A Quick Review of Precious Metals Cycles

When you sit back and think a minute about precious metals prices over the last 30 years you can begin to see the cycles of interest and activity. This came to mind as I read an excellent short historical analysis of the precious metals market since 2006 posted this morning by Gary Dorsch at Seeking Alpha. Take a moment to read through Mr. Dorsch's posting, I am sure it will serve you well. 

It's good for us to look back before deciding how to move forward. Plus it's fun to reminisce!

I remember hearing some great stories about the coin market during that 1979 to 1980 period. In the ten years after the market crashed, dealers still refered to that high point as "The Party". It was a time when some people made lots of money and others came too late or held too long and lost it all. During the 1990's I met many coin collectors who were still holding their silver and gold, waiting for those 1979-1980 price levels to return so that they could cash out without a significant loss.

It's all a matter of timing...and knowledge...and intuition...and outlet. In other words it is much more complicated to trade in precious metals than most people can imagine.

Collecting precious metal coins with an eye towards appreciation, however, is something that most of us do to some degree and that's a good thing. It's a pursuit we can enjoy while keeping our downside risk to a minimum.

Just remember, there is a fine line between collecting for enjoyment and investing in collectibles for profit. Most of us cross back over and forth over that line quite frequently in small degrees, but the collecting side tends to bring us more happiness and less stress. I think about those folks holding on to their silver and gold through the 1980's and 1990's, waiting for a time to unload. The next cycle finally arrived, but was the 20 years of aggravation worth waiting out the profit?

Tom's Recommended Film of the Week

Cascading Precious Metals Morning

Gold and it's counterparts have all been on the slide this morning. In fact it has been almost a weeks worth of cascading spot prices for precious metals, with Gold down to about $895 an ounce as of this posting.

Silver is down to $16.85, Platinum at about $1985 and palladium at about $435. There's a lot of selling going on, with some true goldbugs buying in at these weakened levels, keeping the prices from dropping too drastically in any given day. For the most part, those involved in precious metals investment still see the market as bullish, with current developemnts viewed as healthy solidification. Long term predictions are still generally very enthusiastic for Platinum and Palladium.

Futures are also weak and for the short term it would seem that precious metals are on the outside, looking in. A strengthening dollar and the European economic outlook are pushing the Euro down a bit and U.S. economic data set to be released later this week will also likely have an effect.