since 2006, at SmartKnowledgeU we’ve been advocating our clients to heavily overweight their portfolios with gold and silver when silver was still $9.00 an oz and gold was in the $560 to $580 an ounce range. Obviously our clients that have been stacking physical gold and silver since 2006 have stupendous average prices for their gold and silver today. Still, we haven’t been perfect on calling the bottoms and tops of gold and silver every year for seven straight years as such a feat is literally impossible except for the banking cartel members that artificially manufacture the massive (and increasing) volatility in gold and silver every year. And this is where the patience factor again becomes paramount in building wealth with gold and silver.

For example, on April 25, 2011, as silver was soaring, I distributed a private bulletin to SmartKnowledgeU clients and stated: “One thing I can guarantee you is this: the bankers [are] looking to take down gold/silver this week…I'm 100% sure that the bankers will immediately try to take down gold and silver prices at NY open.” That very day, April 25, 2011, silver actually broke the $50 an ounce barrier in Asia, and even on the COMEX, silver reached its high price of the year, $49.82 a troy ounce. However, that same day, the banking cartel hit the silver price just as I predicted before market open that day in New York, and mercilessly hammered the silver price 8.7% lower before finally recovering a little bit into the market close and closing 5.7% lower from the same day highs in Asia. As silver continued to fall over the next few weeks, I sent another private bulletin to my clients on May 12, 2011 that stated, “my original call was for silver to bottom at $34 to $37, [but] if this level does not hold then look for silver to fall to the $30 level before possibly rebounding.” Though silver did fall even lower to the $30 level after breaking $34, it headed even lower to the $26 level for the briefest of moments before rebounding to the $37 level once again. However, after that, silver re-tested the $26 level again this year.

Thus, for anyone that started stacking silver since our call to do so at $9 an oz in 2006, and every year since then, purchasing silver at $26, $30 and $35 an oz is hardly a concern when considering one’s average cost of silver. However, for new silver buyers that elected to purchase silver between $34 to $37 an oz and $30 an oz in 2011 and again this year when silver hit $26 an ounce (my call for the silver low for 2012), one may have accrued silver at about an average of $30 to $31 an oz. Thus, if one timed all the lows of silver over the past 14-months more accurately, perhaps one could have purchased silver between $26 and $28 an ounce. As I’ve stated before, I believe that such a task is impossible and some years, we are right on mark at calling nearly the exact lows and highs of silver and gold, while in other years, our calls have been very decent but have left room for some improvement. Still, consider if one has built, after 14 months, a silver position at about an average price of $30 to $31 a troy ounce and one has still not seen silver turn a profit as silver is still hovering at around $26 to $27 an ounce today for an approximate 12% loss on one’s average cost of physical silver. Here is how possession of the quality of patience can still yield enormous profits.

On May 16, 2012, I published a bulletin (this one was available not only to my clients but also to the public) in which I stated that there were signs back then “that a major bottom [was] imminent rather than sign[s] that the gold and silver bull [was] finished.” Notice that I stated on May 16, 2012 that a major bottom was “imminent” and NOT that a major rally was “imminent”. These are two different statements with two vastly different meanings. Just because a major bottom is imminent does not mean a major rally is imminent. This is another key point that many gold and silver buyers fail to distinguish. However, if one believes that a major bottom is imminent, then that does mean from that point forward, the low-risk, high-reward paradigm, does apply and that buying assets close to a major bottom should provide ample reward at some point in the future (though not necessarily the “imminent” future). Since I published my thoughts about an imminent major gold and silver bottom on May 16, 2012, gold and silver and gold/silver mining stocks have all moved strongly higher and then strongly lower again. To see how my statement has held up over time thus far, let us take note of where the recent lows in gold, silver and the HUI gold bugs index have been. On May 15, 2012, gold hit a low of $1526.70 an oz, silver hit a low of $26.73 an oz, and the HUI hit a low of 372.24. To this date, only silver has headed lower since May 16, 2012, and ever so slightly lower to an interim low of $26.11 an oz., a mere 2.3% lower than its May 16th low. Thus, one can easily state that my May 16th statement that gold/silver and gold/silver mining stocks were all very close to major lows back then has been very accurate.

And even if gold and silver prices are violated to the downside before the major new leg higher in gold and silver begin, if they are only violated for a very short period (meaning 72-hours or less), May 16, 2012 will stand as a very good entry point for anyone that chose to go long in gold and silver assets that day despite the intermittent volatility since then. The frustrating aspect, I’m sure, since May 16, 2012, has been the first factor of volatility that I discussed above. Since May 16, 2012, gold and silver assets have produced big gains, big losses, AND lots of frustration among those that do not understand gold and silver markets from the churning in price up and down and the lack of big breakout thus far. And this is when understanding to be patient in purchasing gold/silver becomes paramount. Since new lows have not been established in gold and silver since May 16, 2012, there is no reason to panic sell out of gold and silver just because of the large amounts of volatility. Even for the newest buyers of silver and gold that don’t have the benefit of buying large initial tranches of silver at $9, $11, and $13 an oz and gold at $560, $600, and $680 an oz and may be sitting on losses in physical gold and physical silver as of this current time, being patient will very likely enable you to turn small losses now into huge gains in the future. If waiting 14-months seems like a long time for a pay-off, one must put this waiting period in the proper framework within our current 11-year gold and silver bull that is far from finished.

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