The age old questions that many people ask both themselves and us is, “When should I sell?”, or “Is now the time to sell?” As you might already guess, there is no simple pat answer to either of those questions.
In the big picture, one must understand the comprehensive market cycles:
The 3 Phases of this Metals Market:
Phase One (Stealth Phase)
The smart money begins to enter when no one else can see the changes that are coming. These people are the forward-looking type. They are prepared to act upon what they believe. They can see ahead. They are not part of the crowd. This minority are the instigators of change. The crowd never initiates; they only follow what the minority first instigated!
Phase Two (Wall of Worry Phase – The Present Phase)
Next comes the institutional money such as banks, insurance companies, investment fund companies hedge funds, etc. Also from here emerges those companies and individuals which began in phase one and have now grown much bigger. Companies are now marketing to the mainstream crowd. Plus, there is rampant talk that the market is in a bubble. Investors and sideliners alike are trying to determine if they should buy, when they should buy, should they sell, is it too late, etc. Worry everywhere!
Phase Three (Mania Phase)
Now even the diehard bears have become believers. Everyone is speaking about the sector, including Joe Average, the Former Naysayer and the Newspaper Boy. Unscrupulous vendors are coming out of the woodwork. The market seems to go nowhere but up. You literally can’t lose – and if you don’t get in now, you’ll be left in the dust forever (sounds like Florida real estate and dot com stocks.) This sector is the greatest time of reward for those who began and did not bail out in phase one or two.
There’s Nothing New
It has happened repeatedly before.
In 1982 the smart money was buying into an infant sector of technology companies when no one else was paying any attention. Then, the large institutions and venture capitalists began to enter approximately between the years of 1989 and 1991 still unbeknownst to most. In 1995 the mainstream crowd began to enter the tech stock arena driving the price of this sector to the moon.
In the tech sector, mainstream America did not realize for almost thirteen years what was simmering and getting ready to explode. By the time most people realized this, it was well underway, and only those who were pre-positioned realized the tremendous gains.
It is no different with the current Precious Metals market we find ourselves in today. The mainstream still have not entered. However, it is bubbling away just under the surface ready to explode – just waiting for when the timing is correct for the mainstream crowd – and not a moment before. Just take a realistic look around you. Are friends and colleagues speaking about gold in the same way that people were speaking about the tech sector in the 1990s?
An Unfortunate Truth
Those who bailed out in phase one or phase two will never know what could have been if they had hung in there. However, those who stay the course and hold on with confidence will reap a multiplied return from the efforts of the seeds already sown by those who got out long before.
When You’re In, Stay In, When You’re Out, Stay Out:
When you have made your decision, whatever it is – stay in or stay out. It’s the getting in and out that destroys your potential for large profits and success.
Additional Factors to Consider:
There are key factors one must consider when contemplating whether or not to sell your precious metals. Here is a list to review:
1. How much gold and silver do you own as a percentage of your investments, specifically, how much of each metal?
2. Are you over-weighted in either silver or gold, and do you need to sell one in order to balance your holdings or gain more of the other metal?
3. Do you need to liquidate in order to gain immediate cash for an emergency or alternative cost need? Please note that we frequently loan our clients money and they use their metals to collateralize the loan. If you are simply in a short term need for cash situation we can help with that as well.
4. Where is the market currently and where is it headed in the long term?
Then there are many that don’t or have not yet asked those questions. The majority of our clients purchase gold and silver as long-term “hold” investments, anticipating a need to hedge against future inflation and both global and market instability. Many also believe that there is a chance that their metals may reach a time of utility before they even think of selling them. They also purchase them for portfolio diversity and often do not want to lose the additional asset class that their metals provide by selling them.