Yesterday was a bad day for Mr. Market. There was red across the board and around the world. Even gold got hit by the squeeze. The USD was about the only thing significantly in the green.
But is this a dip for gold and silver enthusiasts to buy—or the beginning of the next big crash?
The way I see it, what to do now depends on two key variables: whether or not I’m new to the sector and whether or not I think the next big market crash has begun.
The first variable, at least, is easy to figure out. I know the answer if I’m new to the space and still building an initial portfolio, or if I’m already massively long (perhaps even all in).
The second variable is unknowable.
I know many would like me to say that the crash has begun (or not), and lay out convincing evidence that I am right. But the truth is that no one knows.
Of course, someone will say “This is IT!” and claim guru status if they turn out to be right. Happens all the time. But that’s just showmanship, not actual prescience.
What's not a variable, in my view, is that monetary metals are headed much higher, with or without another temporary squeeze brought on by a crash. That makes a potential market crash a buying opportunity—for gold and silver stocks, at least.
So, where does that leave us today?
Here’s a simple decision matrix that I hope will help:
To be clear, I’m not telling anyone to go out and buy a bunch of stocks today.
I’m saying that if I was new to this space and still building my portfolio of initial stakes—and I was confident that the market didn’t just start its next major meltdown—I would see the current retreat as a buying opportunity.
Unless, of course, I knew I was the sort who’d get ulcers if I bought now and the same stocks are selling for 50% less in a few weeks.
Anyone who buys now must be highly confident, not only of the eventual outcome of the speculation, but of their ability to handle what happens in the interim.
If you can handle it, great. If I were in those shoes, I would be placing Buy orders with my brokers now.
That’s not my case, however, so I’m holding on to my current positions.
I’m also sending more cash to my brokers so I’ll be ready to average down in a big way, should we get the bigger market crash I was expecting last April.
In fact, I just sent more money to my brokers than I ever have at once before—and I plan to send more ASAP.
Knowing exactly what I plan to buy—before I do so—is what The Independent Speculator clients pay for, so I won’t discuss that here. But I will signal to all readers when I do start buying again.
I plan to be ready so that if we do get a shot at stupid-cheap prices—maybe even lower than we saw last March—I won’t miss it.
That’s my take,
P.S. To be kept abreast of more dangers, opportunities, and issues affecting investors, please sign up for our free, no-spam, weekly Speculator’s Digest.
