Public perception and the price of PMs.

Bear

Public perception is most sensitive and subject to unreasoned

emotional factors. It can change direction rapidly. It is not always

a sensible or reasoned reaction of the known facts.Perception is composed of rumors,

fear, wild enthusiasm, herd mentality, financial avarice to make the big score, conjecture,misleading public statements

by government officials or talking heads.People pile in and buy at unsustainable high prices, and then many panic and

sell as prices below all reason. The buy high and sell low is a policy that is not compatible with the protection or increase

in ones wealth in true values.





In Vegas, we have the double up system. You keep doubling your bet until you regain all your lost money. The same happens

in PMs. The early birds, who have averaged the cost of PMs at a low number, are protected against any major set back in price. The

late comer, who is in a frenzy to get in on the gold or silver rush late in the game, is at very high risk because they are buying at ever

higher prices as the up cycle for the commodity grows ever more aged. Thus timing and cost begin to weigh heavily against such late

to the game individuals. Can these late comers make money, perhaps for a while, but since they never have a sell price, they usually

ride the pony up and down to a point that they panic and sell at a lose. Others sell their stack, and then after viewing the increasing

price of silver, buy back in at an ever higher price, giving up a sure profit for a high risk bet for a bonanza.

As stated in a Clint Eastwood movie, "A MAN HAS TO KNOW HIS LIMITATIONS".

RedHerring

When a silver quarter melts at $10, the public perception could get really unreasonable. That's at $55 silver and may be here a lot sooner than I thought possible.

Justacommeman

Bear I guess I look at it a little differently............


Let's say Sneezy has a stack of 1000 ounces of silver has has bought at an average cost of $10 over the years.

Let's say Dopey has never bought an ounce of silver in his life.

Let's say tomorrow they both buy $10,000 worth of silver at $42 or at market.

Who has the greater risk/reward on that $10,000 purchase?

If silver hits $84 will they not both double their money on the 4/14/2011 cash outlay?

If silver pulls back to $21 and they both sell all their silver on the same time will they both not be in the same position on that $10,000 position they bought on 4/14/2011?

MJ

jmski52

The late comer, who is in a frenzy to get in on the gold or silver rush late in the game, is at very high risk because they are buying at ever

higher prices as the up cycle for the commodity grows ever more aged. Thus timing and cost begin to weigh heavily against such late

to the game individuals.

There is an easy way to avoid being "that guy". Don't be in a frenzy. Buy a little, and re-assess. The point is to rescue dollars, not to leverage up in a big way that puts all of your net worth at risk. Rescue a few dollars here and there - and then poke your head out of the cave & look around. If the same money-printing big bank manipulators are still in charge, go back into the cave, hunker down and rescue a few more dollars here and there.

Rinse, lather repeat. Even at $42/oz. silver, $1,480/oz. gold or $1,789/oz. platinum, that is the way to use silver and/or gold and/or platinum to your advantage.

Bear

Jmski, I believe that you have the correct formula.

As for JCM, there are a lot of ifs, in your logic.

derryb

Public perception of PMs only changes as one realizes his dollars are losing value. I know people who are proud of their 1.5% return on bank CDs until I show them inflation and dollar devaluation charts. To make them feel better I let them know they are doing a tad better than those who only get 1% on their CDs. Then I show them my AGQ chart for the last year.

Justacommeman

Actually Bear the scenario I illustrated works the same at every price. It's a constant. Fresh money put to work if just that. MJ

Leham

I think the largest perception concern for the public (and many people here) is that they think in dollars,
not wealth. If your concern is buying PMs to speculate on the price and earn a "profit" in dollars, this is
all good advise. However, it is best to consider your PMs (especially gold) as money/wealth, not an
investment. If you think this way you will quickly realize that the purchasing power, or wealth, of you
PMs stays the same over time. That is the number of loaves of bread you can by per ozt stays the same.
It has been this way, with few short exceptions, for the entire course of history (6,000 to 9,000 years).
In fact, as technology advances and humanity is able to produce more with less, the purchasing power
of PMs increases. This can be seen by observing the "size" of economies grow much faster than the
above ground gold and silver stashes; resulting in relatively less gold and silver to describe the new
growth. I don't consider my stack as a part of my portfolio, it is my savings account. I know how much
metal I have and, unless I'm robbed, it stays put and so does my wealth.

MoneyLA

I admit that Im old enough to remember this... the "public" sold at the right time back in 1980... leaving the pros to get whalloped when silver prices collapsed. the "public" is not stupid. it's the "professionals" who think they know it all.

BigE

<< <i>I admit that Im old enough to remember this... the "public" sold at the right time back in 1980... leaving the pros to get whalloped when silver prices collapsed. the "public" is not stupid. it's the "professionals" who think they know it all. >>



Yes, it will be interesting to see if the dealers get a little skittish @ 50.00 this time!---------------BigE

Justacommeman

Welcome Leham

MJ

Leham

Thanks Justacommeman