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.