Q&A With The Doc: Is Now the Time to Purchase Gold or Silver?
by The Doc, Silver Doctors SD reader RS writes: Doc, Would you please advise if this is a good time to purchase either silver or gold? Would you advise buying in increments each week or in one bulk purchase? RS, Dollar cost averaging by buying in increments each week or month does have several advantages, particularly emotionally. For example, if you put 100% of your assets into gold or silver immediately in one lump allocation (or into any investment for that matter), if price temporarily declines 5%, 10%, or even 20%, you will (over the immediate short term) emotionally feel like you made a mistake and should have waited for the further decline. If you make your purchases in increments however, if price declines after your initial purchase, you are likely to be much more comfortable and confident from an emotional standpoint, because your next incremental purchase will now be made at a discount (ie. more ounces, or lower $ cost for same amount of ounces). Likewise, if the price increases after your initial purchase, while technically missing out on the potential gains had you allocated 100% of your capital at the lower price, emotionally you will be happy because that initial purchase is already positive and has “made you money”. The most important part (yet by far the most difficult) of financial decisions is completely removing your emotions of greed and fear from the process, and incremental purchases help quite a bit in this regard. (99% of the public base their investment decisions on either fear or greed, which is why the public notoriously always sells when a market is bottoming, and buys when a market is topping) As far as the outlook for gold and silver in general at this point in time, while I am not a licensed investment adviser, so I cannot give you any specific investment advice legally, I can tell you that I personally recently bought physical gold for the first time since gold was at $900/oz as I believe we were at or very near a long-term bottom in gold. (While I acquired the majority of my silver holdings over a decade ago, I’ve continued to DCA to increase my silver stack ever since as funds allow). Silver is very attractive here still below $18, I personally believe downside risk is likely in the $12-$13 range, and the upside remains what it was prior to this 4-year grinding correction. If the full downside risk materializes however, expect premiums on silver eagles to jump back towards $5-$6 an ounce so if you are making a physical silver purchase it wont be available for $12 or $13 an ounce if silver does place a final wash-out bottom. Just My .02. All the best! -Doc