Should I Invest in Gold and Silver Now?

[BadJuju]

I sold my gold and silver a year ago to buy a vehicle. Unfortunately, it decided to double in value between the sale and now. I needed the vehicle, so it wasn't a total loss, though. I am just wondering if I should get back into holding gold and silver now or to wait for another drop. Given the state of the economy and future events, I think it would be prudent to get back in as soon as possible; however, I am not an experienced investor.

[jpetr48]

Re: Should I Invest in Gold and Silver Now?

I am not an investment professional but I have been looking at the charts, the Commitment of Traders reports, public sentiment and of course keeping a close eye on our macro picture (e.g. dollar strength) thru EJ and others.

While charts are showing strong support at gold for 1720, the COT shows the commercials are holding a large short position and public sentiment is at a high.I'd wait another couple of days to see if 1720 holds and if so then start buying in at amounts you are comfortable with. Here is a link from Dan Norcini -look at Thursday posting 8/11 http://traderdannorcini.blogspot.com/. He will address those in your situation

On silver, EJ is forecasting a drop to 27. IMO this is a good possibility once the stock market goes to retest bottom and finds a new bottom- silver probably will sell off hard- just a guess. If it does not find a new bottom then expect more range trading for the short term future- I am not expecting silver to take off until spring 2012 because of the number of margin hikes on the CME. Best case $50 by December, worst case $27 in next 2-3 months. Long term silver will rise with gold in latter stages of PM market


Hope this helps.

[c1ue]

Re: Should I Invest in Gold and Silver Now?

The iTulip thesis is that gold in particular, and silver to a lesser degree, will continue to increase in price because the unit of measurement - the dollar - will continue to decrease in value.

There will likely be a point in the future where gold will become 'popular' and thus exceed to devaluation, but the timing and final valuation is uncertain.

We've already seen with silver how this 'popularity' can result in a bubble.

The other point of iTulip analysis is that so long as the policies underwriting the dollar devaluation exist, the 'true' price for gold and silver will go up.

So if you have money you don't need for the medium to long term, you should buy at least some gold/silver in order to shield some of your assets from this dollar devaluation.

The iTulip recommendation is 30% PMs - though many members of iTulip have higher percentages.

This isn't the only path though - my own choice was to spend my savings on building a new business. My view is that until the asymptotic point is reached, ultimately the increases in gold/silver prices are just a function of the dollar denominator falling.

True wealth building for a younger person generally comes through work - increasing professional standing/experience, building a business, going into a new field, etc etc.

For those like EJ and most of iTulip - who are older people seeking to preserve large retirement nest eggs - it is a very different proposition: value preservation.