Falling gold and silver prices leave recent buyers wondering what to do. Should you take advantage of the panic and buy more? Sell before it gets worse? Or just wait and see? You can’t answer these questions until you ask yourself another one.
Gold price forecasts are a dime a dozen. Some experts are bullish. Others are bearish. Whatever you might be inclined to do, there is no shortage of supporting evidence. Yet a more important question requires no research at all. Just ask yourself: “Why did I buy gold in the first place?” The answer will go a long way toward telling you what to do now.
If you originally bought gold as a long-term investment, and “long-term” isn’t here yet, then whether prices rise or fall this week or this year shouldn’t make much difference.
By all means, re-evaluate if your circumstances have changed. You may need to adapt if you lost your job, you developed a terminal disease or had some other major development. Otherwise, the best choice is usually to stick with your original plan — or at least avoid sudden changes.
If, however, you bought gold in anticipation of near-term gains, you were not investing. You were speculating. According to my dictionary, a speculation is “a bet that may not pay off.” Bets on gold initiated anytime in the last two years haven’t worked so well.
Maybe a bet on gold will pay off, given more time. Or maybe the losses will only get worse. Anything is possible. As a speculator, you must decide how long you will wait, and how much pain you can endure in the meantime. These decisions are best made when you first enter the trade, but better late than never.
Whether you are investing or speculating, success requires planning and discipline. If you have to take a loss in gold, remember how it happened. Then do better next time.
© 2014 Moneynews. All rights reserved.