26 Jan 2015

Three Important Points to Remember in a Volatile Gold & Silver Market

Coins | ANA Official Post | ANAStaff

By Tony Davis

As of this writing, gold and silver are seeing a fairly strong pullback from what otherwise has been a stellar year for precious metals.  Reasons for the recent sell-off in the commodities market are being attributed to the Greek election results, a pullback in the Swiss Franc and a strengthening dollar.  Regardless of the day, there are many factors at play that can affect the price of gold and silver.  If the past is any indication, we’re likely going to see some irrational behavior falling this recent sell off in the precious metals market.  As a seasoned coin dealer, we’ve had the opportunity to witness bull and bear markets first hand and believe that we have some insight to share that may be of value to bullion and coin collectors in hopes that they can avert making some costly mistakes.  In this article, we’re going to address three points or guidelines that all investors should consider prior to making any decisions that they may regret in the future.

Don’t Panic!

First and foremost, don’t panic!  Making knee jerk reactions or panicking in a falling market could be hazardous to your financial health.  While it’s perfectly natural to feel uneasy during a market selloff, we recommend that you put things into perspective before making any decisions one way or the other.  If you have a long term investment horizon and don’t plan on cashing in your gold and silver coins anytime soon, a dip in the market should not be seen as a negative, but rather a positive.  Look at this as a buying opportunity to add to your holdings while gold and silver are on sale.  On the other hand, if a decline in the market has caused you to realize that you don’t have the appetite for the volatility of the precious metals market, pare back your holdings to a level that you feel comfortable with and try to avoid regularly checking the spot price of gold and silver.

Don’t Try to Time the Market

While there are some people that have the ability to accurately time the market, 99.9% of us don’t know what the price of gold and silver will be on a daily, weekly or even monthly basis, so it’s best to avoid timing the market, whether it be on the upside or downside.  If you’ve been waiting for a pullback in gold and silver before entering the market or adding to your current holdings, take advantage of this opportunity now.  Don’t wait in hopes that prices will drop lower and that you’ll be able to acquire precious metals at the absolute bottom.  Rarely does this ever happen.  Furthermore, available supply tends to dwindle quickly in a falling market, so even if the spot price of gold and silver does happen to drop further, it’s likely that there will be reduced inventory available, which could cause a spike in premiums.  In fact, we saw this very situation in the first quarter of 2014, when American silver eagles and 90% silver coins were difficult to come by at nearly any price.

Honor Your Commitments

From a coin dealer’s perspective, honoring your commitments is absolutely the most important thing that you can do to maintain and build your relationship with a coin dealer.  While it can be painful at times, it will pay dividends in the future.  What do we mean by honoring your commitments?  If you have come to a verbal agreement with a coin dealer to buy or sell coins or bullion at a certain price, you should follow through with that commitment, regardless of what the price of gold or silver has done since the agreement.  It cuts both ways.  Over the years, we’ve found ourselves selling coins at well below market rates because we agreed to rates in advance with a customer.  Customers who honor their commitments are held in high regard by coin dealers, which will likely translate into early access to new and popular products as well as preferred pricing.


In summary, falling gold and silver prices can be painful, especially if you haven’t experienced a sharp selloff before, but it’s important to keep things in perspective.  As discussed above, it’s important that you don’t panic.  Take a step back and objectively evaluate your position before making any decisions.  Secondly, don’t try to time the market.  No one knows for certain where the price of gold and silver are going in the short term.  If you view falling prices as a buying opportunity, act now, rather than waiting to see if prices fall further.  Lastly, be sure to honor your commitments.  Not only will you earn the respect of your coin dealer, but you’ll also likely receive preferential treatment, such as early access to new inventory and preferred pricing.



Level 7

The only people making big money on investing are those who have big money. Common sense tells you that. Any magazine you open starts with coins so expensive the regular collector is left in the dust. That's a fact. Even the ANA magazine does the same although they do have articles for regular collectors. There like written to fill it. Look at those who made money. There great grandfather and other relatives collected early on. That's old money and we don't have it. Thanks no about it. Mike.


Level 5

I find investing almost fun, but you MUST be careful. I definitely agree with the rules above.

My family purchases precious metals on a regular basis - my dad calls it dollar cost averaging.


Level 6

Investing in anything, be it stocks or metals, is just legal gambling. Don't invest what you can't afford to loose. That's just my opinion. I could be wrong!

We use cookies to provide users the best experience on our website. If you continue without changing your cookie settings, we'll assume that you agree to receive all cookies on money.org. You may disable cookies at any time using your internet browser configuration. By continuing to use this website, you agree to our privacy policy and terms of use. To learn more about how we use cookies and to review our privacy policy, click here.