Precious Metals: This Time The Trend Truly is Your Friend

I often get e-mails from readers stating that are leery about investing in precious metals.  They complain that the markets are “too volatile.”  In the short term the metals markets– particularly for silver and platinum–are indeed quite volatile. (Witness yesterday’s 28 cent dip.) But it is important to step back and look at the big picture. Forget the daily fluctuations. Instead, look at the 120 day moving averages (DMAs). Next, study the 5 year and 10 year charts at

Back in the late 1990s, investors were piling into the NASDAQ, gobbling up high technology stocks in a speculative frenzy that rivaled Holland’s Tulipomania of the 1630s. The investor’s mantra was “The trend is your friend.” But of course history proved them wrong when the bubble burst. The dot.commers were looking from within a short term trend–not the long term. It turned out to be just a three year buying binge with a notoriously ugly aftermath. In contrast, looking at the precious metals market, one can safely say that this time the trend  truly is your friend. In this case, it is true because the bull market in metals is based upon the long term debasement of the U.S. Dollar. The Federal government’s profligate spending and both government and consumer debt point to a long term bear market in the dollar, and a corresponding long term bull market in precious metals. I don’t expect Uncle Sam to change his spendthrift ways anytime soon, so take advantage of the long term trend.