Tip 4/7: Be prepared to see sudden price drops – Focus on the fundamentals

Tips to increase your wealth by investing in Gold & Silver

Tip 4: Be prepared to see sudden price drops, it’s typical. Stay focused on the fundamentals.

As a general rule of thumb, you should know that prices tend to move sharply in most commodity markets. We’ve seen this happening in gold in the past years, but even more so in the silver price. It’s quite common to see silver price increases of 3% or more on one day. But sharp moves lower are common as well.

Now, these moves in the gold price and silver price, are about to become even sharper as we continue well into the long term wealth cycle. In the first stage of the cycle, there is a steady but slow increase in prices. Applying it to the current gold bull market, we saw this happening from 2002 till 2008. As from 2009/2010, which marks approximately the start of phase 2 of the gold bull market, we witnessed heavier price swings. This volatility will continue and it will increase in the coming years, as we move towards the third and final phase of the bull market (the mania phase).

So please do not panic when you see big changes in the gold or silver price. It’s very natural in fact.

Controlling your emotions is not an easy task of course, as they are your biggest enemy when investing. But you need to stay focused on the fundamentals, as they are favoring the precious metals each passing day more and more.

For the “heart fainted” individuals or investors, you’ll preferably need to focus on gold. If you are not afraid of volatility and you have an iron stomach, then go for silver: you’ll have potentially higher profits, but expect high and sudden price drops in the silver price as well. Be sure to time your purchase.

As the bull market in gold & silver continues, the volatility goes up as well. As soon as institutional investors (“wall street”) will enter on a larger scale, the prices will swing at an even faster  pace. When the masses finally will join (“main street”), you can expect massive price hikes. Do not overestimate the size of the gold and silver market: they are both thin (smaller than most of us believe), so increasing volumes flowing in and out of these markets will affect to a high degree the price.

In the midst of all these price changes, don’t forget to keep on focusing on the fundamentals: only if the fundamentals would start to deteriorate, you should start worrying. Currently all indicators are in favor of precious metals. You can subscribe to one of the recommended investment newsletters to stay up to date, to get professional and objective views on the fundamentals, to know when it’s time to accumulate gold and silver and when you should be selling.

 


 

Beginners’ Guide – All Articles

 

INTRODUCTION TO THE WORLDS OF GOLD & SILVER

What’s This Financial Crisis About and What’s The Link With Gold & Silver?

Physical Gold: antidote against the ongoing global debt crisis

7 key benefits of owning gold and silver

7 Ways to Invest in Gold  and  7 Ways to Become a Silver Investor

Is Silver a Safe Investment  and  Are Silver Coins a Good Investment

Buying Silver is a Volatile Investment  and  The Value of Silver

Why To Buy Gold Bars as a Gold Investment

Understanding Gold Coin Prices

Understanding Gold Price Per Ounce

 

7 TIPS TO INCREASE YOUR WEALTH WITH GOLD & SILVER

Introduction: Now is the time to invest in gold and silver – 7 tips to increase your wealth

Tip 1: Gold and silver is for everyone – You too should own it

Tip 2: Be sure to have physical gold & silver

Tip 3: We are in stage 2 in the long term gold & silver bull market

Tip 4: Be prepared to see sudden price drops

Tip 5: Timing when buying is crucial

Tip 6: This is the century of silver

Tip 7: Gold & Silver stocks can have high yields

 

IS NOW THE TIME TO BE BUYING GOLD & SILVER?

7 facts proving we are in a long term powerful uptrend in Gold and Silver

Is This the Best Time to Be Buying Gold and Silver?

Gold Investments in 2012

 

THE BEST GOLD & SILVER INFOGRAPHICS

Is gold a bubble? Look at this Infographic for the answer.

Own physical Gold? This infographic explores Vaulted Gold as one of your options.

Infographic: all you need to know about Gold in the world