Most investors should be pleased with present trend.
(1888PressRelease) October 09, 2011 - MIAMI, FL - Reaction to the recent volatility in the precious metals market can depend on one's reasons for investing. While there are many different types of investors, they can be largely grouped into perhaps three camps.
Firstly we have speculators; these tend to be experienced in the precious metals market and are purely interested in making profits. They are prepared to gamble on the future direction of prices, going long or short as their impression of the current trends indicates. They may also see lower prices as perfect buying opportunities, taking profits when prices rise again. Of course, their actions help push prices back up; ironically, their later profit taking helps push prices down again.
Secondly we have investors who are looking for wealth protection. These investors have lost faith in fiat currencies, and the governments that back them, and see precious metals, especially gold, as the best form of alternative currency. They amass gold as an insurance policy; some will cash in their insurance policy when they find themselves in need of cash to cover losses elsewhere, others will hold onto their gold bullion with little intention of ever selling. Price fluctuations will be watched by this group with caution and some may rush to sell when prices start to slide; others, however, may decide to hold tight, knowing that the price will eventually rise again.
Thirdly, and these investors may perhaps be included in the second group also, we have those who like owning precious metals for their intrinsic value. They enjoy the reassurance of having physical possession of a commodity that cannot be devalued and they may enjoy owning metals for their rarity and beauty. They are not likely to sell their bullion; these investors are hoarders. Price fluctuations will not bother this group at all; they are concerned only with the long term.
All three groups should be happy to see prices rising; the first group will be waiting for prices to peak, the third group will be relaxed in the knowledge that this was always going to be the case, but the second group will be split. Those who held firm will be congratulating themselves while those who 'cashed in' their insurance policy may be regretting their actions.
There is no right or wrong way to invest; people's motivations differ and their actions differ as a consequence. It is important, however, to understand ones reasons for investing in precious metals and to view activity in the market accordingly.
Bill Hionas runs Pan American Metals of Miami, a precious metals brokerage located in Miami Beach. He leads a seasoned team of investors, traders and account executives.
About Bill Hionas:
Bill Hionas is CEO of Pan American Metals of Miami, LLC, a group of traders, investors and account executives who combine many years of experience to help clients invest in bullion. PAMM provides an individual investment service and is based in Miami, Florida for convenient access to both North and South American investors.