This is the big diagram of Bubble Phase.
This is the long term silver chart from 2002 – 2013.
If we overlap the 2 charts, it is obvious that we are now in Capitulation Phase. Capitulation Phase is defined as the action of surrendering or ceasing to resist an opponent or demand. Investors give up any previous gains in price by selling in an effort to get out of the market and into less risky investments.
In layman term, it is the phase where many silver investors give up on hoping silver price would go up as much as they expected earlier. I personally know many people who started investing silver when price was $30+. Now, they are not particularly excited when hear about silver. But, they are also not desperate to sell off their silver at a loss.
The ironic part about investment phases is, we never know what phase we are at until we passed the phase. There are 2 directions we can go now:
- Whine and complain how silver was a bad investment because you might have enter in a bad timing. Then curse and swear that you will never buy a single oz of silver again in your life, OR
- Realize that silver price has came down significantly since April 2011. We now have the timing advantage to buy cheap silver, much cheaper compare to those who bought in 2011.
The fundamental for silver investment remains strong as before. Silver is still an extremely important industrial metal which has no replacement. The underlying global economy crisis is never solved. The can was merely kicked further down to the road. The biggest financial disaster in human history is still waiting for us.
However we need to be aware that further QE (Quantitative Easing) has no more stimulating effect on precious metal price. QE exit in the future would potentially bring precious metal price down. Which is a short-term market reaction.
The potential for silver has not fully shined. I would hold my physical silver for long term and has no plan selling any in the short term. If for whatever reason you need to liquidate your silver in the medium to long term, below are some of the indicators you can look for:
- The Federal Reserve (U.S.) and the Bank of Japan end their QE.
- Silver has another parabolic rise like it did in April 2011.
- Another better investment opportunity comes up that I feel would offer better returns than silver.
One fact is, it is never easy to buy something at the bottom and sell at the top. It is always better to buy and sell an investment at a good price, rather than a best price that might never come. Every investment has its cycle. What went up will come down, and what came down will go up. When one cycle has completed, another cycle will begin. Are you ready to catch the next “New Paradigm!!!“?
To find out more about silver investment in Malaysia, take a look at the eBook: Practical Guide For Investing Silver In Malaysia