When the chauffeur or even the doorman has an opinion, the underlying asset-class is in a bubble.
That’s my definition of a bubble.
And that’s not the case for Silver yet.
A bubble is something psychological. The mind gets twisted into believing that one’s found the holy grail. And then one can’t get enough of it.
Bill Bonner predicted in the year 2000, that Silver and Gold would be the trades of then commencing decade. What a prediction! He went on to say that in the last stages of its run, Gold would rise at the rate of 100$ an hour. You can proportionate that for Silver. That’s how a real bubble behaves. Just go back to first quarter of 2000 and observe the financial behaviour of dotcoms.
This is not a bubble yet. We are nowhere near bubble behaviour. The common households have not started selling off their household Silver. The man on the streets is not obsessed with Silver as of now. (I still look at common-man behaviour, even for Silver, because in a bubble, one forgets affordability. Apart from that, Silver can be bought by the gram).
So, where does one go from here?
The trader keeps trading with the flow and an appropriate, risk-profile-tuned stop. For heavens sake, he or she needs to be long.
And the investor keeps buying small stakes on dips.
Nothing fancy or complicated. A simple, common-sense strategy is all that’s required.