I'm interested in the PM markets because of what can happen to the juniors when the plays get hot, like they were in the 1990s even though the physical just meandered about at a level not much different than where it is now. The dot.com era not withstanding, you can make more money faster in juniors when they get some momentum going than anywhere else (with the exception of the futures markets, perhaps). I also hold varying amounts of physical gold and silver as a disaster hedge, even though I view that as a very remote possibility -- still, discipline needs to trump conviction if you are to stay in the game.
And don't take my confidence the wrong way -- I don't think the dollar will decline significantly from here, as the economic data does not make it inevitable (although, from a technical perspective, that is a really nasty looking bear wedge on the hourly chart), but I certainly don't know that. Everyone needs a thesis for investing, however, and the one that has served me well is to (1) forget about politics, as it clashes with making money every time and forces you to let conviction trump discipline, (2) don't worry about being the first one in or out of a market move (or economic regime change, for that matter), as the moves that make real money are sustained and allow plenty of opportunity to climb on board, and (3) understand what the zealots on either end of the spectrum are trying to say, realizing that what happens is almost always something in between.
In this case, I don't see economic collapse, nor do I see dollar hegemony -- just more of the same "Muddling Toward Frugality" -- which, by the way, was an interesting little book by Warren Johnson back in 1979 (remember the doom and gloom back then?). Turns out that the frugality came (I guess some would claim it never really came) and went, to be replaced by one of the greatest economic expansions ever seen. Now we are back to the "doom and gloom," with forecasts of frugality for as far as the eye can see -- it will be interesting to see how it turns out this time! |
