I recently liquidated 2 Perth Mint silver bullion bars each weighing 1kg last month. I purchased them in early August 2009 through respectable dealers in eBay. I’m still holding on to some Australian, Canadian and Singapore silver coins bought over the years as collection.
The main reason for selling away my bullion bars, even though there might be room for price appreciation amid the uncertainties, are due to these charts:
(graph courtesy of http://www.kitco.com)
As you can see from the charts, the price of silver has shot through the roof over the past year and it might be in a bubble stage now. The graph is of a parabolic nature. A parabolic graph occurs when panic buying sets in and people are rushing to get a piece of the action, regardless of the price. They don’t want to be left behind and this is driven by greed. It is evident that people are rushing in from the volume which has been increasing ever so quickly over the past year. Many people in the streets are talking about buying silver and gold. When laymen who do not know much about investing or trading recommend stocks or commodities to buy, it’s almost time to get out. Warren Buffett’s saying “Be fearful when others are greedy” rings in my mind.
My plan when I bought into silver was to keep it all the way and not sell it at all. I did a blog post on why I believe in silver and gold for the longest term here. However, when I saw the silver graph after a long time last month, it scared the sh*t out of me and I wanted to sell my silver bars to lock-in my profits. You might say that I’m fickle-minded but no one has ever lost money by taking profits, right? I might buy them back once the price settles down or just use the money to buy more wonderful companies amid the sell-off and collect dividends meanwhile.