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Are You Ready For The Pump And Dump?

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[Most Recent Charts from www.kitco.com] Silver has dropped below the $20 mark for the second time this year, the date of this writing is November 21, 2013. Remember the chart (it’s showing silver below $20 and is a live chart) to the left and the date of this article, since the pumping to buy silver will begin in earnest. All bullion companies, coin dealers, analyst and experts will begin to make excuses on why silver has dropped, then tell you all the reasons you should by for long term, and to buy from them.

I will agree with them on one point, buy silver now! I have always recommended buying silver when it drops, stop when it rises, then wait for it to fall again.

I buy and sell, so I rarely hold on to all the silver and gold I buy, but everyone should have some as part of their portfolio or coin collection.

However, I am fast falling of the long term benefit of holding onto silver. If you study the charts going back to the early 90′s then you will see the same ups and downs as we’re seeing now, it’s just a fact of the markets in general. If you go back to the 80′s charts then you can see when silver was at the all time high in history.

You have to fast forward twenty years from 1980 to 2011 before you see an equal silver market bull near $50, and that begun in a period of only a few years, as it did before, only to drop down to less than $15 an ounce this year (2013), and in a similar time period. What we’re seeing is history repeating itself although for different reasons this time around.

Let’s put this into perspective; If you bought silver at it’s height in 1980, you would be selling at a loss now, so what did twenty years do for the bullion silver investor? If you look at the facts then any long term silver investing advice would have been wrong based on buying during the bull markets. It doesn’t seem correct but that’s the facts. Unless you bought when it was down and immediately sold when it went up.

If you bought all the silver you could afford from the mid-80′s to 2010 then you would see a return on your investment and that would be considered long term. However, is this still doable if a person starts buying silver today for the next twenty years? No one can know this for a fact, but it’s possible that another bull is coming in less than twenty years, but will silver still maintain a bottom higher than, it appears to currently stand, after the next bull market? You would hope so, but there’s no guarantee.

It does makes sense to buy silver when it’s dropping, but keeping it and hoping for it to rise for retirement in several years, is what I am not sure about. It doesn’t seem to be a safe bet since we all heard a few years ago that silver was do to rise $100 and even $200 an ounce, but this was unfounded, so far. Now what makes things different now? Nothing! No one can know for certain what silver will be worth in the coming years, so watch out for their pumping of possible future gains.

A huge pump for buying silver usually proceeds a huge dump when it begins to rise from the stimulated demand. Furthermore, the pumps and analysis of the silver market use all kinds of excuses for why silver is dropping and why it will rise again. These excuses run the gambit but most involve foreign demand, foreign government economics or domestic economics as well as political reason, and these can be considered self-full filling prophecies to a degree.

For instance, all the large bullion companies, coin dealers, and experts often have huge mailing lists so they can send a pump-to-buy silver newsletter to hundreds of thousands of people, or include articles claiming that silver could drop if the Fed’s have something negative to say, or some politician or the government, or the strength of the Euro or US Dollar. So what do we see happening when all these subscribers and market watchers and day traders read these newsletters? They either buy silver or sell their holdings based on what’s being reported, and we know what that does to silver’s value, depending on their reactions to the latest news.

It seems the investor and traders hang on every word these experts have to say and try to play the game to make more money instantly when in reality they’re just a pawn in controlling and manipulating the market. I am not saying there’s anything wrong with making money but I am not for being a pawn in the big investors game. I don’t listen to it or read it anymore.

Therefore I buy the most silver when it’s down, then when it goes up a few dollars then I sell. I make money now, because I need it now, and not because I think I will get rich by holding onto it, at least not anymore.

Before you shrug me off on what I have said so far, I do believe in long term investments, just not bullion silver like bars, rounds or ETFs (Exchange Traded Fund). I just know that investing long term in silver US coins or  US coins in general is a better investment than bullion silver. However, I do make an exception with the Silver Eagle, and the reason I refer to long term investing in US silver coins and the US Silver Eagle is due to their growth in numismatic value.

Coin values continue to rise, with some ups and downs, but on a continual steady pace and for long term gains. So I do recommend buying silver, gold, copper and semi-key dates, key dates and variety coins now to hold onto for your future. If you buy them frugally now then you will see a bit of a return in the future, if our future doesn’t see a dramatic change like our government falling or being took over by another country.

In my opinion, the numismatic value of coins is a better risk then buying silver bars and rounds or over-priced silver coins from the precious metal pumping companies. You can do better buying from certain coin dealers and online auctions like ebay. I stick with any coin that has a US Denomination and is highly collected and try to find the best bargains I can.

However, a study of United States History will prove that we have weathered many bad times economically and always seem to pull through it, so there’s nothing to lead me to believe the end is near, or that I need to hoard all the bulk silver bullion I can for the impending doom.

Disclaimer: The author of the article is not an expert investor and doesn’t promise any future gains or losses due to investing in coins, gold, silver or any precious metal. The author is also not responsible for any losses or gain incurred after reading this article. It is merely the opinion of the author and CoinHELP! and should not be taken as advice on investing.

 

 

 


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