Some of you may want to invest in coins or precious metals once you have reached the $25,000 level or higher. Investing in
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precious metals and/or coins is a special procedure to help pro- tect your money in times of inflation or economic stress. Invest- ing in these markets is not the panacea some people would have you believe. It is merely a protective strategy designed to keep your profits from deteriorating. I highly recommend the five- part investment strategy I outlined in my books, Beat the Millen- nium Crash(New York Institute of Finance, 1999) or Investing in Metals(Wiley, 1998).
If you have decided to expand into metals, consider the fol- lowing advice:
Understand the general aspects of each of the metals markets.My main task here is to provide you with a working knowledge about the basics of each major metals market. Although such information is generally known to many investors, there are important facts about the metals that are not gen- erally known. These will assist you in planning your pro- tective portfolio.
Learn if, how, and when to invest in each market. Although some metals are ideal investment vehicles, others are not, because they are not in short supply or heavy demand.
Still other metals prices are tightly controlled by a small group of producers or suppliers. These metals may or may not be suitable for investors. And still other metals may never be liquid enough to be suitable for any investor at any time. Not only will you need to know which markets to buy, but also how to buy them and how they react dur- ing periods of extreme volatility and emotion.
Learn about the various investment vehicles available to you, in- cluding stocks, futures, options, coins, mutual funds, and others.
Although you may know a little about each of these areas, you may wish to know more, and in particular you may
want to know when each of these choices is best for you.
Clearly, you will want to have some degree of diversification when an economic crisis develops. This information will help you develop a balanced portfolio of holdings.
Help plan a strategy for future moves in the metals markets. Al- though this book will answer many questions, it cannot possibly answer all of them. There are numerous sources to which you can turn for assistance, some of which are in book form. Still other questions can be answered by your investment advisor, financial planner, broker, or tax con- sultant. But remember that opinions about the direction or expected direction of the metals markets are only opin- ions. If you have understood what I have explained in this book, and if you share my concerns, then you will have a very good idea of how to protect yourself from what, I feel, is inevitable.
Any opinion stands a good chance of being right. If you have done your homework, if you have done your research, and if you have studied hard to anticipate the direction of the next major market shift, then do not allow your opinion to be swayed by oth- ers. Although it may be reasonable to solicit input regarding how much money to commit, how much risk you can take, or what the tax consequences of your investments might be, you might want to ignore advice about the anticipated direction of the markets.
Someone else’s knowledge and studies may not be as intense or as complete as yours. Don’t forget to use the STF and GIM methods.
Finally, remember that investing in metals is, as I have stated previously, a highly emotional thing. The psychology of investing is a field unto itself. (I have two books on this subject to which I will refer at various points.) And though you may have done a thorough job of researching and preparing your plan, you may fail if you lack the discipline to implement your program thor-
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oughly, consistently, and without the fear or greed that are often the undoing of otherwise successful programs. Keep your emo- tions in check and be aware of your motivation for taking spe- cific actions at given times.
Although I have attempted to provide as much pertinent in- formation as possible about each of the metals, I realize that con- ditions are changing rapidly in our modem world. Technology is growing at an exponential pace, and with it, new applications for metals are found virtually every day. For example, researchers recently introduced a powerful new drug for cancer treatment that uses platinum as its base. While the use of certain metals is declining, applications for other metals are on the rise. By the time you read this book, some of my comments may be out-of-date;
however, the core elements presented here will likely never be out- of-date. As long as human beings continue to advance technol- ogy, metals will continue to play an essential role in their efforts.
And finally, as long as you keep in mind the fact that metals are responsive to extremes in emotion, and that extremes in emotion are a function of market conditions, you will do well.
When emotions reign supreme, when traders and investors are in a frenzy, and when markets appear to be out of control, pre- cious metals will be the preferred investments. Emotional mar- kets are difficult to control or predict; however, these markets have established certain correlates over the years. One is the fact that metals will move as a result of emotional extremes. It is our job first to know this fact and then to use it to our advantage.