.....That way when the trend reverses, you'll have a nice stack of paper to invest in under-valued PMs.
Correctamundo. Of course if you already hold PM's then usually best to hold them, because you can never be sure when the bottom will arrive, and the buy/sell costs could ruin your day. But usually not a bad choice to holding off buying more in a clearly long term declining market, because odds are it'll either keep dropping or will flatten out. Unlikely to go to moon at a moments notice. I always like having cash knowing I can buy in big time if the market plummets. Those who buy regularly and don't have the spare cash won't have the luxury if it arises.
Let governments swap from net buying 450 tonnes every year back to net selling 450 tonnes, what would such a 900 tonnes supply/demand change do to the price? The same it did in the past, but in the opposite direction?
Falling prices mean your cash becomes more powerful, the amount of cash required to purchase assets yesterday is reduced today for instance. Its the opposite for inflation you want hard assets not cash. If you are a genius you can buy at the bottom of the deflationary cycle and then sell out at the top of the inflationary cycle.
Thank you (and others) for the replies. What I don't understand at all is this: "How is it that the dollar might become stronger in the US, when everything says (to me) that the value of the dollar in terms of buying power is increasingly going down? In other words, the "strength" of the dollar is just an illusion - it's certainly not backed by a stronger economy or less (real) joblessness.
It's not that the US dollar is intrinsicly strong, its that faith in other currencies is being eroded. Like asking for volunteers and everyone except one, takes two steps backward ....
O.k. falling back to the mighty U.S. dollar is the safest place to position yourself....key word here is to "position". A simple analogy is to imagine the hub of a spoked wheel. Every spoke ( i.e. investment) originates from the hub. to move back to the U.S. dollar is like moving down from a spoke and into the hub. From the hub, every possible opportunity is "available". It is then a function of time as to when a particular spoke ( or investment) is chosen. In times of crisis, there is no better position than to be at the hub. The first to the hub will benefit the most, the last will pay a very handsome price.
I've decided to average down in to gold, simply because I cannot predict when bubbles pop. There is a saying that markets can continue to be irrational longer than you can remain solvent. However, the fundamentals are that the real economy is weakening and the price action is all smoke and mirrors. An interesting effect of having both gold and cash position is that if the value of one doubles the other tends to halve, but the net result is still a gain. I am taking advantage of USD strength because who knows how long it will last. Everything else is like a game of bubble and crash, redistribution instead of "real" wealth creation through business. It's parasitical essentially and will eventually cause further systemic issues. At least, as gold goes down and USD goes up, house prices local to me are tending to go down in response to USD strength which means I can get into one cheaper (as well as get more gold cheaper). We are at debt saturation which is deflationary, but I suspect governments will freak out and overcompensate to "stave off deflation". The plan is the same regardless of the actual timing: buy more tangibles as prices drop, if high inflation strikes these assets preserve wealth.
