The basic rule is that you should not sell impulsively. Humans are emotional creatures, and research shows that most of us make bad decisions when it comes to timing. If you make a quick decision to sell (or buy) on a wave of fear or greed, you are likely to regret it.
The trick to avoiding an emotional decision about when to sell is to be clear about why you bought the precious metals in the first place and stick to your beliefs. Many investors believe that metals are undervalued compared to other assets.
Stocks are near all-time highs and appear grossly overvalued based on corporate earnings. Bonds are at the peak of a bull market that has been noticeably long in terms of maturity. Real estate may also find itself in a bubble again, especially in large markets in cities. Precious metals are currently one of the few asset classes that seem cheap.
For value-oriented investors, the time to sell will come when the calculation changes. They should exit when metals seem expensive and another asset is undervalued. Others buy metals to guard against inflation. They understand that hoarding money in Fed notes is a one-way street that will lead them to poverty. Any cash they hold in the bank is guaranteed to be worth less next year, perhaps a lot less. A decline in the value of the currency will eventually destroy the value of fixed-rate bonds.
The time to sell will come only when the threat of inflation disappears. Perhaps the day will come when central bankers and politicians will be forced to implement major reforms, such as reintroducing honest money tied to physical gold and silver. Perhaps an independent and incorruptible currency will emerge and prevail. After all, many investors buy physical coins and bars as part of their retirement plan.
History shows that severe inflation is usually accompanied by turbulence and political unrest. They are aware of the possibility that the metal will be needed if fiat currencies - and the governments behind them - fail. Trust in virtually every institution in the United States is waning, and the Federal Reserve banknote is one of them. If a passing certainty is all that supports a currency, it is naive to believe that it will live forever.
It is hard to imagine what the Fed could replace the “dollar” with, if such a fate befalls it. People buy physical metal to get rid of a lot of guesswork. Gold and silver could return to being the official currency. If not, then the owners can be confident that their precious metals will have value in exchange for the new currency. This is the history of metals.
Most of us have bought metals for a combination of the above reasons. Unless we need cash in an emergency, it's not time to sell until the world looks very different from what it does today. It is unknown when to expect the restoration of fair money, healthy markets, and personal freedom. It looks like it's not time to sell yet.