Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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 and

    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 - 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