Wednesday, December 14, 2011

Precious Metals Liquidation

The commodities markets have been hammered today due to a stronger dollar (weaker euro) and what I believe will soon emerge as liquidity problems and liquidations in the European banking system.

Precious metals in particular have been clobbered with gold trading close to $1550 and silver falling near $28.50 as of this writing.  As I try and do during every major sell off, I want to remind those holding the metals to take a deep breath and remember that we are in a secular bull market.  During a long term secular market you experience massive pull backs.  Nothing moves in a straight line and pull backs should be welcomed and embraced.

This is why you raise cash when prices run higher and invest funds when prices fall.  I made a purchase in the silver market today as prices fell below $29.

It is human nature to feel great about silver when it was priced at $43 just weeks ago and feel terrible about it today when it is priced at $28.50, but as an investor you must try and think the opposite.  For a review on the long term fundamentals of the silver market please see:

Silver Fundamentals In Review: Supply and Demand

Silver Supply: The Coming Squeeze

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