Thursday, January 15, 2015

Somebody Said Silver Surfin'?

Let me explain this graph to you. This graph shows all the previous bear markets of silver from 1968.

One of my favourite indicators to use is actually the investment in question itself. I love going back to compare historical drawdowns. Previously I had it done, but only in percentages. As you can see, the duration of the bear market is also useful information to know.

It looks like we have either escaped this bear market already, or we probably just have a bit more downside to go. Either way, Silver is ridiculously cheap.

A lot of things are telling me to "Stack On!". However, I think I will wait a while before I once again start aggressively loading up on Silver. I already have a pretty huge allocation to precious metals. Any portfolio manager aged 20-50 would probably look at my portfolio and shit their pants with my allocation. More allocation in precious metals than equities? They actually would just resign instead of taking over my portfolio, haha.

*I actually drafted this post last night, but it was 3am and I was too tired to finish it and post it up! However with the SNB news out, I am just posting this out as quickly as I can so that if anyone is interested, they can see how my thought process is like regarding Silver.

The minute I heard the news, I immediately checked out the metal prices. My logic: currency crisis / volatility will cause a natural gravitation towards the precious metals. Plus, come on, Silver is cheap. Plus plus, Silver is shiny. Any reason you give me to stack, I'd probably take it. I'm one of dem' crazy peeps.

Luckily the news wasn't digested by Silver yet. I suppose everyone was too busy scalping the EUR/CHF and other CHF pairs. Or freaking out that they just became bankrupt.

Anyway, I bought a boatload of physical Silver from BullionStar at just under USD $17.

I don't claim that this is the bottom for Silver. Doesn't matter what I think, the market does what the market wants to do. However, I do think that we are darn near a bottom, whether we are really in the clear or due for more downside. This is a game of probabilities, and I am putting my money where my mouth is at. I think the probability that we go up long-term from here is much higher than the probability that we go lower.

One of the things I've learnt since I've started investing is that for long-term investments, optimizing your entry for a few cents here and there isn't worth it if you miss the boat. The fundamental thesis isn't going to change with the price. There's no need to penny pinch for long-term investments. If it gets cheaper and the fundamentals hasn't changed? I will probably actually even consider buying more.

Just my thoughts outloud to myself now.
My opinions, your money.*

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