Herd Mentality on Silver: Six Tips on How to Avoid

Herd mentality describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. Examples of the herd mentality include stock market trends, fashions in apparel, cars, taste in music, home décor, etc. – Wikipedia

^ Don’t be among the sheep. Meehhh…

If you have not heard about herd mentality, you may want to stop your world for a second and read up a bit on it. Chances are if you are making decisions based upon the actions of others, you may be among the sheep.

Investors with herd mentality are usually at the bottom of the food chain when it comes to investment. Because they rely mainly on grapevines, they usually buy during uptrend and sells during a downtrend.

Here are six tips on how to avoid being a sheep.

1) DYODD – Do your own due diligence.

Everybody is a guru of their own league. Without a solid understanding on the fundamental, you will be swing left and right by all these so-called investment gurus.

Some may predicts silver will dunked down to $25/oz and that would be the best time to buy. Another guy you barely known will say it is now or never! Dig out all your cash today and buy as much as possible today! Price will start shooting up tomorrow! Target $65/oz!

^ Mike Myers is the silver guru. He foresees silver will go uptrend forever.

You should start by understanding the primary fundamental of silver before diving into it. Having your own point of view is crucial. Bear in mind that sheep does not have the ability to think, they just follow.

Unlike gold, silver is a hybrid with two major usages. Almost all silver ever unearthed are channeled into industrial usages. Merely 5% of silver are used for store-of-value or monetary purposes. Silver is traded just like any commodity in COMEX and is subject to volatility. Unless you are able to tolerate the yo-yo like prices, you may want to consider alternative investment.

Do your own research sufficiently on the nature of silver.

DYODD and be your own guru.
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How to Invest Silver: Ounce Cost Averaging (OCA)

When it comes to investment, everybody knows about buying at low and selling at high.

Problem is, when is low and when is high?

It feels good to buy while riding the bull thus, common investor buys when thing is going UP. When price is falling, it feels worrisome to buy more. In reality, investors buy the least when price is falling and buy the most when price is moving up.

To solve this, dollar cost averaging strategy is recommended.

“The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.” – Investopedia.org

How to invest silver using this strategy?

While dollar cost averaging works best for shares and mutual funds, it is not as straight forward as it is if you are buying physical silver. We recommend buying physical silver instead of paper silver (some US shares on Mines or Singapore’s UOB silver passbook). It is difficult to schedule a regular amount when you are buying in ounce. You might want to look into investing via Ounce Cost Averaging.

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Mike Maloney: Gold And Silver – When To Sell?

Michael Maloney or Mike Maloney has been the precious metals investment advisor to Robert Kiyosaki since 2005. His advise has prompted Robert Kiyosaki to buy a large amount of silver when silver was priced at around $USD4/ozt.