The Biggest Mistake Silver Investors and Traders Make

Last month I invited David Morgan to come and do a guest blog post. Well we received a huge email and comment response to bring him back for more analysis.


The Biggest Mistake Silver Investors and Traders Make!
Do you know what it is?

by David Morgan

To say that investors in the resource sector have been having a bumpy ride for the last six months would be the understatement of the year! Whether you hold mining stocks, buy physical precious metals, or play the futures market, it’s been hard to make dimes and easy to lose dollars. How is a trader supposed to keep his or her balance during these turbulent times, when gold and silver can make bigger up and down moves overnight than they normally do during the daytime session?

I’ve said many times that the market will seek to find and lay bare every weakness a trader has (both in personality and trading style). In order to survive and trade profitably, it is not enough just to become proficient in the mechanics of buying and selling. What is critical is to spend the time necessary to develop a thorough understanding of yourself.

An old Chinese saying that many of my readers have no doubt heard, but which in today’s market environment certainly bears repeating, goes:

If you know your opponent and yourself, you will be victorious in one hundred battles.
If you know only yourself, the odds are even.
If you know neither, there is great danger in one hundred battles.

Tony Burroughs of the Intenders tells us that, to a large extent, our reality is formed by the way we talk to ourselves. Almost always, the outcome of something we are doing will be more productive and positive if we “intend” rather than “try” or “hope.” When the markets are challenging, as they have been lately, “the novice buys into the doubt, but the ‘knower’ pushes the doubt aside and continues forward.”

Start by asking yourself if the reasons you initially invested in mining stocks and metals have changed. Do you believe the fundamentals are different now than they were a few months ago? Are your goals and how you plan to achieve them still aligned? Can you still focus on the larger, long-term picture and turn down the short-term noise?

If you believe, as I do, that this secular bull market for gold and silver has a long way to run, then you can more easily deal with current conditions, limit second-guessing, and make the trading decisions that will keep you in the game.

My friend Pat Gorman has spent much of his life helping others to develop the tools they need to succeed, as well as spending no small amount of time in the search for balance in walking his own path. He likes to speak of two important concepts that can help us stay centered and move forward professionally and personally. These concepts are discipline and gratitude.

Be disciplined in studying about the markets you choose to invest in, and then follow through on what you have learned. Just as important, take time on a regular basis to express your gratitude for what life has given you and the opportunities it presents. Sure the markets and the profit we hope to make from them are important. But doesn’t the real value in our lives rest with our relationships and the health of family, friends, and ourselves? Aren’t you privileged to live in a country that in spite of its many problems is still a beacon for millions of people from around the world?

Developing a thorough understanding about yourself and making sure your self-talk moves you in the direction of your personal and professional goals may not seem as exciting as pulling off a ten-bagger mining stock trade or catching a one-dollar move on a silver futures contract. But it really does offer the potential of helping your trading to become more consistent and enables it to flow with the market, regardless of what it is doing on a given day, week, or month.

Let’s face it. Not only is the market unaware that you exist, but it probably wouldn’t care, even if it knew. There are valid reasons for seeing the trading floors as battlefields, because that’s what they really are . . . titanic battles between bulls and bears.

When the day comes that you have developed a good understanding not only of the markets, but of yourself as well, you may then truly become “victorious in one hundred (trades) battles.” I’d say this is a very worthy endeavor. How about you?

Get Real, Buy Real,
David Morgan

Mr. Morgan is the founder of and has followed the silver market daily for over thirty years. Much of this Web site is devoted to education about money, metals and mining.

10 thoughts on “The Biggest Mistake Silver Investors and Traders Make

  1. It is interesting how people get involved within their own relm and make statements for others that reflect their self interests and bias. I am not interested in taking a right hook at Mr. Morgan but would like to express caution for the side of the investor.
    It is good to know oneself especially if you are in the mashial arts and psychology, such as ZEN.
    In the world of mining with great promises and the investment turmoil people are forgetting the law of the jungle. Buy low and sell high. If you lost money and bought high, sorry. If you bought low and sold at the peak, more power to you. I would like to think that knowing your own reactions to situations is important but it may be more important to know what others are doing and what is the perception of ivestors in the market. Buying and selling is the push of a button on your keyboard and it does not matter if you are nervious or have a happy touchy feeling about your decision.
    Mr. Morgan is implying that you view your investment with a long term strategy. WRONG!
    When you lay down your hard earned money, please take a look at who, what and why. Use a telescope and microscope approach in analyzing how your are going to invest. Don't forget to look at the futures market and learn the trends of advanced investors. Yahoo finance has free software tools for charting time periods and special charts at your disposal. Some additional advice is that when purchasing precious metals, TAKE POSSESSION. No matter how painfull the task is or how costly the shipping, TAKE POSSESSION. It is easy to shuffle paper but it keeps people honest when it comes to shuffling bars of metal. Almost any refiner will sell you metal if they are of any worth. A reputable refiner will have their own custom coins sold and bought at spot price.

  2. Hi,
    as a young enterpreneur from Nigeria,i think your opinion from the philosophical point of view is correct 100% Dave Morgan...however, as you rightly noted "its a battlefield out there"-How do we talk to ourselves-one can hear clearly the strings of your lines in every trade.Discipline and gratitude in indispensible to a successful trader...shallom!

  3. Hello everyone. I am a nurse from Canada working night shift and enjoying reading this blog very much. I just recently suscribed to silver newsletter and everything I have read reassures me that my own personal instinct is right. Silver will probably be the best investment of my life. I tried to buy some physical silver coins and was told by bank of nova scotia that there was none available. This only convinces me more. The simple law of supply and demand will prevail and I am so grateful that I will not look back at this day and think if only...Do your research. Do not rely on one persons opinion. Do what feels right for you.

  4. And just look at how gold has surged 11% to just under $860 because of the uncertainties in the financial markets over the standing of the investment banks. Now it looks as if Goldman Sachs and Morgan Stanley could be targeted.

  5. I guess we never stop learning about ourselves,and this is how it should be.

    Discipline in our approach to trading is always a difficult objective to achieve but it is nevertheless essential.

    I think David Morgan's take on gratitude is interesting. It is important to put into a proper perspective our role in the world and to have an appreciation of all that is good around us.

    Apart from it being right for others with whom we come into contact, having this world view is good for our psychology and temperament for when we need to make trading decisions.

    As for metals and mining, I agree with him about taking a long term view about this sector, and that the fundamentals are favourable for precious and base metals.

    You only have to look at the growing demand for metals such as copper, aluminium and iron ore (though this is not traded on commodity exchanges)from the BRIC economies to realise that long term we are in a bull market for these natural resources.

    The largest mining company in the world, BHP Billiton, is involved in a major takeover bid for another large miner, Rio Tinto, and the company is very bullish on demand for these commodities going forward.

    Again they cite the projected urbanisation growth in the BRIC, especially China, for the strong demand for their products for the coming decades.

    Silver has a growing range of industrial uses and we can expect this metal along with the platinum metal group, palladium and platinum, to show healthy demand in future.

  6. Always aspiring to noble motives in life and finances, I applaud your un-biased and straight forward manner in helping us through this time of uncertainty with regard to pm's in general. Thank you for your good work.



  7. Hi, I received the blog alert but I do not quite understand what to do buy silver stock or the future. whick stock and which etf thank you, annie
    I would appreciate if you could be more explicit

  8. Sounds like another "buy and hold" loser. Look up the definition of investment, and then tell me about your "investment" in silver. Unless you are getting a guaranteed return and your principle is safe, don't talk to me about investment in silver. It is at best a speculation, and anyone who thinks otherwise is fooling themselves.

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