Crocodiles are by far the most successful animals that has ever lived. They have been around for about 200 million years and have out-lived the Dinosaurs. Crocodiles patiently learn the behavior of their victims and wait for long periods of time (sometimes to the point of starving). Then when the time is right, they snatch their victim with confidence and precision!
Crocodile is big, fat, long and needs A LOT of protein in his diet to survive, to swim and to hunt. Is his energy best spent going around all day eating little fish which are easy to catch? Imagine how much energy he would need trying to catch a high quantity of low-quality victim like that all day. The strategy for crocodile is to strike less but each strike take a big gain.
When comes to physical silver investment, we have to invest like a crocodile. Crocodile does not waste time on the small fish; as a silver investors, we do not waste time in the small price fluctuation. Silver price fluctuate between 2% to 3% in a day is very common, do not be overly concern about it and do not waste time chasing the price.
If a person goes in and out during small silver price fluctuation, he might end up like this guy. First, he tries to analyze when is a good time to buy silver. Second, once he is in the game, he monitor silver price closely. He buys when silver price shooting up, sells when silver price coming down (well, sound familiar?). Thirdly, he found out he has been losing money and soon, he is out of money and out of luck. Game over!
If you buy and sell silver within a short period of time, you tend to end up like the guy above. For physical silver investment, do not waste your time chasing the price every day. In fact, looking at the silver price chart multiple times a day is a bad choice for physical silver investment.
Take a look at this chart that many silver investors refer to:
What does this chart tells you? Frankly, it tells very little except the current silver spot price. It is a light weighted line chart that can tell what is the current spot price but nothing more. The chart does not tell any trend and pattern, the chart does not show support and resistance. It is a quick and simple method to know current silver spot price, but sometimes what seems to be simple could complicate your life. On the other hand, if you are willing to spend a little time to learn silver investment, what seems to be complicated could simplify your life.
Personally, I only look at 8 hours chart, daily chart and weekly chart. Why? The longer the time frame, the clearer the trend is. On the other hand, the shorter the time frame, the more “noise” in the chart. The following is silver weekly chart since Oct 2011 till January 2013, there is a very clear wave and obvious range the price is traded for.
A crocodile investor patiently learns the silver price pattern and waits for the opportunity. When the time is right, he buys silver at bottom and sell silver at top with confidence and precision! A crocodile investor would have benefited from his silver investment in the following manner:
In Trade 1, the crocodile investor had 14 days to buy his silver at price $29 then 21 days to sell his silver for $35.
In Trade 2, the crocodile investor had 28 days to buy his silver at price $28 then 14 days to sell his silver for $35.50.
In Trade 3, the crocodile investor had 98 days to buy his silver at price $27.50 then 28 days to sell his silver for $34.50.
If the crocodile investor had put in RM10,000 initially, after 1 year, his investment capital would have been rolled into RM19,208.75. You see, crocodile investor only made 3 trades in a year to profit almost 100% return. He does not chase the small price changes every day or worry about the price fluctuation everyday. It is a total waste of energy. He looks at the big picture, learns the game and have a plan before investing in silver. Investing in silver without a plan is hunting in the jungle at night and hopefully kill a tiger. Common sense would tell us that is a joke. Come on, he would be lucky if he didn’t killed by the tiger instead.
Crocodile investment strategy is suitable for aggressive investors who have time and energy (although very little). There are other strategy such as dollar cost average that is for passive investors and other types of strategy where I discussed in eBook Practical Guide For Investing Silver In Malaysia.
There is no one size that fits all investor in silver investment. In the eBook, you would learn different options for investing silver in Malaysia. You need to understand different options so that you can choose one suitable for yourself. Click here to find out more.