Over the night we decided to start buying precious metals on a pullback that we think has further to go. For context, this follows what we discussed in our recent update on what we are doing after the big silver drop. Oil has started to roll over, down about 2.5 percent on the week, but it is still a tricky situation. We do not have a clean confirmation yet and depending on your strategy this may not be the moment to jump in.
We are not sure we would recommend that everyone follow what we are doing here. Some people may prefer to wait until prices move a bit higher and confirm that momentum has turned back up. That is a perfectly reasonable approach. But buying precious metals on a pullback is how we have always operated and this time is no different.
Why Buying Precious Metals on a Pullback Fits Our Long-Term View
We have always believed we are in a long-term bull run in precious metals. When you take that view, short-term drops do not change anything. If prices fall further from here we are not bothered. We are positioning based on the broader cycle, not the next move in oil or the next snap in volatility. We wrote about how we think about this longer timeline in our post on interest rates, gold, and the calm before the next storm.
That is the whole reason we placed the order. We leaned more toward the silver side this time because the gold silver ratio had jumped back up into the 70 to 75 range. When the ratio gets stretched like that it has historically given silver more upside on the next leg. Not because we think we caught the exact turn. Because it fits the long-term view and buying precious metals on a pullback when the ratio favors silver is the kind of setup we want to be acting on.
For anyone thinking about doing something similar, the approach we generally recommend is dollar cost averaging rather than trying to nail the bottom with one big order. Buy some now, buy some later, and let the position build over time. That takes the pressure off having to be right about the exact day.
If you want to see what is available right now, browse our silver coins, silver bars, gold coins, and gold bars. And if you are still working through whether this is the right time for you, our post on how much silver you should own might help frame the decision.
More updates coming soon. This is not financial advice. It is what we are doing and why.
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