The urge to jump into gold and miners may be overwhelming for some investors. I suggest caution as the first wave of bottom pickers usually regret their decision.
I’ve been doing this for a while, and I’ve seen massive swings in precious metals. Through experience, I learned to be patient and to wait for an entry with defined risk. What do I mean by defined risk? I’m referring to a set entry and exit strategy with a calculated stop…not “well, let’s see what happens.”
Bottom Beware: When prices crash, as they have, there will always be those first brave souls ready to jump in…afraid they will miss the bottom – usually all-in! Frequently, that is a poor and impulsive decision.
This type of economic meltdown doesn’t end overnight. It will take several weeks to perhaps months for prices to stabilize. The first few waves of bottom pickers could get chewed up and spit right out. It all depends on how long this panic lasts. There will likely be waves of selling followed by convincing rebounds. Take a deep breath, and consider using a structured, “non-impulsive” approach. Fast decisions are usually wrong decisions.
Make A List: In the meantime, make a list of your favorite stocks. Remember, everything is on sale – not just precious metals. There are several quality stocks now paying dividends between 7% – 10%.
In summary, be patient. If you do buy now, consider a dollar-cost-average strategy. Keep some ammo in reserves – prices may drop further than you expect.