Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Markets Failing to Give Another AI Mega-trend Buying Opportunity - 6th Jun 20
Is the Stock Bulls' Cup Half-Full or Half-Empty? - 6th Jun 20
Is America Headed for a Post-Apocalyptic Currency Collapse? - 6th Jun 20
Potential Highs and Lows For Gold In 2020 - 5th Jun 20
Tying Gold Miners and USD Signals for What Comes Next - 5th Jun 20
Rigged Markets - Central Bank Hypnosis - 5th Jun 20
Gold’s role in the Greater Depression of 2020 - 5th Jun 20
UK Coronavirus Catastrophe Trend Analysis Video - 5th Jun 20
Why Land Rover Discovery Sport SAT NAV is Crap, Use Google Maps Instead - 5th Jun 20
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Silver, Rethinking “Buy on the Dips”

Commodities / Gold and Silver 2011 Mar 03, 2011 - 03:43 AM GMT

By: Dr_Jeff_Lewis

Commodities Perhaps no more do we hear this common phrase “buy on the dips” than in raging bull markets.  Investors who have long sought to price themselves into strong markets have used this phrase to justify their patience.  However, truthfully, “buying on the dips” isn’t at all rational.


Consider for one moment what buying on the dips means; it means to ease into a particular investment with several smaller investments intended for only times when the market had dipped or made a very small decline against a general bull market.

What makes this strategy so attractive is that investors can buy into the market at its lowest point routinely, and thus lower their average cost per unit as far as is reasonable, given their individual timeline.  But does it make sense?

If we are to assume for a moment that silver has nowhere to go but up in the long-term, why is it that investors want to buy at…say, $30 per ounce instead of $33 per ounce?  Certainly, the desire to save $3 is appreciated, especially in this scenario when $3 represents a 10% change in price, but how does that reason against the fact that in an uptrend, all investments made earlier on the timeframe are at lower values than those made later?

Days vs. Decades

The desire to “buy on the dips” almost runs counter-intuitive to a long-term investment process.  Why does a dollar matter today, if we expect a rise of several dollars in the future?  And given that such a strategy is dependent on relative values, are we sure that investors are actually making more money by waiting?

Investors waiting to buy on the dips in August would have sat out of the markets from $18 to nearly $30 before buying the dip at $25 in January.  While $25 may be a dip relative to the $30 valuations around the first of the year, it is not, in any way, a dip relative to the $18 August price level.  

Patience in long-term investments rewards only those who are holding assets, not those waiting to buy them—and by the very definition, those waiting patiently to buy a dip are not holding the assets they could.  Rather, they again are waiting to buy the assets they believe will rise in value.

Perhaps most backwards is that a “dip” in price usually lasts or is made available for only a few days, at which point the price continues to fall and thus creates a more sizable crater than a dip, or the price rises higher, following a very generic trend toward the top of the chart. 

Silver did not become a #1 investment overnight, nor will it rise to $100 in an hour unless something catastrophic happens.  With that understood, the best dips to buy are the dips that are here right now.  Silver at $33, regardless of its relative maximum value, is very much a bargain to what silver will cost ten years from now.  And to that end, waiting for small percentage declines in what is expected to be the biggest commodity bull run in history not only doesn’t make sense, but it is inherently illogical.

Forget the dips.  Compared to future prices, every price now is a “dip.” By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules