• The Seven (Potentially) Deadly Sins of Silver Investors

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    The Seven Deadly
    Sins committed by silver investors destroy wealth, leaving investors
    discouraged and broke. These seven (potencially) deadly sins are:
    overindulgence, haste, sloth, irrational exuberance, ignorance,
    pride, and dogmatism. Although the seven sins are committed by beginners
    more often, experienced investors can commit any of theses sins
    as well.

    1. Overindulgence
    – many silver investors are carried away by the hype of investing
    in silver. And these investors go out and buy up too much silver
    at one time. Remember, regardless of the market outlook, or the
    future of society, more than 10% of your entire investment portfolio
    is too much. An ideal
    portfolio allocation is around 7%–11%
    . If you are just beginning
    in silver: start small. Here’s another tip for beginners, it’s
    a good idea to start in physical silver investments such as coins,
    and bars, before investing in more leveraged silver investments.
    Get some real metal holdings to build your foundation of wealth
    before making other metal investments.

    2. Haste
    – Similar to the last sin, silver investors should pace themselves
    when making an investment in silver. A prudent investor would spread
    out her investment into multiple purchases–known as dollar
    cost averaging. Dollar cost averaging works by averaging out the
    entire portfolio; for example, if the price of silver is at $13,
    Joe buys a little. Then next month the price fell to $12, and Joe
    buys a little more. Joe’s average investment is now only $12.50.
    Instead of if Joe bought all he could at $13, he’d be at a
    loss. Pace your investments to use dollar cost averaging to your

    3. Sloth
    – With this sin, investors are lazy with proper storage. Many
    silver investors think the original investment is the end. However,
    the investor now has to properly
    store her investment
    , or risk losing. It’s your silver,
    so keep it that way. Keep the bulk of your investment in a safe
    place; this includes a personal safe, a bank safe deposit box, or
    a public storage facility.
    Whatever you use, make sure proper storage happens.

    4. Irrational
    – The number one rule of investing is “don’t
    lose money.” As such, large doses of speculation can cause
    an investor to lose huge sums of money. Speculation is speculation.
    Not investing. But depending on your goals and tolerance for risk,
    very moderate levels of speculation can increase the return on investments
    for your portfolio. If you do decide speculation is right for you,
    then options and futures contracts are excellent speculation tools.

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    29, 2010

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